Papers, Web firms need `a new deal,' Zell says

Journalists produce the news that search engines such as Yahoo Inc. and Google Inc. seamlessly and freely make available to anyone with a computer, Zell said during a presentation on corporate governance at Stanford University. "If all the newspapers in America did not allow Google to steal their content for nothing, what would Google do, and how profitable would Google be?" the Chicago real estate maverick mused.

His answer: Not very.

The title of Zell's talk was " 'Make Me an Offer': Sam Zell and the $39-Billion Buyout of Equity Office Properties." Zell sold the real estate firm he built into the nation's largest collection of office buildings after a heated bidding war in February.

He told his audience of Stanford Law School students that he liked serving on boards that were "pretty noisy," and where the directors tended to display "insufficient regard for the chairman."

"The more times I hear no one has ever done this before, the more likely I am to endorse the idea," he said.

But at a reception before and a Q&A session after his talk, most students wanted to talk about the Tribune deal. The Chicago company's holdings include the Los Angeles Times, KTLA-TV Channel 5 and the Chicago Cubs baseball team.

Zell tried to steer clear of the subject but couldn't resist tackling some questions. He said he had been in the news business for less than a week, so he wasn't a genius at it yet. Zell has made a fortune worth an estimated $4.5 billion by turning around distressed assets.

Told that many people didn't think that newspapers were a good business because of declining circulation and falling ad revenues, he fired back: "A lot of people didn't think the railcar business was a good investment. I made a quarter-billion dollars. A lot of people didn't think container leasing was a good investment. I made a half-billion. Should I go on?"

"The Tribune deal, no matter what happens, is not going to change my life," Zell said. "But it's a fascinating challenge. And it's even more of a challenge when I see other people haven't been successful in figuring it out."

He declined to talk to reporters, saying he was there for the students.