“I’ve had offers on every single asset in the [Tribune] portfolio. Chuck Schumer”—the New York senator—“calls me, because he’s hustling for some people who want to buy Newsday. Baltimore people are calling, Allentown’s calling, Florida’s calling, and, in L.A., David Geffen and Eli Broad. So all I can tell you is that for a dead industry with no future there are an awful lot of schmucks who want to take it away from me!”
Zell on business:
Randy Michaels, whom Zell hired as Jacor’s C.E.O., recalled his first meeting with Zell, in 1993. He wanted to acquire a [radio] station in Denver that was losing money and could probably be bought cheaply, for perhaps four million dollars. He showed Zell “a deal book that looked like the Manhattan white pages. He said, ‘Oh, no! Put it on one piece of paper or you don’t understand it!’ He threw the book on the floor.” Michaels told Zell that he thought they could buy the station for the value of its license, or less. “He said, ‘Listen, business is easy. If you’ve got a low downside and a big upside, you go do it. If you’ve got a big downside and a small upside, you run away. The only time you have any work to do is when you have a big downside and a big upside. So why would you put a book together for something like this?’
Zell's argument for diversification:
Zell had hired a college professor to interview his parents and write a history of their escape from Poland. After his mother, Rochelle, died, in 2000, Zell sent the manuscript to several friends. He has resisted making it public, though, saying that, as the chairman of public companies, he is willing to discuss his business but not his private life. Still, he acknowledged that his family’s history has had a great effect on him. “How could it not?” he told me. “I’m an immigrant’s kid. I have a very different perspective on the world than somebody who grew up in Chicago and led what I would call a normal life. I think that being Jewish means that you’re vulnerable forever. Was there a stronger Jewish community anywhere in the world—more intellectual, more successful—than Germany in the late twenties and early thirties, before Hitler? And seven years later they’re building concentration camps! So, do I expect something like that to happen in the United States? Of course not. Do I think it could? Absolutely.”
That conviction is reflected in his foreign investments, many of which are in countries that he views as potential havens. “It means I’m diversifying my exposure,” he said. “A good thing to do, under almost any circumstances.”
But as Buffett says, diversification can be viewed as a protection against ignorance, and is to be avoided by the know-something investor. As successful as Zell has been, he is not infallible:
In July, 2006, Steven Roth, the chairman and C.E.O. of Vornado Realty Trust, approached Zell to discuss a merger of Vornado and Equity Office Properties Trust, the vast collection of office buildings which Zell had amassed over thirty years. Among Vornado’s direct competitors, Equity Office was one of the lowest-performing real-estate investment trusts. Zell had believed that owning a huge number of office buildings in each of the nation’s top twenty-five cities would prove more lucrative than owning a few buildings in select cities. This turned out to be a mistake.
