So, one of the largest media companies in the world has filed for bankruptcy.

A lot of people will say that this shows how badly newspapers are hurting as a business, and they are wrong.

Sam Zell’s model was as follows:

• Borrow lots of money to buy company.
• Borrow lots of money to expand company.
• Borrow lots of money to go private.
• Attempt to maintain a positive balance sheet by gutting the product to cut costs.
• Fail.

This is a model of someone who does not believe in the product. This is passenger rail in the 1960s, when the railroads decided that they could not compete, so they sucked money out of the operations in order to buy other things, and created a product that no one wanted to buy.

Wall Street has been demanding profit margins in excess of 25%, and you cannot do that and deliver a good product, so they achieve it for a while delivering a bad product, and people like Sam Zell talk about cutting the fat.

The only fat here is between Sam Zell’s ears.