CHICAGO -- Tribune Co. Chairman, President and Chief Executive Officer Dennis J. FitzSimons announced his resignation yesterday, as the media company completes its $8.2 billion deal to go private under Chicago billionaire Sam Zell, who is expected to take over as CEO.
That deal, expected to close today, will pass control of the media conglomerate to Zell, who, under a prior arrangement, will then become Tribune's board chairman.
A source at Tribune said Zell would also become chief executive. A spokesman at Tribune would not confirm that, and a spokeswoman for Zell could not be reached.
Tribune sources said Randy Michaels, who worked with Zell to make Jacor Communications Inc. a mammoth radio concern in the 1990s and became head of radio for Clear Channel Communications when it acquired Jacor, is expected to be named head of the company's broadcast and Internet operations. The company wouldn't confirm whether that plan was in the works.
Also expected to play a key executive role under Zell is Gerald A. Spector, executive vice president and chief operating officer of Equity Residential, according to a Tribune source. Zell is chairman of publicly traded Equity Residential, one of the largest owners and operators of multifamily real estate in the U.S.
Under terms set when he crafted the buyout deal in April, Zell's investment in Tribune will rise to $315 million from $250 million, and he will own warrants to buy about 40 percent of the company, which will be formally owned by an employee stock ownership plan.
"Dennis FitzSimons has provided Tribune with outstanding leadership through a challenging environment," Zell said in a statement. "He helped build the company into one of the nation's premier media businesses, and has been instrumental in guiding Tribune to the closing of this historic transaction."
According to public documents, FitzSimons will leave the company with $38.3 million in severance and stock holdings.
When FitzSimons, 57, took the helm in 2003, he became the first Tribune broadcasting executive to rise to the top job, but he will likely be remembered as the chairman who lost control of one of Chicago's most conservative, iconic institutions.
FitzSimons inherited a company struggling to integrate an $8 billion merger with Times Mirror Co. The merger added newspapers such as the Los Angeles Times, The Sun and New York's Newsday to a stable of media and entertainment assets that included the Chicago Tribune and the Chicago Cubs.
Detractors say he clung to old newspaper and television business models and never articulated a clear vision for how the company could compete against an onslaught of digital media. Instead he focused on cost-cutting to meet Wall Street earnings targets, a stance that led to an embarrassing mutiny by the editor and publisher of the Los Angeles Times, his largest business unit.
Tribune shares initially fell more than 6 percent on investors' nervousness about a potential last-minute snag in banks signing off on the buyout. But the stock recovered after the announcement that FitzSimons is leaving and the closing appeared to be on track.
Tribune shares declined 24 cents to $33.07 in trading yesterday. Zell's deal in April was based on a price of $34 a share.
Phil Rosenthal writes for the Chicago Tribune. The Associated Press contributed to this article.