OT: Tribune to publish tabloid format papers

Phil Rosenthal reports that the Chicago Tribune, hoping to improve its sales (and perhaps hoping for the demise of the Sun-Times?), is going to sell its retail edition (meaning non-home delivery) in a tabloid format. Home delivery customers will still get the broadsheet format, albeit the narrower version adopted by most all broadsheets.

I can't help but think of Jim Traficant, the now-jailed ex-Congressman who used to say on the floor of the House: "Beam me up."

The Trib already publishes the Red Eye, a tab directed at younger folks. But the additional publishing costs are still there and you have to wonder aloud if the paper intends to eventually go to the tabloid format completely with time. (Some would argue the new format is better suited to a tab anyway; I canceled my life-long subscription in response to it and don't miss the paper one bit.)

I will say that a tab is easier to read than a broadsheet on a bus or a train, thus making the format sensical for commuters, but I also will wager a nickel some people will be outraged by this one. All I can say is that this is quite a bet.

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Sorry Sam - still no subscription for you

Yep. Yesterday, advisers, today, a Chapter 11 filing for Tribune Corporation. Even the Grave Dancer, much as I admire him, can't win them all.

"Over the last year, we have made significant progress internally on transitioning Tribune into an entrepreneurial company that pursues innovation and stronger ways of serving our customers," [Sam] Zell said in the [press] release.

"Unfortunately, at the same time, factors beyond our control have created a perfect storm -- a precipitous decline in revenue and a tough economy coupled with a credit crisis that makes it extremely difficult to support our debt," he said.

The Journal's Deal Blog tells us this was never a good idea and people said so:

To many people, the math never worked from the beginning. Tribune’s revenues had been falling precipitously for years. Zell offered a generous $8.2 billion offer for Tribune to win against two other billionaires halfheartedly bidding for the company. From the beginning, his plan was that the price tag would be paid through the pensions of Tribune’s 20,000 workers, held in an employee stock ownership plan, or ESOP. The ESOP structure was designed to reduce Tribune’s taxes to nearly zero and it lowered Zell’s own price tag to $315 million. Unfortunately, it also left a $12 billion debt load to pay just as the newspaper industry as a whole is largely cratering on lower ad revenues. The principle — that the company could hoard its declining cash flows to pay down this enormous debt — was flawed. Cash flows declined, and tax savings couldn’t help. A populism-friendly redesign did little to goose revenues.

It isn't dirt, unless you count Wrigley Field, Tribune Tower (Zell them for Condos?) and ancillary stuff. But the Tribune, the Cubs and WGN are Chicago institutions, so this is news to me.

That said, I don't watch WGN-TV much anymore. They've blown Cubs coverage by putting the games all over the dial. The only good thing they've done there is to add Blackhawks games. The radio side? Still ok, I guess. I have to wait and see on John Williams in morning drive.

But the newspaper? Good grief. It is literally unreadable since the redesign. I tried it for a couple of weeks and then canceled my long-standing subscription. And I'm not coming back. Sorry.

Notably, the Cubs are not part of the filing. Get the team sold already. I know, I know, taxes, taxes and more taxes. But get real and get it done.

UPDATE: Here's a link from the LA Times of the memo to Tribune employees.

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Gee, could you paint a bleaker picture? And is that a good thing?

When I read this story, captioned "It can't get much worse," I wanted to jump out the window. Luckily I was in the basement.

Seriously, here's what some are saying in institutional investor land:

Properties with purchase offers are not closing; transactions are down; and managers are going hat in hand to their investors for cash to prop up properties they do own.

“There's no light, no tunnel, no liquidity, no equity,” said Jeff Barclay, managing director and head of acquisitions and development at real estate investment firm ING Clarion Partners, New York.

“Some people are being wiped out,” said Claudia Faust, co-founder and managing partner at Hawkeye Partners LP, a real estate private equity firm in Austin, Texas. Hawkeye takes stakes in real estate money managers

Deals are being broken at historically high rates.

Some buyers are reneging on deals struck just a month or two ago. Others have walked out on deals or “shamelessly” renegotiated deals after they have been struck, Mr. Barclay said.

Now, there are deals being done. Let's not forget that. We tend to do that, and yes, I do too. But there is also a lot of retrading going on. But a great example of even the best investors having problems with getting money can be seen here, where Tom Corfman tells us:

Hines Interests L.P. is struggling to finance a $536-million skyscraper proposed for a site along the Chicago River, as the credit crisis delays one of the city's biggest developments and saps potential profits on the 52-story tower.

Houston-based Hines' troubles show the depths of the financial crisis, which is threatening a project that until recent months would have been seen as a safe bet by lenders. Hines is one of the largest real estate firms in the nation, and its office tower would be anchored by two trophy tenants: investment bank William Blair & Co. LLC and law firm Baker & McKenzie LLP.

I think Hines will eventually do this deal. Reputation and all that. And hey, there was a full-pager in yesterday's Tribune for the Spire (heaven knows Sam needs all the revenue he can get).

I am being a little facetious here for a reason. A few years ago real estate was so can't miss that everyone and their mother was trying to get into it. And deals were being done that defied description. Now we are in the completely opposite mode. And that tells me that there is opportunity around the corner. I believe it was Nathan Rothschild who said, "Buy when there is blood in the streets, even if the blood is your own." Well, things are looking pretty bloody, and there plenty of opportunities afoot. The only thing holding some people back right now is tight credit or terms that don't make a deal economically feasible. When the business side works out, we legal guys are ready.

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