Tribune Joins Zell's Fold

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It feels like a can't-miss TV show just got cancelled. After months of hijinks at Tribune (NYSE: TRB), a special committee of the company's board decided over the weekend to accept Chicago real estate tycoon Sam Zell's buyout bid, one of many it has received during the past several months.

Zell's offer trumps a remaining joint offer from Los Angeles real estate investor Eli Broad and billionaire grocery magnate Ron Burkle. (In the final analysis, it seems the two bids weren't too different.)

Zell is expected to contribute roughly $315 million in cash into the deal; in return, he'll likely become the company's chairman. He intends to help Tribune form an employee stock ownership plan (ESOP), which carries certain tax advantages, including the ability to borrow money and prepay loans using pre-tax funds.

Given its metrics, including a $34 per-share price tag, the deal is valued at about $8.2 billion, excluding Tribune's $4.5 billion in debt. While the Broad-Burkle approach would also have involved the formation of an ESOP, it would have apparently taken longer to complete, thereby tilting the balance in Zell's favor.

Fools should keep a close eye on how Tribune's new direction comes together, and even more importantly, what the company's announced new structure might presage for other publishers. I've got some theories of my own on these questions:

• Zell will apparently sell Tribune's Chicago Cubs baseball team once the new season is over. (Yo, Sam, they're the Cubs. Sell 'em right away, before they hit their first losing streak.)
  
  
• When its financial engineering has been completed, the Zell deal will apparently burden Tribune with nearly $13.5 billion in debt.
  
  
• For Zell and his minions, newspapers may prove far more difficult to effectively manage than real estate assets. With more and more Americans getting their news from the Internet, ad revenues and circulation figures for publishers in general appear destined to continue their slide.
  
  
• With Tribune snapped up, many other publishers -- from industry leader Gannett (NYSE: GCI) on down -- could ultimately succumb to privatization as well. Being a public company amid unavoidably declining circumstances is hardly ideal.

After McClatchy's (NYSE: MNI) purchase of Knight Ridder last year, Tribune will apparently become the second major publisher to depart from Wall Street. Though others will likely follow, Fools would be well-advised to read about the action in their newspapers, but remain financially uninvolved.

Further fishwrap Foolishness:

• Will All Newspapers Fold?
• Scripps May Throw Papers
• An Opportunity for Innovation

Fool contributor David Lee Smith does not own shares in any of the companies mentioned. He welcomes your questions and comments.