Tribune Co. planning to switch ESOP to profit-sharing program

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., which 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 open to all employees.

The move comes after Tribune creditors turned 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.

Tribune will end the ESOP once it emerges from bankruptcy, Chief Administrative Officer Gerald Spector said in a memo to staff Tuesday.

Last week, Zell said in a Bloomberg Television interview that with "some reasonable luck," the company would emerge from bankruptcy by the end of the first quarter of 2010. He also said the future of the newspaper industry is bleak -- and potentially profitless.

Tribune owns the Chicago Tribune, Los Angeles Times, the Sun of Baltimore and other dailies, along with 23 TV stations.

Staff reports, with

Bloomberg contributing