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Zell Tribune Buyout May Signal Newspapers’ Concession of Internet News 4/2/07

Posted by Steve Boriss in Competition, Money.
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When looking back a few years from now, today’s announcement that Chicago real estate mogul Sam Zell successfully bid for the Tribune Company may be seen as a turning point, after which newspapers ultimately conceded their potential leadership of Internet news in favor of profits. In an industry without a credible vision in sight for rebuilding circulation and increasing advertising revenues, Zell, a master of recognizing undervalued properties, is almost certainly going to restore value to this struggling operation by reducing costs rather than building revenues. Most likely this means that two of America’s most prominent papers, the Chicago Tribune and Los Angeles Times, will greatly reduce staff and increasingly outsource stories to the AP, as highlighted by The Street’s Jim Kramer. If Zell achieves his goal, he and the other private owners will profit handsomely, creating possibly the only successful model to restore profitability to newspapers. In the process, the newspaper industry will concede online news to entrepreneurs unburdened by legacy infrastructures, costs, and labor unions.

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