Tribune Co. ending ESOP plan for employee profit sharing

The controversial employee stock-ownership plan at the center of Sam Zell's 2007 purchase of Tribune Co. is about to be converted into a profit-sharing plan.

Tribune Co., the newspaper publisher that filed for bankruptcy protection in December, said it will replace the employee stock-ownership plan it began in December 2007 with a profit-sharing program.

The move comes just months after Tribune creditors began to turn up the heat on Zell by threatening an investigation of the leveraged buyout he used to take over the company.

The creditors asked the federal bankruptcy court in August for authority to hire an outside law firm to probe Zell's $8.2 billion deal. Zell took on debt to fund the takeover of what had been a publicly traded company, but the worst market for advertising since the recession forced the media conglomerate into bankruptcy last December.

The publisher will end the so-called ESOP once it emerges from bankruptcy, Chief Administrative Officer Gerald Spector said in a memo to staff today. Tribune employees were each allocated a portion of the company when it was taken private for $8.3 billion by billionaire Zell in 2007.

Zell said last week in an interview on Bloomberg Television that with "some reasonable luck," the company will emerge from bankruptcy by the end of next year's first quarter. Though Zell also said in that interview that the future of the newspaper industry is a bleak, and potentially profitless one.

Tribune, which owns the Chicago Tribune, Los Angeles Times, the Sun of Baltimore and other dailies, along with 23 TV stations, filed for bankruptcy protection in December because of dwindling ad revenues and a crushing debt load of $13 billion. Much of that debt was amassed when billionaire Sam Zell took the company private in 2007.

All employees will be eligible for a discretionary profit- sharing plan, Spector said. He didnít provide details of that program.