Behold, The Sun King

For just a moment there, Sun staffers had a glimmer of hope for the city's most venerable newspaper. The Sun's parent company, Chicago-based Tribune, bought back more than $4 billion in shares in order to go private, then sold controlling interest to Chi-town real estate tycoon Sam Zell.
Instead, there's only more nervousness, more trepidation, and more buyouts (50 more in April), courtesy of Tribune.
The question now for Sun staffers is how much patience Zell—who will own a 40 percent share of Tribune's assets when the $8.2 billion deal is done, making him board chairman—will have while he tries to re-energize his piece of an industry some say is going the way of the Hula-hoop.
The tough-talking Zell, 65, thinks one key to saving newspapers is finding a way to stop free access to the news through the Internet. And he did tell Chicago Tribuneeditors in April that he bought Tribune Co. as a long-term investment . . . though he seemed just as concerned about where he could park his motorcycle.
Asked how The Sun'sreturn to private ownership by Zell will affect that paper's prospects, Tom Kunkel, dean of the Philip Merrill College of Journalism at the
University of Maryland, and a veteran of the daily newspaper industry, says the definitive answer is "Who knows?"
"You'll see fairly early the sense of any new owner's commitment: If profitablity is the goal, you'll see cuts right away," he says. "But if not, you might see patience and commitment."
Will Zell sell the paper? Not soon:There's a lot of money at stake. At No. 52 on the Forbes list of richest people (he's worth about $4.5 billion), Zell's resources are considerable, but not inexhaustible—and he's acquiring a lot of debt from Tribune (about $5 billion). To alleviate taxes—and insulate Zell—the deal involved an employee stock ownership program (ESOP), which gives employees 60 percent of the stock. ESOPs are good because they soften tax burdens, but the trade-off is massive taxes on asset sales until a decade has passed. So there's little likelihood of Zell quickly selling former Tribune properties (Tribune announced it would sell the Chicago Cubs baseball team; it also owns over 30 newspapers and TV stations).
UM's Kunkel stresses that newspapers are wounded, but not dead yet. "It's an industry that kills itself with doom and gloom," he says. "These properties still throw off a ton of money, and the margins are still terrific. A 14 percent margin would be on the low side for a major newspaper, which is large compared to manufacturing. It's still a very good business, and it will be for some time."
Plus, "there's a tremendous romance to a lot of people in the publishing industry," says Kunkel. "There's power, ego, and sheer romance."