Mr. Zell is at one level very confused here, because most searches and the corresponding profitable sponsored links have nothing to do with news. However, at another level, Mr. Zell is making an important point, which is that the current arrangements on the internet do not provide a reliable way of compensating news outlets for their product. However, the problem is not caused by search engines. Any news outlet could avail itself of
robots.txt to stop being indexed. The problem is that the news outlets want to be found more than they want to protect their content, leading to an arms race in which outlets that block full access lose popularity compared with those that are open. In theory, a system in which outlets allowed themselves to be indexed but required some compensation for reading anything beyond a headline or snippet could address Mr. Zell's problem. Except that the system would not work if some outlets decided to be fully open, and a peace treaty among outlets to keep everyone's content restricted could well be illegal.
I can see how Mr. Zell would prefer to just get a kickback from the search engines when they show search results from news outlets. But the search engines don't profit directly from showing organic search results, just from the sponsored results, which may or may not have much connection with the organic results. And search engines already pay some outlets like the AP to be able to show their product in particular ways. It may well be that what Mr. Zell dislikes is that the information market is not placing as much value as he thinks on what his papers add to the wire services. It's an empirical question, which he could test by restricting access to some of his papers.
I feel quite virtuous here, since I subscribe to a physical newspaper that I enjoy reading by the window with my morning espresso. But I use the Web for anything else involving news. Search engines have become very profitable while offering their main services for free, while newspapers are sinking. It could be that the two types of service are very different and what worked for the search engines will not work for newspapers, but it could also be that the newspapers have been clueless. Before deprecating search engines, Mr. Zell might consider learning from them. As Portuguese folk wisdom has it, you don't trap flies with vinegar (“Não é com vinagre que se apanham moscas”).