April 2 (Bloomberg) -- Billionaire Sam Zell said he agreed to buy Tribune Co., owner of the Chicago Tribune and Los Angeles Times, for about $8.2 billion, thwarting rivals Ron Burkle and Eli Broad.

Zell said in an interview he will pay $34 a share for the newspaper publisher after raising his bid from $33 yesterday. Zell said via telephone that he plans to sell the Chicago Cubs baseball team once the deal is done.

The offer matched the $34 a share that Burkle and Broad had bid last week. The auction of Tribune stretched for six months and was marked by tepid interest before a last minute bidding war. The deal with Zell will end more than two decades of public ownership of the second-largest U.S. newspaper company and will put nine newspapers, 23 television stations in the hands of a 65-year-old property magnate.

``It's been a difficult time for newspapers, and for Tribune it's been like pushing a rock uphill to get a higher sale price,'' said Steven Barlow, an analyst at Prudential Equity Group. The New York-based analyst, who has an ``underweight'' rating on the shares and doesn't own any, estimated in June the stock was worth $43 a share in a breakup.

While the price is 6 percent above Chicago-based Tribune's close last week, it is in line with where the shares were trading in September after the company put itself up for sale. At the time, analysts had estimated the company could fetch $55 a share.

Shares of Tribune, which ranks second to Gannett Co. among newspaper publishers, rose $1.04, or 3.2 percent, to $33.15 in early New York Stock Exchange composite trading. They had dropped almost 30 percent in the two years before putting itself up for sale.

Chandler Pressure

Tribune's board met over the weekend as the company's self- imposed deadline of March 31 passed. Zell said he raised his offer yesterday and directors accepted the deal at a meeting last night.

Directors had been always leaning toward a deal with Zell, a Chicago native, even though Burkle and Broad's offer of $34 a share, or $8.2 billion, was initially higher.

Zell, who sold Equity Office Properties Trust, his hometown- based real estate investment trust, to Blackstone Group LP for $39 billion, said last month that he plans to keep the company intact.

Chief Executive Officer Dennis FitzSimons put the company up for sale under pressure from the Chandler family, which became a shareholder with the 2000 sale of Times Mirror Co. to Tribune. The family is now the largest investor.

Zell Vs Burkle, Broad

Zell's interest in Tribune didn't emerge until February, after a deadline for bids had passed and an initial bid by Broad and Burkle and an offer from the Chandlers failed to meet the company's goal.

Burkle, 54, and Broad, 73, made an 11th-hour effort to wrest back the deal, changing their offer to include an employee stock ownership plan that would help finance the transaction and reduce the amount of debt assumed by Tribune.

The board had considered a ``self-help'' plan to spin off the TV stations and borrow money to pay a special dividend to shareholders. That plan lost momentum when Tribune's operating results deteriorated.

Tribune said this month that newspaper advertising fell 5.1 percent in February to $233 million, led by a 13 percent drop in classifieds.

Failure?

The Chandler family will sell its 20 percent stake in Tribune, ending 125 years of ownership in the Los Angeles Times.

The Chandlers, who sold Times Mirror for $7.6 billion, called for a breakup of the company after saying its strategy of cross-ownership of newspapers, TV stations and Web sites in the biggest U.S. markets ``has failed.''

Tribune traces its roots back to 1847 with the creation of the Chicago Daily Tribune. Joseph Medill became editor and part owner in 1855. His grandson Robert McCormick, known as ``The Colonel,'' ran the company from 1920 until his death in 1955, expanding into more newspapers and television stations.

The company went public in 1983 at $26.75 a share, equivalent to $3.34 after stock splits. It peaked at $60 in October 1999 before slowing ad sales prompted its descent.

Ad Declines

Tribune's decline in advertising revenue has been reflected across the industry. Ad sales at the four largest U.S. newspaper publishers, including New York Times Co., Gannett Co. and McClatchy Co., fell an average 5 percent last month from February 2006. Knight Ridder Inc. sold itself to Sacramento, California- based McClatchy last year after pressure from shareholders to boost its stock price.

``The general thesis back in the '90s was that you could combine media properties like newspapers and broadcasters very easily,'' said Hal Vogel, an independent media analyst in New York. ``Then the Internet came along and now we have two dysfunctional businesses, and a lot of finger pointing and retribution between Tribune shareholders and management.''

Tribune won't be the first media purchase by Zell.

In the 1990s, Zell and a Chicago investment banker bought control of radio company Jacor Communications for about $79 million. When Clear Channel Communications Inc. bought Jacor for $4.4 billion in 1999, the Zell/Chilmark Fund LP earned a profit of more than $1 billion.

More Optimistic

Zell said this month that he is more optimistic about the industry than others.

``I'm not quite as bearish as most people about the print side of the business,'' Zell said in a March 12 interview. In the same interview, Zell said he didn't have any interest in influencing editorial policy, saying his main concerns were ``solely economic.''

Zell will jettison the Cubs because he already owns a share of the Chicago White Sox Major League Baseball team.

Tribune agreed this month to sell the Stamford Advocate and Greenwich Time to Gannett Co. for $73 million as part of a separate, yearlong effort to sell $500 million in assets and concentrate on its larger holdings.

The company will be left with nine newspapers, including Newsday in New York, the Baltimore Sun and the Chicago Tribune.

The Chandlers had proposed acquiring the company's newspapers in a tax-free exchange for the family's roughly $1.4 billion stake in the company and a $19.30 payment to shareholders.

To contact the reporter on this story: Leon Lazaroff in New York at llazaroff@bloomberg.net

Last Updated: April 2, 2007 08:38 EDT