Dennis J. FitzSimons, the chairman and chief executive officer of The Sun's parent company, was visibly relieved Monday when he told 20,000 Tribune employees that a protracted search for a buyer for the company had finally ended. As many of the more than 1,200 who work at The Sun joined thousands watching on closed-circuit TV, FitzSimons explained that the company had in fact found two buyers - Sam Zell, a Chicago businessman who made billions in commercial real estate, and the employees of Tribune itself.
The $8.2 billion deal means that Zell will invest a relatively modest $315 million of his own money to become a partner with Tribune employees, who will be the majority owners through an employee stock ownership plan, or ESOP. Since the deal was announced, the agreement has generated a number of news articles in The Sun and in newspapers and on Web sites across the country.
The sale clearly marks a turning point. But the future remains uncertain for The Sun and the rest of Tribune's newspapers, which include the Los Angeles Times, Newsday and the Chicago Tribune. The good news is that the new Tribune Co. will be privately held, and thus relieved of the relentless scrutiny from Wall Street and the pressure to maintain high short-term profit margins.
Still, the buyout of existing shareholders is expected to add more than $4.5 billion to the company's already heavy debt burden. Paying off those loans while finding resources to invest in the newspapers and their Web sites will be a daunting challenge, given the continuing decline in newspaper advertising revenues.
The Sun's new publisher, Timothy Ryan, has said that budget cuts requiring staff reductions will be necessary in coming months because the newspaper is not meeting its revenue goals.
So while the company's status has been decided, Tribune employees in Baltimore and elsewhere are likely to remain worried about losing their jobs for the foreseeable future. FitzSimons, however, will remain as president and CEO and reportedly will receive a more than $20 million payout. Zell will become chairman after the deal is completed.
In my view, Ryan and Editor Tim Franklin are fortunate that The Sun's journalists understand the need to adapt and reshape the company: to make baltimoresun.com a long-term success while continuing to produce the best possible newspaper for its readers. But with more staff reductions looming, The Sun's foundation of local, regional and statewide coverage will more than ever be challenged to meet its own expectations.
As The Sun's Nick Madigan and Hanah Cho reported in their April 3 front-page article, concern about the cumulative effect of continuing cutbacks amid ownership changes is growing. Mike Hoyt of the Columbia Journalism Review told the reporters: "The danger is that newspaper owners will 'eat their seed corn,' that is, cut back so deeply that they destroy their chances of long-term survival because they eventually produce a paper that has so little value that readers drop it."
Reader Calvin Billingsley said: "After reading the articles in The Sun and other papers about the Tribune sale, I can't help but think that the value of what newspapers bring to a community and what they mean for our democracy is no longer much of a consideration. Whether one likes and subscribes to The Sun or not, I think people should care about the future of newspapers being able to fulfill their responsibilities."
Of course, Tribune and The Sun are not alone in confronting the challenges of a rapidly changing media market. Newspapers and their owners across the country are struggling with the same issues. Yet what is especially frustrating for Sun employees is the uncertain nature of Tribune's immediate future.
Journalists who work for newspapers that have been purchased by established media companies have a good idea about what the mission will be. But Tribune workers will have to wait for more detailed answers. Many who work at The Sun also are upset that they were not consulted about the ESOP plan and the fact that they and other Tribune workers will absorb much of the financial risk in this uncertain media environment.
At present, Zell has yet to offer any detailed views about newspapers other than his belief that they are an "undervalued asset." He did tell the Chicago Tribune that "being relevant" is the key to the future success of Tribune. He also has said that he initially plans to keep Tribune - with its nine newspapers and 23 television stations - intact. The exception is the planned sale of the Chicago Cubs baseball team by the end of the year, which will help pare down the company's debt.
What is happening at The Sun and Tribune reflects the volatile and often ruthless nature of American business in the 21st century. After writing about this business climate for years, newspapers are now experiencing it firsthand.
Said reader Dave Lentz: "I'm not sure what it means for you guys at The Sun, but I know that Mr. Zell got a hell of a deal."
Paul Moore's column appears Sundays.