Zig Zag Zell Buys Tribune

April 2, 2007

Real-estate magnate Sam Zell buys the Tribune Co. which includes two major newspapers, the Chicago Tribune and Los Angeles Times. Zell is known for buying out-of-favor real-estate properties in down cycles. Are newspapers in a down cycle rather than generally in decline? Warren Buffet is known for buying an undervalued company or two but his formerly bullish attitude no longer holds with newspapers.

Zell will be restructuring the company into an Employee Stock Ownership Plan (ESOP). This will allow him to invest company 401K investments back into the company. I guess an ESOP has other tax incentives as well. I wonder if this is the kind of outcome envisioned by the writers of the ESOP tax laws?