Stop the presses! Over-leveraged Tribune Corp. files bankruptcy

My first job out of college was working for the Tribune Co.-owned Sun Sentinel and late-lamented Fort Lauderdale News. As a woman among many men, I was in charge of helping put out all the most trivial news -- the 24-page Sunday bridal sections and the 36-page Wednesday food sections.

It was hard to just find enough stuff every week to keep the ads from bumping together. There were so many ads in those newspapers that one of the baffling management problems was how to fit enough copies in a newspaper carrier's bag so that he could get the papers delivered on time.

Those days are long gone. Today, the Tribune Co. declared bankruptcy. Chairman and CEO Sam Zell blamed "a precipitous decline in revenue."

In short. Not enough ads.

Newspapers don't bring in the piles of money they once did. Too much competition, for one thing. Switching to an online format is only part of the answer. Readers still want ink on paper. Print editions bring in 92% of the overall revenue, according to the Newspaper Association of America as reported in The New York Times.

Persuading readers to see it differently, so papers can get rid of printing plants, ink by barrel and distribution trucks would certainly make a difference, but the key is learning to sell ads online -- lots of them.

In an interview last month in Portfolio magazine, Zell pointed out that his newspaper company is only one of many in financial distress. He told skeptical interviewer Joanne Lipman that comparing the Tribune's advertising declines to that of other newspaper companies is "comparing leprosy to cancer."

Zell whined that too many newspapers operate like charities. "Every piece of a newspaper has to be economically evaluated, because, in the end, we're not an eleemosynary institution, even though most of the newspapers have been run as one," he says.

Zell's right. You can't confuse running a newspaper with running the Red Cross, but neither can you expect those printing presses to just print money. The $13 billion mountain of debt that's driving the bankruptcy is the result of the deal Zell struck when he bought The Tribune a year ago with borrowed money. Zell leveraged the Tribune until its debt load was 11 times its annual earnings before interest, taxes, depreciation and amortization, Standard & Poor's calculates.

Watching some of the greatest newspapers unravel is painful for those of us who spent most of our lives in the business and believe in its power to make the world better. Some people say the newspaper revenue model is broken. I don't think that's true.

The smallest, cheapest display ad in a newspaper is generally known as a 2x2 -- two columns by 2 inches. Selling them is tedious work. In the best of times, it takes thousands of phone calls and a lot of knocking on doors. Beyond that, it requires smart allocation of resources to woo advertisers who come to understand that placing their ads next to well-crafted content will pay off for them.

No, newspapers aren't charities, but since the beginning, they've been a place where people do well by doing good. Too bad Zell doesn't understand how it works. Now, he's botched his chance.