A fews weeks ago I was chatting with a Tribune Co. editor about the resale value of his office within the Tribune Tower. We joked that the space will be worth a couple of million dollars, once Sam Zell figures a way to convert "The Tower" into condos.
That's no joke anymore.
Today, Zell informed the troops what he's already told creditors -- everything the Tribune Co. owns is in play.
This is especially true of the media concern's "hard assets" such as office buildings, printing plants, TV stations and anything else that will tip the interests of developers and real estate investors.
Tribune CEO Zell says he's in no hurry. By that he means the company won't be pressured into selling anything at a fire sale price in order to meet its hefty debt repayments and other obligations (which are in the multi-billions). Instead, Zell will seek to maximize the value of every parcel, while minimizing the impact of taxes.
That's how you get to be a billionaire.
A Tribune Tower transaction could be sliced a couple of ways.
The Tribune Co. could sell outright and lease back the space on a long term basis. Or it can sell and agree to vacate in a couple of years for cheaper office space somewhere in the area. God knows there's plenty of such space around.
Or it could maintain an equity stake and partner with a developer who turns the place into a high-end condominiums/retail palace on North Michigan Ave. Maybe they end up calling it "435 Mich Plaza", or something kitschy like that.
(You don't knock down the actual Tribune Tower, but perhaps redevelop the land that's immediately east of the building. And nagging details, like zoning restrictions, can always be hammered out, eh?)
One thing is certain, the day when newspaper companies reside in Stately Wayne Manor is done. Already many newspapers are located in industrial parks or, like the Chicago Sun-Times, are operating from rented office space.
The Los Angeles Times' building complex, also owned by TribCo., is on the chopping block, too.
I suspect Zell's people are busy sizing up the other Tribune properties with an eye toward selling them or "maximizing" their value. So look for further consolidation of news operations under more affordable roofs, and the eventual dismantling or consolidation of printing operations.
I won't even get into outsourcing copy editing and other centralized editorial and business functions like the Orange County Register.
None of this should comes as a huge surprise. Since taking control of the Tribune Co., Zell has basically said that he's open to selling anything and everything at the right time and for the right price.
Going forward, the question is this: Will Zell plow money from real estate sales back into saving and improving Tribune Co.? Or is this just a thinly-veiled, albeit orderly, liquidation playing out before our very eyes?
Either way, I see condos in the Tribune Tower's future.