Tribune: The Canary In A Scary Mine

摘要

When I wrote a column of predictions last week, I expected some of my guesses for 2009 would never happen. Leave it to Tribune's Sam Zell, though, to make one of them wrong by filing Chapter 11 while the calendar still reads 2008. Zell's $8.2 billion deal, which went from "we did it" to "we're bankrupt" in less than a year, illustratesrnthe folly of buying declining business -es with billions of dollars of borrowed money. That seems an obvious and fatuous statement now, but apparently it didn't occur to Zell. (A Tribune spokesman did not respond to several calls and e-mails.) The Tribune deal left a company that generates revenue mainly from newspapers with aroundrnnine times more debt than annual cash flow, or at least what had been its annual cash flow, since that figure is declining by the month. It was extreme enough to warrant "whoas" even from media executives accustomed to doing deals involving lots of debt.