Be Afraid. Be Very Afraid

Maybe I just have Tony on the brain because The Sopranos begins its death rattle this Sunday. But what went down with the Tribune Co. and Sam Zell is eerily similar to an episode of the HBO series. After all, the 65-year-old Chicago real estate tycoon who is worth $5 bil didn’t give himself the nickname “Grave Dancer” for nuttin’. Rather, it aptly describes his bada-bing-bada-boom style of buying up “distressed” assets after others had given them last rites. And that’s what the Los Angeles Times is considered right now: dead meat.

On Monday morning, Tribune Co. chairman Dennis J. FitzSimons sent an e-mail around to employees telling them about Zell buying the embattled company and taking it private. That’s the equivalent of Tony, through his errand boy, making calls to his crew from the Escalade. Then FitzSimons followed up later in the day with a video teleconference during which he answered questions from the disgruntled grunts. Someone asked the goombah what’s “the vision” for Trib’s newspapers under Zell. “Basically, we never got around to discussing a vision for the papers,” FitzSimons replied. I’m told a visible shudder went through the Los Angeles Times newsroom.

The reason is clear: This deal was all about money ($34 a share for more than half the outstanding 250 mil Tribune shares, or a 5.9 percent premium over the closing stock price on March 30) and not about the 11 newspapers or the 25 TV stations (including L.A.’s KTLA) or the Chicago Cubs or any of the other infotainment products the Trib Co. owns. On The Sopranos, Tony often takes out a fat wad of dollars from his pants pocket, then turns to his underlings and says, “Let me figure out how to take care of you.” What Tony really means is, “Let me figure out how to take care of me first, and then you.” And that’s exactly the strategy of the Trib’s board and Zell toward the 20,000 employees involved in this deal.

Zell only had to put up $315 mil of his own moola for a subordinated note and warrant that entitles him in the highly leveraged $8 bil-plus deal: In exchange, he gets the chairman title as well as an option to buy 40 percent of the private company’s common stock anytime over the next 15 years. As the preferred stock holder, Zell will elect a large number of directors to the board and therefore gain control. FitzSimons for his part is supposed to personally pocket $21 mil-plus, and still remain CEO and retain a board seat. The other top four Trib execs get big bucks too, and stay on. For all these suits now, running the newly private company is suddenly akin to those no-show construction jobs reserved for Tony’s mob: They’re in it only for the pay and the perks.

As for the rebellious Los Angeles Times, it’s as much an afterthought as one of Tony’s whacked rivals. Zell’s own experience in publishing is little to none: Legend has it that, as a kid, he would buy Playboy magazines in downtown Chicago and resell them to his classmates in the suburbs for a 200 percent markup. By all accounts, Zell won’t micromanage the media outlets. Zell even describes himself as an opportunist and the Tribune Co. as an investment. “I’m not interested in becoming op-ed editor or publisher or anything like that,” he says in interviews. So the same Tribune mob who’ve been kicking the crap out of the Los Angeles Times from afar are still going to be in charge, at least if Zell’s promise to keep current management in place is to be believed.

If anyone still hopes that L.A. billionaires Eli Broad and Ron Burkle can save Spring Street, fuhgedaboudit. My sources say the Broad/Burkle offer slept with the fishes a long, long time ago because Broad, in cahoots with then-editor Dean Baquet, had done too much badmouthing of the L.A. Times’ Chicago bosses. (“The Trib guys hated Eli Broad,” an insider told me. “They thought he was a piece of shit.”)

That leaves only David Geffen.

How fitting that a Hollywood mogul is eager not just to take on Big Media’s version of The Sopranos but to actually get in bed with them. I can report that Geffen is by no means out of this. Sources tell me that Geffen and Zell came to know each other in Malibu, where both billionaires have their de rigueur beach houses, and consider themselves friends. Geffen believes Zell is a straight shooter and an honest guy who can be taken at his word when he says he won’t interfere in the running of the newspapers. So Geffen has been talking to Zell about doing a joint venture for the Los Angeles Times that would circumvent the expensive tax consequences of an outright sale. Geffen would buy 50 percent of the Los Angeles Times from Zell for $1 billion and get to operate the paper. (That figure makes sense since Geffen had already offered Tribune Co. $2 bil for the paper.) If he doesn’t come in, then the L.A. Times will stay under present Trib management — and that’s the worst situation possible for the paper’s future and, ultimately, for the employees.