Before Sam Zell bought the Tribune Company last year, he said he was "skeptical" of using staff reductions to increase profit. He famously told the Los Angeles Times, "I promise you I did not come here to be the captain of the Titanic."

Since then, however, the newspaper industry's woes have intensified—and Zell has made numerous staff reductions at Tribune's newspapers, which in addition to the L.A. Times also include the Chicago Tribune and the Baltimore Sun. The outspoken Zell, who made his fortune investing in real estate, has dubbed the Tribune purchase "the deal from hell."

On November 12, Zell spoke with Condé Nast Portfolio editor in chief Joanne Lipman at Quadrangle Group's Foursquare media conference, where, true to form, he came out swinging against journalistic icons. He declared the worthlessness of Pulitzer Prizes ("I haven't figured out how to cash in a Pulitzer Prize"), said the newspaper business model is "unequivocally...a failure," and challenged New York Times publisher Arthur Sulzberger, saying "If you want to be a charitable trust, be a charitable trust. If you don't want to be a charitable trust, then you've got to focus on producing a return for investors' capital, and it's just that simple."

Zell also talked about running spadias (ads that wrap around an entire newspaper section) and said that comparing Tribune's advertising declines to that of other newspaper companies is "comparing leprosy to cancer."

The Foursquare conference was an off-the-record event; Sam Zell and event organizers agreed to put this transcript on the record.

EMCEE: Thank you, gentlemen. And now Sam Zell will be in a conversation with Joanne Lipman.

JOANNE LIPMAN: All right. Welcome, Sam Zell. It's great to have you here. Thanks very much. You barely need introducing, but a quick recap. Sam, of course, made his reputation buying up distressed real estate, earning himself the nickname, "The Grave Dancer." In his more recent incarnation as a media mogul, that nickname might be more apt than ever. Last year, Sam, of course, bought the Tribune Company, which owns newspapers and local television stations, for $13 billion. Since then, the newspaper industry, as we all know, has been in a free fall, and Tribune properties, which include the L.A. Times, the Chicago Tribune, the Baltimore Sun, and the Orlando Sentinel, have also been in a free fall, along with the rest of the industry. And so it's apropos that we talk with Sam today. And everybody here wants to know the same thing, which is: If you knew then what you know now, would you have made this deal?

SAM ZELL: Well, obviously, the newspaper business and advertising, generally, has gone off a cliff. And it didn't go off a cliff in October or September. It went off the cliff in January. When we looked at the historical numbers, we saw an average erosion of about 3 percent. At the time we underwrote the transaction, we used a 6 percent erosion.  And the last time I checked, 19 percent erosion is bigger than 6.

JOANNE: Yeah.

SAM: And so it's just a whole new ballgame. Just like if you asked the guy would you have stepped on the tracks if you'd known the train was coming, the answer is no. But once the train is here, you've got to deal with it.

JOANNE: Right. Would you actually have gone into the newspaper industry, or would you simply have wanted to adjust the price accordingly?

SAM: I don't think that I ever woke up in the morning and said, "I want to own a newspaper." I think that the attraction to the Tribune deal was the ability to put the deal together, to apply a business patina to what has historically been a nonbusiness business, and ultimately test the thesis as to whether or not there is a place for the newspaper in the 21st century.

JOANNE: And the answer to that question would be what? Is there a place for the newspaper?