CNBC EXCLUSIVE: CNBC TRANSCRIPT: CNBC'S MARIA BARTIROMO INTERVIEWS BILLIONAIRE INVESTOR & TRIBUNE OWNER SAM ZELL ON CNBC'S "CLOSING BELL" TODAY

WHEN: Today, Wednesday, December 10th at 3:15 PM ET

WHERE: CNBC's "Closing Bell"

Following is the unofficial transcript of a CNBC interview with Billionaire Investor & Tribune Owner Sam Zell, on CNBC'S "Closing Bell" today.

All references must be sourced to CNBC.

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MARIA BARTIROMO: LET ME KICK IT OFF WITH TRIBUNE. OF COURSE IT HAS BEEN A ROUGH ROAD HERE. THE COMPANY HAS ASSETS OF $7.6 BILLION, BUT DEBT OF 12.9 BILLI0N. SAM, WHAT WENT WRONG?

SAM ZELL: I THINK THAT, IN THE MOST SIMPLISTIC TERMS, WE LOOKED AT THE TRIBUNE BEFORE WE MADE OUR OFFER. IT HAD BASICALLY ERODED AT ABOUT A 3 PERCENT LEVEL IN THE PREVIOUS FIVE YEARS. WE UNDERWROTE IT AT A 6 PERCENT AND WE ENDED UP WITH 20. AND IN AN OPERATING LEVERAGE BUSINESS LIKE THIS, 20 PERCENT REDUCTION IN GROSS REVENUE IS A DISASTER IN A CASH FLOW LINE. AND IN THE END MY RESPONSIBILITY IS TO PRESERVE THE VALUE OF THE COMPANY AND TO MAKE SURE THAT IT WILL GO ON INTO THE FUTURE. AND OUR ACTION WAS PRE-EMPTIVE IN NATURE SO AS TO PRESERVE THE ASSETS OF THE COMPANY AND CREATE THE OPPORTUNITY FOR A REORGANIZATION.

BARTIROMO:SO,TELL ME ABOUT THAT REORGANIZATION. DO YOU FEEL YOU HAVE ENOUGH CASH RIGHT NOW TO OPERATE IN BANKRUPTCY?

ZELL: YES. THE COMPANY HAS A SIGNIFICANT POSITIVE CASH FLOW, AS LONG AS IT'S NOT, OBVIOUSLY MAKING ITS DEBT PAYMENTS.

BARTIROMO: DO YOU THINK THERE WILL BE MORE JOB CUTS AHEAD OR HOW SPECIFICALLY ARE YOU PLANNING TO RESIZE THE BUSINESS TO FACE THE ECONOMIC REALITIES?

ZELL: WELL I THINK THAT WE HAD BEEN RESIZING THE BUSINESS ALL YEAR LONG. AND I IMAGINE THAT GOING FORWARD WE NOW HAVE THE TIME TO REALLY FOCUS ON WHAT I CALL BROADER ISSUES AND ISSUES OF CONSOLIDATION, TAKING ADVANTAGE OF THE POSITION WE'RE IN, IN VARIOUS MARKETS WHERE IN FACT WE CAN CREATE AN OPPORTUNIT ONE PLUS ONE EQUAL THREE.

BARTIROMO: SO HOW MUCH OF A ISSUE WAS THE BACKDROP, THE TOUGH ENVIRONMENT WITH, REALLY, A FUNDAMENTAL SHIFT IN THE BUSINESS VERSUS ISSUES AT TRIBUNE?

ZELL: I THINK THAT HAD WE HAD A 2007 OR 2006 YEAR, WE WOULD NOT HAVE HAD ANY ISSUES AT "THE TRIBUNE." BUT UNDER THE CIRCUMSTANCES IT WAS LIKE A GIANT TSUNAMI OR PERFECT STORM. AND WHEN YOU LOSE THAT KIND OF REVENUE, THERE'S NO WAY TO OVERCOME IT.

BARTIROMO: SAM, WHEN WE TALKED A YEAR AGO WHEN YOU FIRST WERE MAKING THE ACQUISITION, WE TALKED ABOUT THAT EMPLOYEE STOCK OWNERSHIP PLAN, ESOP, CREATED IN THE BUYOUT, THE PRIVATE COMPLETION, WITH THE BANKRUPTCY, A LOT OF PEOPLE ARE SAYING ESOP IS WORTHLESS. IS THAT TRUE?

ZELL: OH, I DON'T THINK SO AT ALL. I THINK THE ESOP STRUCTURE WILL DRAMATICALLY BENEFIT THE RECOVERY AND THE REORGANIZATION OF "THE TRIBUNE."

BARTIROMO: SAM, LET ME ASK YOU ABOUT THE ISSUES OF THE DAY AND OBVIOUSLY BIG NEWS OUT OF ILLINOIS, THE GOVERNOR CHARGED WITH TRYING TO SELL PRESIDENT-ELECT BARACK OBAMA'S SEAT AMAZINGLY, ACCORDING TO PROSECUTIRS. REPORTS THAT THE GOVERNMENT AND THE CHIEF OF STAFF THERE IN THE GOVERNOR'S OFFICE SOUGHT TO FORCE THE FIRING OF MEMBERS OF "THE "CHICAGO TRIBUNE," TRUE?

ZELL: I'M NOT PERSONALLY FAMILIAR WITH ANY OF THAT. AND CONSIDERING THE FACT, MARIA, THAT THIS IS AN ONGOING CRIMINAL INVESTIGATION, I WOULD FEEL RETICENT TO COMMENT ACCORDINGLY.

BARTIROMO: HAVE YOU BEEN CONTACTED BY THE FBI, SAM?

ZELL: YES.

BARTIROMO: AND THEY'RE LOOKING TO SEE IF THERE WAS ANY PRESSURE CLEARLY ON THE "TRIBUNE" STEAFF?

ZELL: I THINK THEY'RE ASKING QUESTIONS, AS FAR AS MY KNOWLEDGE IS CONCERNED. THE "TRIBUNE" DID NOT RESPOND AT ALL.

BARTIROMO: AND AS FAR AS YOU'RE CONCERNED, WAS THERE PRESSURE ON THE STAFFERS TO CHANGE COVERAGE?

ZELL: I CERTAINLY CAN'T SPEAK TO THAT.

BARTIROMO: ALL RIGHT. SAM, LET ME ASK YOU A LITTLE BIT MORE ABOUT BUSINESS HERE. YOU HAVE A GREAT VANTAGE POINT IN TERMS OF CERTAINLY IN THE "TRIBUNE" AS WELL AS IN REAL ESTATE. CAN YOU CHARACTERIZE WHERE WE VERY IN THE REAL ESTATE CYCLE AS WELL AS THE ECONOMIC SLOWDOWN? WHAT ARE YOU SEEING?

ZELL: WELL, FIRST OF ALL, I THINK THE BIGGEST PROBLEM EVERYBODY HAS RIGHT NOW IS THE LACK OF VISIBILITY. IT'S VERY HARD TO PREDICT HOW THE ECONOMY WILL RESPOND NEXT YEAR. PERSONALLY I BELIEVE THAT THE HOUSING CRISIS HAS ALREADY PEAKED, AND I WOULD EXPECT THAT COME THE MIDDLE OF 2009 WE WILL HAVE SEEN A SIGNIFICANT ABSORPTION OF THE UNSOLD HOUSES OR FORECLOSED HOUSES. AND I THINK IT'S REALLY A QUESTION OF SUPPLY AND DEMAND. FOR THE LAST TEN YEARS WE PRODUCED ABOUT A MILLION, 600,000 OF HOUSES A YEAR. WE'RE NOW PRODUCING AT A RATE OF ABOUT 4 TO 500,000. BASED ON MY EXPERIENCE, WHEN SUPPLY STOPS, SUPPLY GETS ABSORBED, AND WE RETURN SLOWLY TO A MORE NORMAL MARKET.

BARTIROMO: LAST TIME WE SPOKE YOU WERE PRETTY CONFIDENT WE HAVEN'T SEEN THAT ALL THAT MUCH OF AN IMPACT TO THE COMMERCIAL SIDE OF REAL ESTATE. ARE YOU CHANGING YOUR TUNE, GIVEN THE ECONOMIC FUNDAMENTALS SEEMS TO BE WORSENING?

ZELL: I AM NOT -- I MEAN WHEN YOU LOOK AT COMMERCIAL REAL ESTATE, JUST LIKE THE RESIDENTIAL REAL ESTATE, EVERYTHING HAS TO COME DOWN TO SUPPLY AND DEMAND. AND WE HAVE NOT BUILT OR COMMITTED TO ANYTHING NEW IN THE UNITED STATES SINCE JULY OF '07. SO THAT WILL, IN MY OPINION, DRAMATICALLY CUSHION THE IMPACT OF THIS RECESSION ON COMMERCIAL REAL ESTATE. ALMOST EVERY OTHER TIME WE'VE HAD A RECESSION, WE'VE ABOUT GONE INTO THAT RECESSION WITH SIGNIFICANT OVERSUPPLY IN COMMERCIAL REAL ESTATE. THAT'S NOT THE CASE TODAY, AND SO ALTHOUGH WE ARE SEEING REDUCTIONS IN VALUES, PRIMARILY AS A RESULT OF NO FINANCING AVAILABLE, AT LEAST SO FAR AND CERTAINLY IN WHAT I WOULD CALL THE HIGH QUALITY REAL ESTATE, I DON'T THINK THAT A THERE'S BEEN ANY DIMINUTION IN CASH FLOW. ALTHOUGH OBVIOUSLY VALUE IS IN THE EYES OF THE BEHOLDER.

BARTIROMO: SAM, ZEROING IN ON THE CHICAGO CUBS AND THE WRIGLEY FIELD BALLPARK SALE, THEY'RE NOT INCLUDED THE BANKRUPTCY THAT WE'RE TALKING ABOUT TODAY IN TERMS OF TRIBUNE. AT THIS POINT,IS THE TEAM SALE AND TIMETABLE FOR THAT SALE STILL ON TRACK, ESSENTIALLY UNCHANGED OR HAS THAT CHANGED?

ZELL: NO. I HAVE NO REASON TO ANTICIPATE THAT THE SALE SCHEDULE WILL BE ANY DIFFERENT THAN WHAT WE'VE PREVIOUSLY ANNOUNCED. WE DID GET THREE FINAL BIDS. I BELIEVE IT WAS LAST WEEK. THERE WAS SOME SPECULATION IN THE NEWSPAPERS TODAY THAT THE FILING HAD SOMETHING TO DO WITH THE FACT THAT WE GOT INADEQUATE BIDS. NOTHING COULD BE FURTHER FROM THE TRUTH.

BARTIROMO: YOU KNOW, SOME ISSUES WERE RAISED THAT FEDERAL PROSECUTORS,YOU KNOW, SAY THAT THE ILLINOIS SITUATION ALSO IMPACTS THIS, THAT THE GOVERNOR'S OFFICE THREATENED TO WITHHOLD STATE ASSISTANCE TO TRIBUNE IN CONNECTION WITH THE SALE OF WRIGLEY PARK. IS THAT TRUE?

ZELL: WELL, I THINK THAT THE ISSUE THAT WE WERE ADDRESSING WAS WHETHER OR NOT A FINANCING STRUCTURE WHICH SEPARATED THE BALLPARK FROM THE TEAM MIGHT BE BENEFICIAL TO EVERYBODY INVOLVED, PARTICULARLY GUARANTEEING THE VIABILITY OF WRIGLEY FIELD FOR THE NEXT 30 YEARS. THAT DID NOT REQUIRE QUOTE/UNQUOTE ASSISTANCE, BUT IT WAS A QUESTION OF WHETHER OR NOT IT MADE SENSE OR NOT. AND WE NEVER REALLY GOT TO FIND OUT SINCE WE NEVER TOOK IT VERY FAR TO WHETHER OR NOT THAT WAS A VIABLE ALTERNATIVE.

BARTIROMO: LET ME ASK YOU MORE ABOUT WRIGLEY FIELD AND THE CUBS STORY HERE BECAUSE,YOU KNOW, EVEN THOUGH IT'S NOT TECHNICALLY PART OF THE BANKRUPTCY, SAM, A CUB SALE WOULD STILL HAVE TO BE APPROVED BY THE BANKRUPTCY JUDGE. SO WHAT IS THE IMPACT OF THE "TRIBUNE" BANKRUPTCY ON THOSE TWO?

ZELL: I DO NOT BELIEVE THAT THE CUBS TRANSACTION WILL BE IMPEDED BY THE BANKRUPTCY.

BARTIROMO: IN ANY WAY.

ZELL: I DON'T THINK SO.

BARTIROMO: WE WERE JUST TALKING A FEW MINUTES AGO ABOUT WHAT HAS OCCURRED IN FINANCIAL SERVICES, SAM AND YOU KNOW, YOU HAVE BEEN REALLY AN ACCURATE PREDICTOR OF WHAT HAS GONE ON. LET ME ASK YOU YOUR THOUGHTS ON HOW IT HAS BEEN POSSIBLE THAT WE FIND OURSELVES IN THIS POSITION WHERE THE FINANCIAL SERVICE COMPANIES ARE TEETERING AND WE'RE IN THIS SIGNIFICANT CREDIT CRUNCH. HOW HAS IT IMPACTED YOUR ABILITY TO RAISE CAPITAL?

ZELL: I THINK IT'S IMPACTED EVERYBODY'S ABILITY TO RAISE CAPITAL, AND SINCE OUR SYSTEM IS PREDICATED ON BOTH DEBT AND EQUITY, ONE OF THOSE ELEMENTS IS CURRENTLY MISSING, WHICH IS OBVIOUSLY IMPAIRING EVERYBODY'S ABILITY TO GO FORWARD IN TRANSACTIONS. SO I THINK THAT OVERALL THE BUSINESS COMMUNITY IS SUFFERING FROM THE FACT THAT CREDIT IS NOT REASONABLY AVAILABLE. ON THE OTHER HAND, I THINK IT IS VERY PREMATURE TO EITHER EXPECT OR ASSUME THAT THE PROGRAMS IMPLEMENTED BY SECRETARY PAULSON WOULD HAVE ALREADY HAD ANY KIND OF MAJOR IMPACT. I THINK THAT IT WILL TAKE TIME FOR THE T.A.R.P. FUNDING OF THE BANKS TO TRANSLATE INTO LENDING, BUT I THINK IT WILL HAPPEN, AND I THINK IT WILL HAPPEN AFTER THE FIRST OF THE YEAR.

BARTIROMO: FINAL QUESTION AS WE WRAP UP ON THE "TRIBUNE" BANKRUPTCY SITUATION. WHEN YOU MADE THE DEAL AND TOOK THE COMPANY PRIVATE A YEAR AGO, YOU DID HAVE SOME SKEPTICS OUT THERE SAYING THIS WAS THE DEAL FROM HELL, I THINK IT WAS ONE HEADLINE.

ZELL: NO. THAT WAS MY QUOTE. THAT WAS MY QUOTE.

BARTIROMO: EVEN WHEN YOU WERE --

ZELL: THAT WAS AFTER I WAS IN THE DEAL FOR THREE MONTHS.

BARTIROMO: AND THAT SOON INTO IT. DO YOU REGRET MAKING THAT DEAL?

ZELL: YOU KNOW, MY HEAD ONLY FUNCTIONS LOOKING FORWARD. I'M NOT REALLY VERY GOOD AT LOOKING BEHIND. AND SO CONSEQUENTLY I DON'T TEND TO REMINISCE OR, YOU KNOW, SELF-MUTILATE MYSELF AS A RESULT OF PAST DECISIONS. I THINK I MADE THE DECISION WHEN I MADE IT. I THOUGHT IT WAS AN APPROPRIATE INVESTMENT AT THE TIME. OBVIOUSLY CIRCUMSTANCES HAVE PROVEN THE OPPOSITE, BUT THIS, TOO, SHALL PASS.

BARTIROMO: WHEN YOU DO YOU EXPECT IT TO PASS? WHEN DO YOU EXPECT THE EMERGE FROM BANKRUPTCY AT THE "TRIBUNE?"

ZELL: I THINK IT'S A LITTLE EARLY TO ANSWER THAT QUESTION, MARIA. AS YOU KNOW, WE JUST GOT ORDERS TODAY. HOPEFULLY WE'LL FIND A SOLUTION IN THE NOT TOO DISTANT FUTURE.

BARTIROMO: SAM VERY GOOD TO HAVE YOU ON THE PROGRAM. WE SO APPRECIATE YOUR CANDOR.





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