TPM Reader JM — a recent escapee from the industry — comments …
The most depressing thing I’ve heard in a while was Wall Street Journal reporter Shira Ovide on Chicago public radio this morning describing Tribune Co.’s predicament. She pointed out that the Chicago Tribune itself actually has pretty good cash flow (relatively speaking) and some cash reserves. In other words, this is a company that should still be leading the industry – if it weren’t for its massive, crippling debt.
That debt comes from two of the worst decisions in recent corporate history. The first was Tribune’s purchase of Times Mirror in 2000 for the vastly inflated price of $8 billion, which made the company double down on old media without gaining any strategic benefit. The second bad decision piggy-backed on the first. Swooning from the fallout of the Times Mirror deal (including a very foreseeable $1 billion tax penalty), they paid another $8 billion to put a man who actively hates newspapers in charge of one of the nation’s biggest newspaper operations. What could possibly go wrong?
Just a thought experiment: What if the penalties for a CEO’s business failure were as extravagant as the rewards for success are? What if the executives who did this to Tribune Co. had known that the cost of failure would be the loss of all their assets, that they would be forced to start over with a $7/hour job? I have to think they would have been a little more responsible.
There’s at least something loosely parallel with McClatchy’s need to get rid of the Miami Herald. They’re loaded with debt from the purchase of Knight-Ridder.
