From the President Elect's website
Labor
Obama and Biden will strengthen the ability of workers to organize unions. He will fight for passage of the Employee Free Choice Act. Obama and Biden will ensure that his labor appointees support workers' rights and will work to ban the permanent replacement of striking workers. Obama and Biden will also increase the minimum wage and index it to inflation to ensure it rises every year.
Ensure freedom to unionize: Obama and Biden believe that workers should have the freedom to choose whether to join a union without harassment or intimidation from their employers. Obama cosponsored and is a strong advocate for the Employee Free Choice Act (EFCA), a bipartisan effort that makes sure workers can exercise their right to organize. They will continue to fight for EFCA's passage and Obama will sign it into law.
Fight attacks on workers' right to organize: Obama has fought the Bush National Labor Relations Board (NLRB) efforts to strip workers of their right to organize. He is a cosponsor of legislation to overturn the NLRB's "Kentucky River" decisions classifying hundreds of thousands of nurses, construction workers, and professional workers as "supervisors" who are not protected by federal labor laws.
Protect striking workers: Obama and Biden support the right of workers to bargain collectively and strike if necessary. They will work to ban the permanent replacement of striking workers, so workers can stand up for themselves without worrying about losing their livelihoods.
Raise the minimum wage: Barack Obama and Joe Biden will raise the minimum wage, index it to inflation and increase the Earned Income Tax Credit to make sure that full-time workers earn a living wage that allows them to raise their families and pay for basic needs.
Wednesday, December 31, 2008
Tuesday, December 30, 2008
Republicans Marshal To Destroy Unions
By MARIE COCCO
StatesmanJournal.com
WASHINGTON -- I must admit that when the danger of a global financial implosion became apparent in March with the taxpayer-backed takeover of Bear Stearns by banking giant JP Morgan Chase, I did not understand how all those worthless Wall Street credit swaps really could be the fault of an overpaid union welder at an auto plant somewhere in Michigan.
Heck. Despite having once listened as Republican leader Tom DeLay gave a House speech blaming the 1999 Columbine High School shootings on mothers who use birth control and the teaching of evolution in schools, I still underestimate the peculiar genius conservative Republicans show in exploiting dire, even tragic, situations to wield a partisan cudgel.
Senate Republicans' effort to break the United Auto Workers union as the pound of flesh they wanted in exchange for loans to teetering automakers -- companies that are on the brink because of a credit crisis they did not cause -- was over the top, even drawing objections from the Bush White House. The administration is now rushing to find money for Detroit somewhere in the huge pot of financial-industry bailouts, lest the automakers go down and take what's left of the economy with them.
Understand that the conservative assault on the UAW is just a warm-up act.
The main event for these contemporary Pinkertons is coming after Barack Obama is sworn in as president, and Democrats seek to pass a measure that would make it easier for workers to organize unions. It is the Employee Free Choice Act, and its intent is to push back -- at least a bit -- on the multimillion-dollar union-busting business that has become institutionalized since the political assault on labor was juiced up with President Ronald Reagan's 1981 mass firing of air traffic controllers.
When Reagan supplanted the striking controllers with "replacement workers" (previously known as strikebreakers or scabs), business got the message: It was perfectly acceptable, if not advantageous, to bust unions or to keep them from being organized. From there, it was a small step toward the widespread use of unethical, and sometimes illegal, tactics.
"When it comes to workers' right to form unions, loophole-ridden laws, paralyzing delays and feeble enforcement have created a culture of impunity in many areas of U.S. labor law and practice," according to a 2005 report by Human Rights Watch. In the 1950s, a few hundred workers each year suffered reprisals for union organizing. By the early part of this decade, according to the report, about 20,000 workers a year suffered a reprisal serious enough for the National Labor Relations Board to order back pay or take other steps.
Academic research has demonstrated that much of the illicit anti-union activity is conducted after employees have signed cards indicating they want a union, but before a formal election is held.
This is what the "free choice act" aims to eliminate: a waiting period during which three-quarters of companies hire consultants to thwart the organizing drive and engage in a variety of pressure tactics to keep employees from ultimately voting "yes." About half of companies threaten to close the plant if the union wins the election, according to research by Kate Bronfenbrenner of Cornell University.
No wonder then that in a memo from which the author's name was removed -- but which is believed to have been circulated among Republicans this month during the auto industry imbroglio -- lawmakers were told that "This is the Democrats' first opportunity to pay off organized labor after the election. This is a precursor to card check and other items ... Republicans should stand firm and take their first shot against organized labor, instead of taking their first blow from it."
But the blows of this economy have been harshest on average workers. Before the current recession began, paychecks still had not recovered from the 2001 recession. Wages and benefits have been eroding. One way to staunch the trend is to tip the scale -- now tilted so heavily in favor of Wall Street and wealth -- back the other way. Otherwise, when the economy recovers, the fruits will again trickle up to the executive suite.
"If workers are going to benefit from this recovery, they are going to have to have the ability to bargain for higher wages and higher benefits. We can't depend on employers on their own to deliver the benefits of this recovery to workers," says Bill Samuel, legislative director of the AFL-CIO. "We have to change the equation here."
That is the kind of change conservatives just don't believe in.
Marie Cocco writes for the Washington Post Writers Group, 1150 15th St. NW, Washington, DC 20071. Send e-mail to mariecocco@washpost.com.
StatesmanJournal.com
WASHINGTON -- I must admit that when the danger of a global financial implosion became apparent in March with the taxpayer-backed takeover of Bear Stearns by banking giant JP Morgan Chase, I did not understand how all those worthless Wall Street credit swaps really could be the fault of an overpaid union welder at an auto plant somewhere in Michigan.
Heck. Despite having once listened as Republican leader Tom DeLay gave a House speech blaming the 1999 Columbine High School shootings on mothers who use birth control and the teaching of evolution in schools, I still underestimate the peculiar genius conservative Republicans show in exploiting dire, even tragic, situations to wield a partisan cudgel.
Senate Republicans' effort to break the United Auto Workers union as the pound of flesh they wanted in exchange for loans to teetering automakers -- companies that are on the brink because of a credit crisis they did not cause -- was over the top, even drawing objections from the Bush White House. The administration is now rushing to find money for Detroit somewhere in the huge pot of financial-industry bailouts, lest the automakers go down and take what's left of the economy with them.
Understand that the conservative assault on the UAW is just a warm-up act.
The main event for these contemporary Pinkertons is coming after Barack Obama is sworn in as president, and Democrats seek to pass a measure that would make it easier for workers to organize unions. It is the Employee Free Choice Act, and its intent is to push back -- at least a bit -- on the multimillion-dollar union-busting business that has become institutionalized since the political assault on labor was juiced up with President Ronald Reagan's 1981 mass firing of air traffic controllers.
When Reagan supplanted the striking controllers with "replacement workers" (previously known as strikebreakers or scabs), business got the message: It was perfectly acceptable, if not advantageous, to bust unions or to keep them from being organized. From there, it was a small step toward the widespread use of unethical, and sometimes illegal, tactics.
"When it comes to workers' right to form unions, loophole-ridden laws, paralyzing delays and feeble enforcement have created a culture of impunity in many areas of U.S. labor law and practice," according to a 2005 report by Human Rights Watch. In the 1950s, a few hundred workers each year suffered reprisals for union organizing. By the early part of this decade, according to the report, about 20,000 workers a year suffered a reprisal serious enough for the National Labor Relations Board to order back pay or take other steps.
Academic research has demonstrated that much of the illicit anti-union activity is conducted after employees have signed cards indicating they want a union, but before a formal election is held.
This is what the "free choice act" aims to eliminate: a waiting period during which three-quarters of companies hire consultants to thwart the organizing drive and engage in a variety of pressure tactics to keep employees from ultimately voting "yes." About half of companies threaten to close the plant if the union wins the election, according to research by Kate Bronfenbrenner of Cornell University.
No wonder then that in a memo from which the author's name was removed -- but which is believed to have been circulated among Republicans this month during the auto industry imbroglio -- lawmakers were told that "This is the Democrats' first opportunity to pay off organized labor after the election. This is a precursor to card check and other items ... Republicans should stand firm and take their first shot against organized labor, instead of taking their first blow from it."
But the blows of this economy have been harshest on average workers. Before the current recession began, paychecks still had not recovered from the 2001 recession. Wages and benefits have been eroding. One way to staunch the trend is to tip the scale -- now tilted so heavily in favor of Wall Street and wealth -- back the other way. Otherwise, when the economy recovers, the fruits will again trickle up to the executive suite.
"If workers are going to benefit from this recovery, they are going to have to have the ability to bargain for higher wages and higher benefits. We can't depend on employers on their own to deliver the benefits of this recovery to workers," says Bill Samuel, legislative director of the AFL-CIO. "We have to change the equation here."
That is the kind of change conservatives just don't believe in.
Marie Cocco writes for the Washington Post Writers Group, 1150 15th St. NW, Washington, DC 20071. Send e-mail to mariecocco@washpost.com.
TV Retains Marketing Dollars in Hard Times
By JOHN CONSOLI
THE NEW YORK TIMES
While newspapers, magazines, radio and local television are all losing advertisers in the recessionary economy, the broadcast networks continue to be an anomaly, with advertisers putting their marketing dollars into national television at levels reminiscent of prosperous economic times.
“American Idol” is an annual ratings juggernaut for Fox. “We’re maintaining our business” said Jon Nesvig of Fox Broadcasting.
“The shoe hasn’t dropped yet,” said Kris Magel, senior vice president and director for national broadcast at Initiative, a media buying agency. The troubled economy “hasn’t hit national television yet,” he said.
It’s not because the four major broadcast networks are delivering more prime-time viewers to advertisers than they did last season; they are not. Cumulatively, they are down 10 percent in actual live viewers, with ABC, NBC and Fox all drawing around a million viewers less each night than they did last season. CBS is the one network that has improved from last season; the network is up 1 percent in viewership.
Among the 18-to-49-year-old audience sought by advertisers, there are also declines. Both ABC and Fox are down 14 percent, while NBC is down 9 percent and CBS is down 3 percent.
So why are advertisers still putting their money into broadcast television? Network sales presidents and executives at various media agencies, who do the ad buying for the major advertisers, said that despite the continued fragmentation of national television viewing, the power of the broadcast networks to reach mass audiences on a nightly basis continued to give them an edge over other media.
“When the economy goes into a recession, marketers are looking at ad platforms that generate the most efficiency, and that is national television,” said Rino Scanzoni, chief investment officer for the media agency conglomerate Group M, where he oversees broadcast TV ad spending of close to $3 billion for media agencies Mediaedge:cia, Mindshare and MediaCom. “When ad budgets are strapped, advertisers turn to the tried and true, and national TV has proven that it works in helping them move product in good and bad economic times.”
Mr. Magel of Initiative said, “Broadcast television may be losing ratings, but there is no other medium that has been able to supplant it in a big enough way to negatively impact it at this point.”
Still, as a result of the ratings declines, the broadcast networks have had to give advertisers make-goods — free ads — to make up for failing to deliver the ratings they guaranteed when they sold their ad time to advertisers last May in what is known as the upfront buying period.
The upfront process, unique to the broadcast and cable networks, is another reason advertisers have remained loyal to the TV networks during economic downturns. In the upfront period, advertisers commit a certain amount of advertising dollars to each network for the coming season. And in exchange for those commitments, the networks offer ratings guarantees; if they are not met, the networks must make good on those shortfalls by giving advertisers free ad time.
With three of the four major broadcast networks showing significant ratings declines since the start of the TV season in late September, they have been doling out make-goods, particularly in the month of December. That means they are giving back ad time that they cannot sell in what as known as the scatter ad market. Only CBS is doing well enough in prime time that it has not yet had to give out make-goods, so it has been able to sell more of its remaining ad inventory.
”We have zero make-goods,” said Leslie Moonves, president and chief executive of the CBS Corporation, of his broadcast network’s prime-time performance. “Demand is not what we would like it to be. And scatter pricing is basically flat with what the upfront pricing was.” Last year at this time, it was as much as 40 percent higher.
But Mr. Moonves said that not having had to give make-goods so far this season has put CBS in a better position than the other networks to sell more ad inventory now and in 2009, if advertisers remain interested.
While they are short of available inventory to sell because of make-goods, both ABC and Fox said that heading into the first quarter of 2009, each would be scheduling programming that would raise their ratings and enable them to sell more advertising in the scatter market.
Fox will have its annual ratings juggernaut “American Idol,” while ABC has five new scripted prime-time shows it will introduce from January to March.
“We’re maintaining our business and have not been faced with any type of major cancellations,” said Jon Nesvig, sales president for Fox Broadcasting. “First-quarter upfront retention was over 95 percent, and we’re selling scatter for first quarter at upfront pricing or slightly better. We have not renegotiated any deals. Everybody has many concerns going forward, but we’re hoping for the best.”
Production on new shows for this season was limited because of the writers’ strike last fall, and as a result, ABC had only one new show in the fall. Because of that, Mike Shaw, president of sales at ABC, said he expected that ratings would be challenged, and that ABC tried to reflect that situation in how it sold in the upfront period.
“Right now our scatter pricing is better than what we sold in the upfront, in all day parts,” Mr. Shaw said. ”Cancellations by advertisers are at normal levels. And with most of our new programming not coming till the first quarter, our report card really can’t be written until March.”
NBC, which has no new shows that have made any sort of impact with advertisers, said it was still keeping its head above water.
“As expected in this climate, we’re compensating our advertisers with make-goods,” said Mike Pilot, president of sales and marketing at NBC Universal. ”At the same time we’re still doing business, although at a slower pace. Our clients continue to recognize the value of broadcast television, they’re just spending their money closer to air dates.”
Mr. Magel of Initiative said, “Broadcast television may be losing ratings, but there is no other medium that has been able to supplant it in a big enough way to negatively impact it at this point.”
Most media buyers, who did not want to make any predictions for attribution, said that the broadcast networks might make it through this season, which ends in late May, without any major advertiser defections. The impact of the economy on the broadcast networks could be felt in this May’s upfront buying period, when advertisers buy for the 2009-10 TV season, but for now the relationship between national advertisers and the broadcast networks is like any traditional TV season.
“We’re all waiting for the broadcast TV marketplace to slow down,” said Mr. Magel. “We all believe at some point it will. But right now the money keeps flowing —it’s perplexing, but it’s reality.”
THE NEW YORK TIMES
While newspapers, magazines, radio and local television are all losing advertisers in the recessionary economy, the broadcast networks continue to be an anomaly, with advertisers putting their marketing dollars into national television at levels reminiscent of prosperous economic times.
“American Idol” is an annual ratings juggernaut for Fox. “We’re maintaining our business” said Jon Nesvig of Fox Broadcasting.
“The shoe hasn’t dropped yet,” said Kris Magel, senior vice president and director for national broadcast at Initiative, a media buying agency. The troubled economy “hasn’t hit national television yet,” he said.
It’s not because the four major broadcast networks are delivering more prime-time viewers to advertisers than they did last season; they are not. Cumulatively, they are down 10 percent in actual live viewers, with ABC, NBC and Fox all drawing around a million viewers less each night than they did last season. CBS is the one network that has improved from last season; the network is up 1 percent in viewership.
Among the 18-to-49-year-old audience sought by advertisers, there are also declines. Both ABC and Fox are down 14 percent, while NBC is down 9 percent and CBS is down 3 percent.
So why are advertisers still putting their money into broadcast television? Network sales presidents and executives at various media agencies, who do the ad buying for the major advertisers, said that despite the continued fragmentation of national television viewing, the power of the broadcast networks to reach mass audiences on a nightly basis continued to give them an edge over other media.
“When the economy goes into a recession, marketers are looking at ad platforms that generate the most efficiency, and that is national television,” said Rino Scanzoni, chief investment officer for the media agency conglomerate Group M, where he oversees broadcast TV ad spending of close to $3 billion for media agencies Mediaedge:cia, Mindshare and MediaCom. “When ad budgets are strapped, advertisers turn to the tried and true, and national TV has proven that it works in helping them move product in good and bad economic times.”
Mr. Magel of Initiative said, “Broadcast television may be losing ratings, but there is no other medium that has been able to supplant it in a big enough way to negatively impact it at this point.”
Still, as a result of the ratings declines, the broadcast networks have had to give advertisers make-goods — free ads — to make up for failing to deliver the ratings they guaranteed when they sold their ad time to advertisers last May in what is known as the upfront buying period.
The upfront process, unique to the broadcast and cable networks, is another reason advertisers have remained loyal to the TV networks during economic downturns. In the upfront period, advertisers commit a certain amount of advertising dollars to each network for the coming season. And in exchange for those commitments, the networks offer ratings guarantees; if they are not met, the networks must make good on those shortfalls by giving advertisers free ad time.
With three of the four major broadcast networks showing significant ratings declines since the start of the TV season in late September, they have been doling out make-goods, particularly in the month of December. That means they are giving back ad time that they cannot sell in what as known as the scatter ad market. Only CBS is doing well enough in prime time that it has not yet had to give out make-goods, so it has been able to sell more of its remaining ad inventory.
”We have zero make-goods,” said Leslie Moonves, president and chief executive of the CBS Corporation, of his broadcast network’s prime-time performance. “Demand is not what we would like it to be. And scatter pricing is basically flat with what the upfront pricing was.” Last year at this time, it was as much as 40 percent higher.
But Mr. Moonves said that not having had to give make-goods so far this season has put CBS in a better position than the other networks to sell more ad inventory now and in 2009, if advertisers remain interested.
While they are short of available inventory to sell because of make-goods, both ABC and Fox said that heading into the first quarter of 2009, each would be scheduling programming that would raise their ratings and enable them to sell more advertising in the scatter market.
Fox will have its annual ratings juggernaut “American Idol,” while ABC has five new scripted prime-time shows it will introduce from January to March.
“We’re maintaining our business and have not been faced with any type of major cancellations,” said Jon Nesvig, sales president for Fox Broadcasting. “First-quarter upfront retention was over 95 percent, and we’re selling scatter for first quarter at upfront pricing or slightly better. We have not renegotiated any deals. Everybody has many concerns going forward, but we’re hoping for the best.”
Production on new shows for this season was limited because of the writers’ strike last fall, and as a result, ABC had only one new show in the fall. Because of that, Mike Shaw, president of sales at ABC, said he expected that ratings would be challenged, and that ABC tried to reflect that situation in how it sold in the upfront period.
“Right now our scatter pricing is better than what we sold in the upfront, in all day parts,” Mr. Shaw said. ”Cancellations by advertisers are at normal levels. And with most of our new programming not coming till the first quarter, our report card really can’t be written until March.”
NBC, which has no new shows that have made any sort of impact with advertisers, said it was still keeping its head above water.
“As expected in this climate, we’re compensating our advertisers with make-goods,” said Mike Pilot, president of sales and marketing at NBC Universal. ”At the same time we’re still doing business, although at a slower pace. Our clients continue to recognize the value of broadcast television, they’re just spending their money closer to air dates.”
Mr. Magel of Initiative said, “Broadcast television may be losing ratings, but there is no other medium that has been able to supplant it in a big enough way to negatively impact it at this point.”
Most media buyers, who did not want to make any predictions for attribution, said that the broadcast networks might make it through this season, which ends in late May, without any major advertiser defections. The impact of the economy on the broadcast networks could be felt in this May’s upfront buying period, when advertisers buy for the 2009-10 TV season, but for now the relationship between national advertisers and the broadcast networks is like any traditional TV season.
“We’re all waiting for the broadcast TV marketplace to slow down,” said Mr. Magel. “We all believe at some point it will. But right now the money keeps flowing —it’s perplexing, but it’s reality.”
Chicago Sitdown Strike Produces Win for Workers, Not Banks
By Jerry Mead-Lucero
Labor Notes
When managers informed the workers at Republic Windows and Doors in Chicago that the plant would close in three days’ time, the announcement was no surprise.
Suspicion that something was wrong had been floating around the workplace for weeks before the December 2 announcement. “We’ve had a lot of our machines taken out of the plant at night,” said Melvin Maclin, vice president of United Electrical Workers (UE) Local 1110 and a seven-year employee. “And along with the machines go people’s jobs.”
Concerned that Republic’s owners would remove or sell off the remaining machinery before they handed over pay for severance and vacation time already accrued, the workers brought in a local congressman, Representative Luis Gutierrez.
But management failed to show at a meeting with Gutierrez, leading workers to take a dramatic stand that confounded expectations about the U.S. labor movement, long in retreat.
They refused to leave the plant at closing time December 5, voting unanimously to occupy their factory, the first such action in the United States in years.
Lalo Munoz, an employee of Republic for 34 years, said workers were determined to fight. “They decided just to kick (us) into the streets, with no benefits or nothing, not even what we have already earned,” he said.
The occupation lasted six days, until a unanimous December 10 vote among the 240 workers accepted a severance package worth about $7,000 per worker. The deal also includes two months of health care, a crucial gain for workers who discovered that their coverage had been unilaterally yanked.
WHO GETS BAILED OUT?
Republic management laid the blame on its primary financier, Bank of America, claiming the bank’s refusal to extend further credit to the company caused the shutdown.
Company representatives insisted that without further credit they could not pay workers the severance they were owed—although information surfaced days into the occupation that owners had found enough cash recently to purchase a non-union window factory in Iowa.
A Chicago councilman who had seen company documents said workers in Iowa would be paid one-third of what Republic workers earned. In 1996, the company received a $9.6 million subsidy from Chicago to place the factory in the city.
The Republic workers turned their attention to Bank of America. Jobs with Justice helped the union organize a press conference outside the bank’s Chicago headquarters, where speakers hammered the bank for refusing to release to Republic a tiny fraction of the $25 billion it was granted in the $700 billion Wall Street bailout.
The plant occupation tapped into simmering discontent nationwide about banks’ refusal to open credit lines that could help struggling firms survive . Dozens of protests sprouted across the country in front of Bank of America branches.
As harsh as Republic’s stance seemed, Chicago organizers emphasized that the company’s refusal to give the legally required 60 days’ notice of a plant closing and to pay severance was by no means unique.
A bakery and a potato chip plant, both large and unionized factories, are just two that have shuttered in Chicago in recent years without following the plant-closing law.
“This is not an exceptional practice,” said Adam Kader, director of Chicago Interfaith Committee on Worker Issues (CICWI), a worker center involved in campaigns to recover severance pay. “This is standard practice.”
Workers at Republic, however, were uniquely prepared to fight their plant closing. Before the occupation, they were already well-known in Chicago labor circles. A mostly African-American and immigrant Latino workforce, they organized into UE Local 1110 four years ago after dumping a company union that had agreed to a wage freeze and had allowed dozens of workers to be fired with no protest.
“There is a political tradition that the UE has nurtured, and when the time was right, it presented itself and they could seize the moment. The organizers were quick on the uptake to understand the issue at hand and fit it into the global context. They did it brilliantly,” says Nelson Lichtenstein, a labor historian at the University of California, Santa Barbara.
SPARKING THE FIRE
Word of the workers’ decision spread rapidly among Chicago labor and social justice activists. Within hours a prayer vigil, organized by CICWI, had been planned. Supporters appeared at the factory’s entrance bearing gifts of food, coffee, blankets, and sleeping bags. They signed posters that workers taped to the factory walls, with messages like “Thanks for showing us all how to fight back” and “You are an inspiration to us all.”
Hundreds of supporters showed up to the prayer vigil, and workers received statements of solidarity from as far away as France and Argentina, where factory occupations are a more familiar form of protest.
The occupation entered the national stage in full force after President-elect Obama voiced his support. The Republic workers make energy-efficient doors and windows, products at the core of Obama’s call for a new, more environmentally sustainable economy.
Local politicians threatened to pull city and state business with the Bank of America, and apparently offered other promises of assistance to the workers, too. UE Western Region President Carl Rosen announced he was working with state agencies to find financing to re-open Republic under new management, and UE announced the creation of a fund to restart the plant.
Given the scale of public and political support, it was only a matter of time before the workers won their demand for the severance legally mandated under plant-closing laws.
Some pumped-up supporters are wondering whether the Republic victory will be a spark that re-ignites the labor movement.
“We really feel like we had an obligation to working class people to win this fight,” said UE international representative Mark Meinster, “because of what it could mean for workers in this country.”
Labor Notes
When managers informed the workers at Republic Windows and Doors in Chicago that the plant would close in three days’ time, the announcement was no surprise.
Suspicion that something was wrong had been floating around the workplace for weeks before the December 2 announcement. “We’ve had a lot of our machines taken out of the plant at night,” said Melvin Maclin, vice president of United Electrical Workers (UE) Local 1110 and a seven-year employee. “And along with the machines go people’s jobs.”
Concerned that Republic’s owners would remove or sell off the remaining machinery before they handed over pay for severance and vacation time already accrued, the workers brought in a local congressman, Representative Luis Gutierrez.
But management failed to show at a meeting with Gutierrez, leading workers to take a dramatic stand that confounded expectations about the U.S. labor movement, long in retreat.
They refused to leave the plant at closing time December 5, voting unanimously to occupy their factory, the first such action in the United States in years.
Lalo Munoz, an employee of Republic for 34 years, said workers were determined to fight. “They decided just to kick (us) into the streets, with no benefits or nothing, not even what we have already earned,” he said.
The occupation lasted six days, until a unanimous December 10 vote among the 240 workers accepted a severance package worth about $7,000 per worker. The deal also includes two months of health care, a crucial gain for workers who discovered that their coverage had been unilaterally yanked.
WHO GETS BAILED OUT?
Republic management laid the blame on its primary financier, Bank of America, claiming the bank’s refusal to extend further credit to the company caused the shutdown.
Company representatives insisted that without further credit they could not pay workers the severance they were owed—although information surfaced days into the occupation that owners had found enough cash recently to purchase a non-union window factory in Iowa.
A Chicago councilman who had seen company documents said workers in Iowa would be paid one-third of what Republic workers earned. In 1996, the company received a $9.6 million subsidy from Chicago to place the factory in the city.
The Republic workers turned their attention to Bank of America. Jobs with Justice helped the union organize a press conference outside the bank’s Chicago headquarters, where speakers hammered the bank for refusing to release to Republic a tiny fraction of the $25 billion it was granted in the $700 billion Wall Street bailout.
The plant occupation tapped into simmering discontent nationwide about banks’ refusal to open credit lines that could help struggling firms survive . Dozens of protests sprouted across the country in front of Bank of America branches.
As harsh as Republic’s stance seemed, Chicago organizers emphasized that the company’s refusal to give the legally required 60 days’ notice of a plant closing and to pay severance was by no means unique.
A bakery and a potato chip plant, both large and unionized factories, are just two that have shuttered in Chicago in recent years without following the plant-closing law.
“This is not an exceptional practice,” said Adam Kader, director of Chicago Interfaith Committee on Worker Issues (CICWI), a worker center involved in campaigns to recover severance pay. “This is standard practice.”
Workers at Republic, however, were uniquely prepared to fight their plant closing. Before the occupation, they were already well-known in Chicago labor circles. A mostly African-American and immigrant Latino workforce, they organized into UE Local 1110 four years ago after dumping a company union that had agreed to a wage freeze and had allowed dozens of workers to be fired with no protest.
“There is a political tradition that the UE has nurtured, and when the time was right, it presented itself and they could seize the moment. The organizers were quick on the uptake to understand the issue at hand and fit it into the global context. They did it brilliantly,” says Nelson Lichtenstein, a labor historian at the University of California, Santa Barbara.
SPARKING THE FIRE
Word of the workers’ decision spread rapidly among Chicago labor and social justice activists. Within hours a prayer vigil, organized by CICWI, had been planned. Supporters appeared at the factory’s entrance bearing gifts of food, coffee, blankets, and sleeping bags. They signed posters that workers taped to the factory walls, with messages like “Thanks for showing us all how to fight back” and “You are an inspiration to us all.”
Hundreds of supporters showed up to the prayer vigil, and workers received statements of solidarity from as far away as France and Argentina, where factory occupations are a more familiar form of protest.
The occupation entered the national stage in full force after President-elect Obama voiced his support. The Republic workers make energy-efficient doors and windows, products at the core of Obama’s call for a new, more environmentally sustainable economy.
Local politicians threatened to pull city and state business with the Bank of America, and apparently offered other promises of assistance to the workers, too. UE Western Region President Carl Rosen announced he was working with state agencies to find financing to re-open Republic under new management, and UE announced the creation of a fund to restart the plant.
Given the scale of public and political support, it was only a matter of time before the workers won their demand for the severance legally mandated under plant-closing laws.
Some pumped-up supporters are wondering whether the Republic victory will be a spark that re-ignites the labor movement.
“We really feel like we had an obligation to working class people to win this fight,” said UE international representative Mark Meinster, “because of what it could mean for workers in this country.”
Tribune Co. outlays failed to halt spiral
By Ameet Sachdev | Tribune reporter
$3 million spent on legal work to manage debt before bankruptcy
Before Tribune Co. sought bankruptcy protection on Dec.8, the Chicago-based media company and Chicago Tribune owner had spent nearly $3 million for legal work related to managing and restructuring its massive debt.
Those efforts began as early as March, three months after Chicago real estate investor Sam Zell completed a deal to take Tribune Co. private in a leveraged buyout, according to court documents filed Dec. 26 by Sidley Austin, Tribune Co.'s bankruptcy counsel.
Sidley's filing, as well as papers submitted to the bankruptcy court by other Tribune Co. advisers, indicate that the prospect of Chapter 11 reorganization became a more likely scenario in November, weeks before the bankruptcy petition was filed in Delaware.
In early November, Tribune Co. hired consulting firm Alvarez & Marsal, well-known restructuring and bankruptcy advisers, to assist with bank negotiations, among other things, according to court papers. Prior to Tribune Co.'s bankruptcy, Alvarez & Marsal was paid more than $1 million by the media company.
Also last month, Tribune Co. hired the Edelman public relations firm to assist with communications in connection with a possible Chapter 11 petition, Edelman said in court documents. Tribune Co. provided Edelman with two retainers totaling $110,000. As of Dec. 14, Edelman had applied $98,000 for incurred fees and expenses.
Tribune Co. also set up a retainer for Sidley Austin, the company's longtime outside counsel. On Nov. 24, Tribune Co. gave the Chicago law firm an advance of $3.5 million, and 10 days later increased the retainer by $1 million.
Sidley's work intensified beginning in October and through Dec.4, when it billed the company more than $2.2 million.
"Much of the legal work described in the application had nothing to do with the contemplation of a possible bankruptcy proceeding," a Tribune Co. spokesman said. "Instead, the focus was on matters that large corporations typically contemplate in the ordinary course with respect to their credit facilities, including possible asset sales, early debt repayments and debt buybacks, refinancing and similar items."
About $1.4 million remained in the retainer as of Dec. 8, said Sidley's James Conlan in court papers.
Bankruptcies don't come cheap. Sidley's partners charged between $575 and $1,100 per hour. The hourly rates for managing directors at Alvarez & Marsal range from $525 to $750.
Tribune Co. also is paying investment banker Lazard Freres & Co. a monthly fee of $200,000. Payments to advisers are subject to court approval.
Much is at stake. Tribune Co. also owns the Los Angeles Times and other papers and is a major broadcaster. In its bankruptcy petition, the company listed assets of $7.6 billion and $12.9 billion in liabilities.
asachdev@tribune.com
$3 million spent on legal work to manage debt before bankruptcy
Before Tribune Co. sought bankruptcy protection on Dec.8, the Chicago-based media company and Chicago Tribune owner had spent nearly $3 million for legal work related to managing and restructuring its massive debt.
Those efforts began as early as March, three months after Chicago real estate investor Sam Zell completed a deal to take Tribune Co. private in a leveraged buyout, according to court documents filed Dec. 26 by Sidley Austin, Tribune Co.'s bankruptcy counsel.
Sidley's filing, as well as papers submitted to the bankruptcy court by other Tribune Co. advisers, indicate that the prospect of Chapter 11 reorganization became a more likely scenario in November, weeks before the bankruptcy petition was filed in Delaware.
In early November, Tribune Co. hired consulting firm Alvarez & Marsal, well-known restructuring and bankruptcy advisers, to assist with bank negotiations, among other things, according to court papers. Prior to Tribune Co.'s bankruptcy, Alvarez & Marsal was paid more than $1 million by the media company.
Also last month, Tribune Co. hired the Edelman public relations firm to assist with communications in connection with a possible Chapter 11 petition, Edelman said in court documents. Tribune Co. provided Edelman with two retainers totaling $110,000. As of Dec. 14, Edelman had applied $98,000 for incurred fees and expenses.
Tribune Co. also set up a retainer for Sidley Austin, the company's longtime outside counsel. On Nov. 24, Tribune Co. gave the Chicago law firm an advance of $3.5 million, and 10 days later increased the retainer by $1 million.
Sidley's work intensified beginning in October and through Dec.4, when it billed the company more than $2.2 million.
"Much of the legal work described in the application had nothing to do with the contemplation of a possible bankruptcy proceeding," a Tribune Co. spokesman said. "Instead, the focus was on matters that large corporations typically contemplate in the ordinary course with respect to their credit facilities, including possible asset sales, early debt repayments and debt buybacks, refinancing and similar items."
About $1.4 million remained in the retainer as of Dec. 8, said Sidley's James Conlan in court papers.
Bankruptcies don't come cheap. Sidley's partners charged between $575 and $1,100 per hour. The hourly rates for managing directors at Alvarez & Marsal range from $525 to $750.
Tribune Co. also is paying investment banker Lazard Freres & Co. a monthly fee of $200,000. Payments to advisers are subject to court approval.
Much is at stake. Tribune Co. also owns the Los Angeles Times and other papers and is a major broadcaster. In its bankruptcy petition, the company listed assets of $7.6 billion and $12.9 billion in liabilities.
asachdev@tribune.com
Sunday, December 28, 2008
America's worst CEO: Sam Zell
By HAROLD MEYERSON
UnionLeader.com
Sam Zell never really had much skin in the game. Last year, when he purchased the Tribune Company, which filed for bankruptcy last week, he put up $315 million of his own money and paid the balance of the purchase price, $8.2 billion, with the employee stock ownership plan -- a move in which Tribune employees had no say whatever. But that actually overstates the amount of Zell's investment.
Of the $315 million he sunk into the company, it turns out that $225 million was simply a promissory note. Due to the vagaries of bankruptcy law, writes business analyst Mark Lacter on laobserved.com, that means that Zell has better protection for his stake than all his employees. Trib's ESOP holds 100 percent of the company common equity -- and it's the holders of common stock who usually take a bath, or get wiped out altogether, in the debt restructuring that goes on under Chapter 11.
In his memo to his employees Wednesday morning, Zell wrote, "in general, the existing benefits in the pension and cash balance plans are also unaffected by the filing." To quote Lacter one more time: "In general?"
Even when measured against today's sub-prime standards for CEO performance, Zell is in a class by himself. The CEOs of the Big Three auto companies may have paid a good deal less attention to the quality of their cars than they should have, but Zell repeatedly and profanely expressed his disdain for quality journalism.
The company's leading papers, the Chicago Tribune and the Los Angeles Times -- the latter one of the four great American newspapers -- carried too much national and international news, he decreed. Hundreds of excellent reporters and editors were unceremoniously shown the door; the Times lost its Sunday book review and opinion sections; the Washington bureaus of the papers were consolidated and cut back at the very moment when readers are following decisions made in Washington more intently than they have in decades.
When the Tribune company's former owners elected to sell the company to Zell, they bypassed some other potential buyers, either of the company or its constituent papers, who were actually willing to put up their own money to make their purchases.
In Los Angeles, David Geffen, Eli Broad and Ron Burkle all tried to buy the Times, but the Trib board wanted to sell to a fellow Chicagoan, even if he had no regard for journalism. In the end, not only has Zell lowered the quality of some great and good papers, but he structured a deal so laden with debt that he's plunged his company into bankruptcy, too. Even if -- an operator, that Zell -- he'll come out of it a whole lot better than the employees whose ESOP he dragooned.
POSTSCRIPT: The Tribune internal Q&A Web site on the bankruptcy filing states that "all ongoing severance payments have been discontinued." So if you're one of the large number of reporters, editors and other staffers at the L.A. Times, the Chicago Trib or other papers who got sacked and didn't get your severance in one lump sum, you have a real problem.
A sit-down strike, such as that currently being waged in that Chicago door and window factory, seems a fitting and proper response, though you'll need help from those of your former colleagues still employed to get back into the buildings.
Harold Meyerson is editor-at-large of American Prospect and the L.A. Weekly.
____________________
The Road to Zell
How the Tribune deal went so bad, so fast.
By Daniel Gross
What's the difference between Smart Money and Dumb Money? Twelve months, the popping of a credit bubble, and about $800 million.
In the run-up of asset prices, which ended about a year ago, everyone was a genius. Hedge-fund managers felt wise for borrowing large sums of money and buying stocks, commodities, or pretty much anything that went up. Private equity barons bought companies, issued debt to pay themselves dividends, and were hailed as master investors. Heck, even millions of homeowners felt like Einsteins for refinancing at lower rates. And hardly anyone was deemed smarter than Sam Zell.
The Chicago-based real estate investor, nicknamed the Grave Dancer for his delight in picking up dead businesses and reviving them, built Equity Office Properties, a collection of high-end office buildings.
In February 2007, Zell was lauded as a genius for unloading the company in an all-cash transaction valued at about $38 billion (Blackstone put in $6.4 billion in cash and borrowed the rest), after a frenzied bidding process. But Zell wasn't content to take his winnings and stow them under the mattress. Having benefited from the dumb-money culture—people willing to pay high prices for leveraged assets in the hope and expectation that they'd be able to sell them to other debt-fueled buyers at even higher prices—Zell loudly plunged right back into it. (Regular readers of this column should expect to hear more about the culture of dumb money—I've got an electronic book about it in the works with the Free Press.)
In December 2007, Zell closed on the $8.2 billion acquisition of the Tribune Co., putting in $315 million of his own money and borrowing much of the rest. Make no mistake about it, the Tribune Co. was a classic dumb-money play, and not just because its main assets were declining newspapers.
A big part of the dumb-money culture was the rising sense that hedge-fund managers, asset flippers, and financial engineers—because they had made a lot of money from cheap credit—could apply their genius to industries in which they had little expertise. Frequently, however, that strategy didn't go much beyond financial engineering or selling assets—which depended, in other words, on the plentiful availability of cheap credit and credulous buyers.
If hedge-fund maestro Eddie Lampert couldn't remake Sears into an effective retailer, investors thought, he could at least bolster shareholder value by buying back shares or by selling the real estate underlying the stores. That hasn't quite worked out. Hedge-fund manager Bill Ackman set up a vehicle to amass a huge stake in retailer Target.* His bright idea: Target should sell its stores and lease them back.
It was plain from the beginning that Zell didn't have much of a strategy for reversing the revenue decline at the newspapers. And the failure to realize that a slowdown in real estate and autos—the credit crunch had started a half year before the deal closed—would reduce revenues sharply was an act of colossal stupidity on Zell's part and on the part of the bankers who made the era of dumb money possible. (Andrew Ross Sorkin has a good rundown of the fees earned by Citigroup, Merrill Lynch, and Morgan Stanley for their roles in this debacle.)
Zell loaded up the company with nearly $13 billion in debt, which required interest payments of nearly $500 million in the first half of 2008. The plan, such as it was, was to pay down debt not with operating cash but with asset sales. One problem: Most of the assets were themselves dumb-money assets—trophy properties such as the Chicago Cubs, office buildings, and big-city newspapers that couldn't support a lot of debt on their own and whose purchase would require easy credit.
In May 2008, Zell managed to sell Newsday to Cablevision for $650 million. In September, it sold a chunk of CareerBuilder.com for $135 million. In June, Tribune put the company's headquarters buildings in Chicago and Los Angeles on the market. So far, no takers. The hope to stay current on debt payments rested on selling the Chicago Cubs, perhaps the greatest Midwestern trophy property of all. But the credit crunch decimated the net worth of many of the potential buyers, and lenders fell by the wayside. Having failed to find any greater fools, Tribune filed for bankruptcy.
UnionLeader.com
Sam Zell never really had much skin in the game. Last year, when he purchased the Tribune Company, which filed for bankruptcy last week, he put up $315 million of his own money and paid the balance of the purchase price, $8.2 billion, with the employee stock ownership plan -- a move in which Tribune employees had no say whatever. But that actually overstates the amount of Zell's investment.
Of the $315 million he sunk into the company, it turns out that $225 million was simply a promissory note. Due to the vagaries of bankruptcy law, writes business analyst Mark Lacter on laobserved.com, that means that Zell has better protection for his stake than all his employees. Trib's ESOP holds 100 percent of the company common equity -- and it's the holders of common stock who usually take a bath, or get wiped out altogether, in the debt restructuring that goes on under Chapter 11.
In his memo to his employees Wednesday morning, Zell wrote, "in general, the existing benefits in the pension and cash balance plans are also unaffected by the filing." To quote Lacter one more time: "In general?"
Even when measured against today's sub-prime standards for CEO performance, Zell is in a class by himself. The CEOs of the Big Three auto companies may have paid a good deal less attention to the quality of their cars than they should have, but Zell repeatedly and profanely expressed his disdain for quality journalism.
The company's leading papers, the Chicago Tribune and the Los Angeles Times -- the latter one of the four great American newspapers -- carried too much national and international news, he decreed. Hundreds of excellent reporters and editors were unceremoniously shown the door; the Times lost its Sunday book review and opinion sections; the Washington bureaus of the papers were consolidated and cut back at the very moment when readers are following decisions made in Washington more intently than they have in decades.
When the Tribune company's former owners elected to sell the company to Zell, they bypassed some other potential buyers, either of the company or its constituent papers, who were actually willing to put up their own money to make their purchases.
In Los Angeles, David Geffen, Eli Broad and Ron Burkle all tried to buy the Times, but the Trib board wanted to sell to a fellow Chicagoan, even if he had no regard for journalism. In the end, not only has Zell lowered the quality of some great and good papers, but he structured a deal so laden with debt that he's plunged his company into bankruptcy, too. Even if -- an operator, that Zell -- he'll come out of it a whole lot better than the employees whose ESOP he dragooned.
POSTSCRIPT: The Tribune internal Q&A Web site on the bankruptcy filing states that "all ongoing severance payments have been discontinued." So if you're one of the large number of reporters, editors and other staffers at the L.A. Times, the Chicago Trib or other papers who got sacked and didn't get your severance in one lump sum, you have a real problem.
A sit-down strike, such as that currently being waged in that Chicago door and window factory, seems a fitting and proper response, though you'll need help from those of your former colleagues still employed to get back into the buildings.
Harold Meyerson is editor-at-large of American Prospect and the L.A. Weekly.
____________________
The Road to Zell
How the Tribune deal went so bad, so fast.
By Daniel Gross
What's the difference between Smart Money and Dumb Money? Twelve months, the popping of a credit bubble, and about $800 million.
In the run-up of asset prices, which ended about a year ago, everyone was a genius. Hedge-fund managers felt wise for borrowing large sums of money and buying stocks, commodities, or pretty much anything that went up. Private equity barons bought companies, issued debt to pay themselves dividends, and were hailed as master investors. Heck, even millions of homeowners felt like Einsteins for refinancing at lower rates. And hardly anyone was deemed smarter than Sam Zell.
The Chicago-based real estate investor, nicknamed the Grave Dancer for his delight in picking up dead businesses and reviving them, built Equity Office Properties, a collection of high-end office buildings.
In February 2007, Zell was lauded as a genius for unloading the company in an all-cash transaction valued at about $38 billion (Blackstone put in $6.4 billion in cash and borrowed the rest), after a frenzied bidding process. But Zell wasn't content to take his winnings and stow them under the mattress. Having benefited from the dumb-money culture—people willing to pay high prices for leveraged assets in the hope and expectation that they'd be able to sell them to other debt-fueled buyers at even higher prices—Zell loudly plunged right back into it. (Regular readers of this column should expect to hear more about the culture of dumb money—I've got an electronic book about it in the works with the Free Press.)
In December 2007, Zell closed on the $8.2 billion acquisition of the Tribune Co., putting in $315 million of his own money and borrowing much of the rest. Make no mistake about it, the Tribune Co. was a classic dumb-money play, and not just because its main assets were declining newspapers.
A big part of the dumb-money culture was the rising sense that hedge-fund managers, asset flippers, and financial engineers—because they had made a lot of money from cheap credit—could apply their genius to industries in which they had little expertise. Frequently, however, that strategy didn't go much beyond financial engineering or selling assets—which depended, in other words, on the plentiful availability of cheap credit and credulous buyers.
If hedge-fund maestro Eddie Lampert couldn't remake Sears into an effective retailer, investors thought, he could at least bolster shareholder value by buying back shares or by selling the real estate underlying the stores. That hasn't quite worked out. Hedge-fund manager Bill Ackman set up a vehicle to amass a huge stake in retailer Target.* His bright idea: Target should sell its stores and lease them back.
It was plain from the beginning that Zell didn't have much of a strategy for reversing the revenue decline at the newspapers. And the failure to realize that a slowdown in real estate and autos—the credit crunch had started a half year before the deal closed—would reduce revenues sharply was an act of colossal stupidity on Zell's part and on the part of the bankers who made the era of dumb money possible. (Andrew Ross Sorkin has a good rundown of the fees earned by Citigroup, Merrill Lynch, and Morgan Stanley for their roles in this debacle.)
Zell loaded up the company with nearly $13 billion in debt, which required interest payments of nearly $500 million in the first half of 2008. The plan, such as it was, was to pay down debt not with operating cash but with asset sales. One problem: Most of the assets were themselves dumb-money assets—trophy properties such as the Chicago Cubs, office buildings, and big-city newspapers that couldn't support a lot of debt on their own and whose purchase would require easy credit.
In May 2008, Zell managed to sell Newsday to Cablevision for $650 million. In September, it sold a chunk of CareerBuilder.com for $135 million. In June, Tribune put the company's headquarters buildings in Chicago and Los Angeles on the market. So far, no takers. The hope to stay current on debt payments rested on selling the Chicago Cubs, perhaps the greatest Midwestern trophy property of all. But the credit crunch decimated the net worth of many of the potential buyers, and lenders fell by the wayside. Having failed to find any greater fools, Tribune filed for bankruptcy.
Dark Winter On Broadway
By Geraldine Baum
Los Angeles Times
Shows are canceling or closing, as investors declare this no time to take chances. The theater community can only hope for a spring awakening.
Reporting from New York -- They added four new songs, lined up a big theater and psyched up their backers. The producers of "Vanities, A New Musical," originally staged at the Pasadena Playhouse, then announced it was opening on Broadway in February.
But three weeks later, on Dec. 5, the producers issued a second bulletin: The show would not go on during this winter of economic discontent.
This is not a season for new Broadway shows that might make it. Now is a time for sure bets -- dramas starring celebrities and musical revivals with familiar tunes that summon nostalgia for better times.
With tens of thousands of people out of work in the New York area; tourism slipping along with foreign currencies; and long-running shows like "Grease," "Hairspray," "Gypsy" and "Spamalot" closing before the traditional winter slump, opening a new show calls for a magical mixture of star power, deft management and old-fashioned luck.
Sonia Friedman, producer of the Tony-winning "Boeing-Boeing," which is also shutting down in early January, released a statement explaining, "We chose to close the show when the current cast members' contracts all expired and to end on a high note rather than forge through the challenges of January and February in a weak economy."
This winter, Times Square will lose a portion of its vitality at showtime, with many theaters dark and the theater community questioning whether it will come alive in spring.
That's not to say Broadway is dead -- shows scheduled to open after February include "West Side Story," "Impressions" with Joan Allen and Jeremy Irons, and "33 Variations," which stars Jane Fonda and had its start at the La Jolla Playhouse.
But concern about the long-term fallout from the ailing economy is making producers and investors more cautious than usual about what they stage and when.
"Vanities" producer Sue Frost was weighing the economic outlook when she decided to put her show -- which got mixed reviews in Los Angeles -- on hold indefinitely.
"What we had was a small musical with no boffo star names associated with it," Frost said. She was preparing to present the latest version of the show to backers when the stock market crashed in September. The production had secured the Lyceum Theatre and sold group tickets.
She made her decision not to open right after what is traditionally Broadway's busiest time, Thanksgiving week. This year, the week's ticket sales were down 10% compared with last year.
Long-running shows like "Gypsy" and "Hairspray" are, in fact, a victim of that 10%, according to several producers.
Producers had varying theories for which shows would get hit hardest. Several insiders who didn't want to be named because they didn't want to appear negative about their business predicted that family shows that entail on average a five-ticket purchase would suffer most.
"When they're flush, upper-class parents with two kids don't think twice about spending $500 to see a show," said a Broadway producer. "But are they going to spend that now when they can see a family movie for $50?"
Disney Theatrical Productions, for example, worked hard to keep families coming by offering "buy one, get one free" specials for its shows "The Little Mermaid," "The Lion King" and "Mary Poppins" leading up to the holidays. And DreamWorks has just opened "Shrek," a name well known from the film, and the expensive production is attracting big audiences.
"You can have all the ticket promotions and discounts, but if you can produce the right mix onstage -- and capture the audience's imagination -- you'll have a nice success no matter what," said Steve Traxler, a Chicago-based producer who with New York producer Jeffrey Richards brought "August: Osage County" to Broadway.
Traxler is optimistic that dramas with limited engagements will thrive because they rely more on loyal New York theatergoers and less on international tourists. On that belief, he is again collaborating with Richards to move "Reasons to Be Pretty," a new play by Neil LaBute, from off-Broadway to the Lyceum.
"Rock of Ages," an '80s-themed musical that originated in Los Angeles and has the advantage of a film in the works, is also moving this spring from off-Broadway to a Broadway theater.
But finding backers is getting tougher. Broadway insiders accuse the media of spooking live-theater investors with reports of show closings and half-filled theaters.
As it is, investors have only a 20% chance of recouping their money. But it's the onslaught of dour financial news that is chilling investors. "If you asked me to put $10 in a new show, I'd think twice," said Peter Schneider, a Los Angeles-based producer and investor.
Shows that already have raised $2 million (for a drama) or up to $20 million (for a musical) to open in the spring now have to focus on reducing weekly operating expenses, Schneider said. "They have to at least hope that these shows will be exciting and beautiful enough that they'll be something you want to see."
Nonprofit theaters also are cutting their budgets and asking donors for more money. Harold Wolpert, managing director of Broadway's nonprofit Roundabout Theatre Co., said he was preparing yet another letter asking for contributions, which are as crucial as ticket sales to keeping prices affordable for its 40,000 subscribers.
"We're doing everything we can to convince people even though times are tough we're offering good value," Wolpert said.
To lower costs, he has cut opening-night parties and is sending the newsletter via the Internet. At the same time, the company is weighing every aspect of producing. "You cut back and you cut back and the subscribers say the shows look chintzy," Wolpert said. "We're trying not to sacrifice the quality of what's onstage."
Even before the long-awaited revival of "Pal Joey" opened to less-than-ecstatic reviews in December, Wolpert said advance ticket sales weren't what they should have been given the title and the familiar music.
Elizabeth McCann, who is bringing "Hair" to Broadway in late February, is struggling to complete $6.5 million in financing, but she's convinced the show will attract audiences because it "has an extraordinary amount of sentimentality that others don't have."
McCann, a veteran producer who has a long history of hits and of balancing multiple projects, described the art of finessing the bottom line.
"You lower ticket prices on one set and raise them on another. You deal with priority seating one night and the next night you discount tickets." And if none of that works to cover the costs for the immense "Hair" cast, she said, "We'll open in China. They'll love ['Hair'] there."
McCann has also tried for years to revive "You Can't Take It With You." Now might be the perfect time. "It's a big old-fashioned play of the Depression," she said. "That's what audiences will find relevant."
Despite the economic anguish in the 1930s and 1940s, the theater was for the most part Depression-proof, according to historian Martin Gottfried. "People needed something to distract them and Broadway thrived," said Gottfried, who has written 13 books on the theater. Tickets, he noted, were $1.25 and "that was reasonable, even back then."
Victoria Bailey, who heads the nonprofit Theatre Development Fund that operates the TKTS discount ticket booths, said the downturn might force the business to be more creative about pricing tickets.
"If you look at recessions as a kind of moral adjustment, the experience of losing yourself for a few hours in someone else's story with other people who are like you will be important," she said, adding: "But we, as an industry, are going to have to be more articulate about why this is a rewarding experience."
And that may involve being aggressive about embracing social networking, blogging and getting young people informed about plays that don't have big advertising budgets but speak to their lives, she said. "What we've done is let theater become too precious."
If there is sanguinity -- even if it's forced -- it comes from the creative side.
Sarah Stiles gave up the female lead in "Avenue Q" to play the uptight and conservative Joanne, one of three leads in the musical version of "Vanities," which first opened in 1976 and ran for 1,785 performances off-Broadway.
For 2 1/2 years, Stiles has done every reading, workshop and backers' audition. She was devastated by the news that the opening was canceled.
Now she is focusing on her own material, joining forces on a sketch with a friend from "Avenue Q."
"Luckily, as actors, we can still do our work even if we're not getting paid for it," said Stiles, who says her husband can support her. "I know the pain I felt in that phone call is stuff I can remember and use. It's all things that make you grow as an actor."
geraldine.baum@latimes.com
Los Angeles Times
Shows are canceling or closing, as investors declare this no time to take chances. The theater community can only hope for a spring awakening.
Reporting from New York -- They added four new songs, lined up a big theater and psyched up their backers. The producers of "Vanities, A New Musical," originally staged at the Pasadena Playhouse, then announced it was opening on Broadway in February.
But three weeks later, on Dec. 5, the producers issued a second bulletin: The show would not go on during this winter of economic discontent.
This is not a season for new Broadway shows that might make it. Now is a time for sure bets -- dramas starring celebrities and musical revivals with familiar tunes that summon nostalgia for better times.
With tens of thousands of people out of work in the New York area; tourism slipping along with foreign currencies; and long-running shows like "Grease," "Hairspray," "Gypsy" and "Spamalot" closing before the traditional winter slump, opening a new show calls for a magical mixture of star power, deft management and old-fashioned luck.
Sonia Friedman, producer of the Tony-winning "Boeing-Boeing," which is also shutting down in early January, released a statement explaining, "We chose to close the show when the current cast members' contracts all expired and to end on a high note rather than forge through the challenges of January and February in a weak economy."
This winter, Times Square will lose a portion of its vitality at showtime, with many theaters dark and the theater community questioning whether it will come alive in spring.
That's not to say Broadway is dead -- shows scheduled to open after February include "West Side Story," "Impressions" with Joan Allen and Jeremy Irons, and "33 Variations," which stars Jane Fonda and had its start at the La Jolla Playhouse.
But concern about the long-term fallout from the ailing economy is making producers and investors more cautious than usual about what they stage and when.
"Vanities" producer Sue Frost was weighing the economic outlook when she decided to put her show -- which got mixed reviews in Los Angeles -- on hold indefinitely.
"What we had was a small musical with no boffo star names associated with it," Frost said. She was preparing to present the latest version of the show to backers when the stock market crashed in September. The production had secured the Lyceum Theatre and sold group tickets.
She made her decision not to open right after what is traditionally Broadway's busiest time, Thanksgiving week. This year, the week's ticket sales were down 10% compared with last year.
Long-running shows like "Gypsy" and "Hairspray" are, in fact, a victim of that 10%, according to several producers.
Producers had varying theories for which shows would get hit hardest. Several insiders who didn't want to be named because they didn't want to appear negative about their business predicted that family shows that entail on average a five-ticket purchase would suffer most.
"When they're flush, upper-class parents with two kids don't think twice about spending $500 to see a show," said a Broadway producer. "But are they going to spend that now when they can see a family movie for $50?"
Disney Theatrical Productions, for example, worked hard to keep families coming by offering "buy one, get one free" specials for its shows "The Little Mermaid," "The Lion King" and "Mary Poppins" leading up to the holidays. And DreamWorks has just opened "Shrek," a name well known from the film, and the expensive production is attracting big audiences.
"You can have all the ticket promotions and discounts, but if you can produce the right mix onstage -- and capture the audience's imagination -- you'll have a nice success no matter what," said Steve Traxler, a Chicago-based producer who with New York producer Jeffrey Richards brought "August: Osage County" to Broadway.
Traxler is optimistic that dramas with limited engagements will thrive because they rely more on loyal New York theatergoers and less on international tourists. On that belief, he is again collaborating with Richards to move "Reasons to Be Pretty," a new play by Neil LaBute, from off-Broadway to the Lyceum.
"Rock of Ages," an '80s-themed musical that originated in Los Angeles and has the advantage of a film in the works, is also moving this spring from off-Broadway to a Broadway theater.
But finding backers is getting tougher. Broadway insiders accuse the media of spooking live-theater investors with reports of show closings and half-filled theaters.
As it is, investors have only a 20% chance of recouping their money. But it's the onslaught of dour financial news that is chilling investors. "If you asked me to put $10 in a new show, I'd think twice," said Peter Schneider, a Los Angeles-based producer and investor.
Shows that already have raised $2 million (for a drama) or up to $20 million (for a musical) to open in the spring now have to focus on reducing weekly operating expenses, Schneider said. "They have to at least hope that these shows will be exciting and beautiful enough that they'll be something you want to see."
Nonprofit theaters also are cutting their budgets and asking donors for more money. Harold Wolpert, managing director of Broadway's nonprofit Roundabout Theatre Co., said he was preparing yet another letter asking for contributions, which are as crucial as ticket sales to keeping prices affordable for its 40,000 subscribers.
"We're doing everything we can to convince people even though times are tough we're offering good value," Wolpert said.
To lower costs, he has cut opening-night parties and is sending the newsletter via the Internet. At the same time, the company is weighing every aspect of producing. "You cut back and you cut back and the subscribers say the shows look chintzy," Wolpert said. "We're trying not to sacrifice the quality of what's onstage."
Even before the long-awaited revival of "Pal Joey" opened to less-than-ecstatic reviews in December, Wolpert said advance ticket sales weren't what they should have been given the title and the familiar music.
Elizabeth McCann, who is bringing "Hair" to Broadway in late February, is struggling to complete $6.5 million in financing, but she's convinced the show will attract audiences because it "has an extraordinary amount of sentimentality that others don't have."
McCann, a veteran producer who has a long history of hits and of balancing multiple projects, described the art of finessing the bottom line.
"You lower ticket prices on one set and raise them on another. You deal with priority seating one night and the next night you discount tickets." And if none of that works to cover the costs for the immense "Hair" cast, she said, "We'll open in China. They'll love ['Hair'] there."
McCann has also tried for years to revive "You Can't Take It With You." Now might be the perfect time. "It's a big old-fashioned play of the Depression," she said. "That's what audiences will find relevant."
Despite the economic anguish in the 1930s and 1940s, the theater was for the most part Depression-proof, according to historian Martin Gottfried. "People needed something to distract them and Broadway thrived," said Gottfried, who has written 13 books on the theater. Tickets, he noted, were $1.25 and "that was reasonable, even back then."
Victoria Bailey, who heads the nonprofit Theatre Development Fund that operates the TKTS discount ticket booths, said the downturn might force the business to be more creative about pricing tickets.
"If you look at recessions as a kind of moral adjustment, the experience of losing yourself for a few hours in someone else's story with other people who are like you will be important," she said, adding: "But we, as an industry, are going to have to be more articulate about why this is a rewarding experience."
And that may involve being aggressive about embracing social networking, blogging and getting young people informed about plays that don't have big advertising budgets but speak to their lives, she said. "What we've done is let theater become too precious."
If there is sanguinity -- even if it's forced -- it comes from the creative side.
Sarah Stiles gave up the female lead in "Avenue Q" to play the uptight and conservative Joanne, one of three leads in the musical version of "Vanities," which first opened in 1976 and ran for 1,785 performances off-Broadway.
For 2 1/2 years, Stiles has done every reading, workshop and backers' audition. She was devastated by the news that the opening was canceled.
Now she is focusing on her own material, joining forces on a sketch with a friend from "Avenue Q."
"Luckily, as actors, we can still do our work even if we're not getting paid for it," said Stiles, who says her husband can support her. "I know the pain I felt in that phone call is stuff I can remember and use. It's all things that make you grow as an actor."
geraldine.baum@latimes.com
Friday, December 26, 2008
Tribune seeks approval for union pension payments
Dec 26 (Reuters) - U.S. media group Tribune Co is asking a judge for permission to pay unpaid pre-bankruptcy contributions owed to its union pension plans.
In a motion filed on Wednesday in U.S. Bankruptcy Court in Delaware, the publisher of The Chicago Tribune and The Los Angeles Times said the payments were aimed at maintaining morale, union relationships and an essential union employee workforce.
The company is seeking the ability to immediately pay pre-bankruptcy contributions owed to the pension plans, provided the amount does not exceed $550,000. It is also seeking the ability to continue making contributions to those plans, while it operates in bankruptcy.
The court filing said about $443,000 was due to be paid to the pension plans as of Dec. 8, when the company filed for bankruptcy protection.
Tribune added that its average monthly payment under the pension plans is about $407,000.
The company has about 13,940 employees and 2,450 part-time employees. About 15 percent of those employees are represented by the unions, it said.
Tribune said if it fails to pay unpaid pension contributions it expects union representatives to immediately seek legal relief to compel the payment.
Tribune, which owns eight major daily newspapers and several television stations, filed for bankruptcy protection after collapsing under a heavy debt load, just a year after real estate mogul Sam Zell took it private. Much of the $8.2 billion buyout price was paid for by borrowing against future contributions to the pension plans for Tribune's workers, through their employee stock ownership plan.
A court hearing on the pension payment issue is set for Jan. 15, according to court documents.
The case is In re Tribune Co, U.S. Bankruptcy Court, District of Delaware, No. 08-13141. (Reporting by Santosh Nadgir in Bangalore, additional reporting by Emily Chasan in New York; Editing by Tim Dobbyn)
In a motion filed on Wednesday in U.S. Bankruptcy Court in Delaware, the publisher of The Chicago Tribune and The Los Angeles Times said the payments were aimed at maintaining morale, union relationships and an essential union employee workforce.
The company is seeking the ability to immediately pay pre-bankruptcy contributions owed to the pension plans, provided the amount does not exceed $550,000. It is also seeking the ability to continue making contributions to those plans, while it operates in bankruptcy.
The court filing said about $443,000 was due to be paid to the pension plans as of Dec. 8, when the company filed for bankruptcy protection.
Tribune added that its average monthly payment under the pension plans is about $407,000.
The company has about 13,940 employees and 2,450 part-time employees. About 15 percent of those employees are represented by the unions, it said.
Tribune said if it fails to pay unpaid pension contributions it expects union representatives to immediately seek legal relief to compel the payment.
Tribune, which owns eight major daily newspapers and several television stations, filed for bankruptcy protection after collapsing under a heavy debt load, just a year after real estate mogul Sam Zell took it private. Much of the $8.2 billion buyout price was paid for by borrowing against future contributions to the pension plans for Tribune's workers, through their employee stock ownership plan.
A court hearing on the pension payment issue is set for Jan. 15, according to court documents.
The case is In re Tribune Co, U.S. Bankruptcy Court, District of Delaware, No. 08-13141. (Reporting by Santosh Nadgir in Bangalore, additional reporting by Emily Chasan in New York; Editing by Tim Dobbyn)
Wednesday, December 24, 2008
Newspaper Guild Local Named to Creditor Committee in Tribune Bankruptcy Filing
WASHINGTON, Dec. 19 /PRNewswire-USNewswire/ -- The Washington-Baltimore Newspaper Guild-CWA, which represents employees at the Baltimore Sun, has been named as one of nine members of the creditors' committee in the bankruptcy filing by Tribune Co.
The relatively unusual inclusion of a union on a creditors' committee follows the Guild's success last week in securing Tribune's commitment to pay promised severance and health care benefits to employees who recently accepted a company buy-out. The payments were threatened by Tribune's filing for Chapter 11 bankruptcy in Wilmington, Del., just slightly more than one year after the company was taken private in a complex transaction that saddled it with nearly $13 billion in debt.
"We're extremely happy that we'll now be in a position to watch out for our members' best interests," said Cet Parks, the Guild's executive officer. "And we're appreciative that Tribune will honor its commitments to the several dozen employees who accepted severance packages after years of dedicated service to the Sun."
Added Bernie Lunzer, president of The Newspaper Guild-CWA: "Our ability to get a seat on the committee ensures that the voice of Tribune Company's workers will get heard in the proceedings."
Other members of the creditors' committee include major banks and suppliers, including JPMorgan Chase Bank, Merrill Lynch Capital Corp., Deutsche Bank Trust, Warner Bros. Television, Vertis and the Pension Benefit Guaranty Corp. At a meeting Dec. 18 following the naming of committee members, the group interviewed several law firms, selecting Chadbourne & Parke as counsel to the committee.
Robert Paul, of Zwerdling, Paul, Kahn & Wolly, is the Guild's representative on the committee.
The creditors' committee also chose representatives of JPMorgan and Warner Bros. TV as committee co-chairs, and was meeting today to interview investment advisers. It also will draft a set of by-laws to govern its activities as it prepares for the next court hearing, scheduled for Jan. 5.
Approximately 60 Guild members have taken buyouts at the Sun over the past year. Another 300 Guild members continue to work at the newspaper, which is the only one of Tribune's daily newspapers to have a unionized newsroom. An additional 1,000 or so employees in other parts of Tribune operations are represented by the Teamsters.
SOURCE The Newspaper Guild-CWA
The relatively unusual inclusion of a union on a creditors' committee follows the Guild's success last week in securing Tribune's commitment to pay promised severance and health care benefits to employees who recently accepted a company buy-out. The payments were threatened by Tribune's filing for Chapter 11 bankruptcy in Wilmington, Del., just slightly more than one year after the company was taken private in a complex transaction that saddled it with nearly $13 billion in debt.
"We're extremely happy that we'll now be in a position to watch out for our members' best interests," said Cet Parks, the Guild's executive officer. "And we're appreciative that Tribune will honor its commitments to the several dozen employees who accepted severance packages after years of dedicated service to the Sun."
Added Bernie Lunzer, president of The Newspaper Guild-CWA: "Our ability to get a seat on the committee ensures that the voice of Tribune Company's workers will get heard in the proceedings."
Other members of the creditors' committee include major banks and suppliers, including JPMorgan Chase Bank, Merrill Lynch Capital Corp., Deutsche Bank Trust, Warner Bros. Television, Vertis and the Pension Benefit Guaranty Corp. At a meeting Dec. 18 following the naming of committee members, the group interviewed several law firms, selecting Chadbourne & Parke as counsel to the committee.
Robert Paul, of Zwerdling, Paul, Kahn & Wolly, is the Guild's representative on the committee.
The creditors' committee also chose representatives of JPMorgan and Warner Bros. TV as committee co-chairs, and was meeting today to interview investment advisers. It also will draft a set of by-laws to govern its activities as it prepares for the next court hearing, scheduled for Jan. 5.
Approximately 60 Guild members have taken buyouts at the Sun over the past year. Another 300 Guild members continue to work at the newspaper, which is the only one of Tribune's daily newspapers to have a unionized newsroom. An additional 1,000 or so employees in other parts of Tribune operations are represented by the Teamsters.
SOURCE The Newspaper Guild-CWA
Starbucks Loses Round in Battle Over Union
By STEVEN GREENHOUSE
The New York Times
A National Labor Relations Board judge ruled on Tuesday that Starbucks had illegally fired three baristas and otherwise violated federal labor laws in seeking to beat back unionization efforts at several of its Manhattan cafes.
The administrative law judge, Mindy E. Landow, found that Starbucks had also broken the law by issuing negative job evaluations to union supporters and prohibiting employees from discussing the union even though the employees were allowed to discuss other subjects not related to work.
“The judge’s ruling shows that this company has trampled on workers’ rights to organize a labor union,” said one of the fired baristas, Daniel Gross, who is a longtime leader of the effort by the Industrial Workers of the World to unionize Starbucks workers in New York, Minnesota, Michigan and other states.
Judge Landow ordered that Mr. Gross and the two other baristas be reinstated to their jobs and receive back wages. She also ordered Starbucks to pledge to end what she said was discriminatory treatment toward workers who supported the union at four of its Manhattan shops: 200 Madison Avenue at 36th Street, 145 Second Avenue at 9th Street, 15 Union Square East and 116 East 57th Street.
Starbucks was quick to voice its dismay with the ruling.
“While we respect the N.L.R.B. process, we’re disappointed with the decision, and we intend to appeal it to the next stage in the process,” said Tara Darrow, a spokeswoman for Starbucks. She said the company was disappointed that the decision did not take into consideration what she said where personal threats lodged against managers.
Ms. Darrow said the company was proud of its tradition of communicating with its employees directly, and not through a union. “We believe that at the end of this, our policies and approach will be deemed fair and consistent.”
The judge’s ruling grows out of charges that the labor board’s Manhattan office brought against Starbucks in April 2007.
In March 2006, Starbucks reached a settlement with the union, agreeing to pay $2,000 in back pay and reinstating two other New York baristas who the labor board said had been fired illegally as part of an effort to quash unionization. Judge Landow ruled against Starbucks on most issues, finding that its managers had improperly barred employees from wearing more than one pro-union button and had illegally prohibited workers at its Union Square East store from posting union items on a company bulletin board.
The judge also ruled that a Starbucks manager had illegally prohibited employees from talking about wages and other terms of employment.
But the judge found that Starbucks managers did not improperly discriminate when they prohibited two union supporters from wearing what the managers said were overly obtrusive necklaces.
The 88-page ruling describes a bitter and escalating battle between Starbucks and the union since it began its organizing drive in 2004. The union has repeatedly sought to pressure Starbucks, demonstrating outside shops and handing petitions to management demanding improvements in working conditions.
The company asserted that the fired employees were terminated for legitimate reasons, including insubordination, disrespectful conduct, using profane language and poor work performance. But Judge Landow found that the three fired employees — Mr. Gross, Joe Agins Jr. and Isis Saenz — were fired because of their pro-union activities.
Judge Landow’s decision noted that Starbucks tried to keep close track of union supporters, going so far as to disseminate “what information it received regarding off-duty employee gatherings, such as parties, where recruiting was suspected.”
“This decision conclusively establishes Starbucks’ animosity toward labor organizing,” said Stuart Lichten, a lawyer for the union. “For the first time, a judge has confirmed the existence of a nationally coordinated antiunion operation at Starbucks.”
Help support print media, enjoy the convenience of home delivery of The Times for less than $1 a day.
_______________
The New York Times
A National Labor Relations Board judge ruled on Tuesday that Starbucks had illegally fired three baristas and otherwise violated federal labor laws in seeking to beat back unionization efforts at several of its Manhattan cafes.
The administrative law judge, Mindy E. Landow, found that Starbucks had also broken the law by issuing negative job evaluations to union supporters and prohibiting employees from discussing the union even though the employees were allowed to discuss other subjects not related to work.
“The judge’s ruling shows that this company has trampled on workers’ rights to organize a labor union,” said one of the fired baristas, Daniel Gross, who is a longtime leader of the effort by the Industrial Workers of the World to unionize Starbucks workers in New York, Minnesota, Michigan and other states.
Judge Landow ordered that Mr. Gross and the two other baristas be reinstated to their jobs and receive back wages. She also ordered Starbucks to pledge to end what she said was discriminatory treatment toward workers who supported the union at four of its Manhattan shops: 200 Madison Avenue at 36th Street, 145 Second Avenue at 9th Street, 15 Union Square East and 116 East 57th Street.
Starbucks was quick to voice its dismay with the ruling.
“While we respect the N.L.R.B. process, we’re disappointed with the decision, and we intend to appeal it to the next stage in the process,” said Tara Darrow, a spokeswoman for Starbucks. She said the company was disappointed that the decision did not take into consideration what she said where personal threats lodged against managers.
Ms. Darrow said the company was proud of its tradition of communicating with its employees directly, and not through a union. “We believe that at the end of this, our policies and approach will be deemed fair and consistent.”
The judge’s ruling grows out of charges that the labor board’s Manhattan office brought against Starbucks in April 2007.
In March 2006, Starbucks reached a settlement with the union, agreeing to pay $2,000 in back pay and reinstating two other New York baristas who the labor board said had been fired illegally as part of an effort to quash unionization. Judge Landow ruled against Starbucks on most issues, finding that its managers had improperly barred employees from wearing more than one pro-union button and had illegally prohibited workers at its Union Square East store from posting union items on a company bulletin board.
The judge also ruled that a Starbucks manager had illegally prohibited employees from talking about wages and other terms of employment.
But the judge found that Starbucks managers did not improperly discriminate when they prohibited two union supporters from wearing what the managers said were overly obtrusive necklaces.
The 88-page ruling describes a bitter and escalating battle between Starbucks and the union since it began its organizing drive in 2004. The union has repeatedly sought to pressure Starbucks, demonstrating outside shops and handing petitions to management demanding improvements in working conditions.
The company asserted that the fired employees were terminated for legitimate reasons, including insubordination, disrespectful conduct, using profane language and poor work performance. But Judge Landow found that the three fired employees — Mr. Gross, Joe Agins Jr. and Isis Saenz — were fired because of their pro-union activities.
Judge Landow’s decision noted that Starbucks tried to keep close track of union supporters, going so far as to disseminate “what information it received regarding off-duty employee gatherings, such as parties, where recruiting was suspected.”
“This decision conclusively establishes Starbucks’ animosity toward labor organizing,” said Stuart Lichten, a lawyer for the union. “For the first time, a judge has confirmed the existence of a nationally coordinated antiunion operation at Starbucks.”
Help support print media, enjoy the convenience of home delivery of The Times for less than $1 a day.
_______________
No More Leveraged Buyouts
BY TED RALL
BoiseWeekly.com
Stop speculators from ruining strong companies
JAMAICA, VERMONT—The Crash of '08 offers the incoming Obama administration a rare chance to rein in the excesses of our economic system. I can think of few better places to start than banning leveraged buyouts.
Leveraged buyouts are Wall Street's solution to American capitalism's dirtiest secret and biggest problem: No one has any money. Really. Working as an investment banker during the 1980s, I was repeatedly astonished when deals would fall apart because would-be buyers of major corporations didn't have enough cash on hand to buy a house in the Hamptons. Many of the wealthiest people in the world, it turned out, have zero or negative net worth. According to The New York Times, for example, one of Donald Trump's biggest sources of income was his job hosting the TV show The Apprentice. Those buildings with his name on them? He leased his name to developers who liked his brand.
It's true: The rich are different from you and me. But not because they're rich. If most "wealthy" people ever had to settle up with their creditors, they'd be worth less than the average homeless Iraq War vet. What they do have—or, until recently, had—are big lines of credit.
LBOs are a way for cash-poor "rich" people and corporations to buy companies they can't really afford. First the would-be acquirer buys enough stock to get controlling interest in the targeted company. A bank lends him the rest of the purchase price, using the purchased company's own assets as collateral. Overnight, a profitable company with a healthy balance sheet can find itself burdened with staggering debt—its own purchase price.
Now the corporate raider owns the company. But the company owes big payments to the bank. The raider has two options. He can use his management skills to make it more efficient and profitable. Or he can sell off pieces of the company. More often than not, "turnaround" experts find that they're not much smarter than the management they replaced and end up selling assets and cutting costs. For other acquirers, turnarounds aren't the point. They're out to gut the joint from the start.
The results are the same in both scenarios. Each sale of a division and each round of layoffs reduces the already cash-starved acquired company's chances of survival. The formerly profitable company is forced to file bankruptcy. Its employees lose their jobs. Because the law inexplicably lets corporations use retirement plans as collateral for loans, they often lose their pensions, too. Suppliers are stiffed. Customers suffer higher costs due to less competition.
It's bad news for most people—but not for everyone. The corporate raider sells off his equity stake in the company before the fiscal excrement encounters the fan, then pays himself and his friends millions in golden parachutes. The bank, which collected high interest payments as the company began its post-LBO decline, seizes and sells off what remains of the company's assets.
Here's another way to look at it: Let's say you want to buy a car you can't afford, like a Rolls Royce. You "buy" the fancy handcrafted auto using the car itself as collateral. When the payments come due, you sell the engine, tires, carburetor, CD player and other parts to a chop shop. You pocket the cash and default on your loan. This, of course, is illegal—yet in this scenario, all that's been lost is a nice car.
LBOs inflict much greater damage. They transform profitable companies into bankrupt ones, throw thousands of people out of work, stifle competition and deprive government of the tax revenues it needs in order to build schools, maintain roads and drop bombs on Muslims. Yet LBOs are legal.
Generally speaking, LBOs succeed under two conditions: an expanding economy and a management team able to radically increase profits in a short time. These conditions are rarely present at the same time, and almost never for very long.
Signs that the LBO model was untenable began appearing 20 years ago, when two of corporate raider Robert Campeau's victims, the Revco drugstore chain and Federated Department Stores, went bankrupt. Federated, which employed thousands of American workers before Campeau came along, had been saddled with LBO debt equal to 97 percent of its net assets.
LBO transactions have since led to scores of bankruptcies and hundreds of thousands of Americans losing their jobs—all to line the pockets of a tiny cabal of greedy speculators. The LBO goons' latest victims, ironically enough, are the media giants lionized by their own business reporters in breathless puff pieces.
In 2007 Sam Zell, described as "a 65-year-old billionaire and president of Chicago-based Equity Group Investments," bought the Tribune Company for $8.23 billion. Tribune was one of the largest media chains in the United States, owning the Chicago Tribune, the Los Angeles Times, The Baltimore Sun, 20 television stations, and other properties—as well as the Chicago Cubs baseball team. Like most "billionaires," Zell didn't have any money. Like most takeover artists, he didn't know anything about the multibillion-dollar business he wanted to run.
Zell invested a mere $315 million (3.6 percent of the purchase price) and stuck Tribune with $8.4 billion of debt, promising to make early debt payments by selling the Cubs and turning around the company's flagging newspapers.
Everyone saw trouble ahead. "The leveraged buyout is making Tribune one of the riskiest newspaper companies, according to John Puchalla, a media analyst at Moody's Investors Service in New York," reported the Bloomberg business wire service at the time. Now, a year later, Tribune has filed for Chapter 11. Layoffs are coming fast and furious. After just 18 months under Zell's careful stewardship, Tribune—formerly a profitable company—reports assets of $7.6 billion and debt of $13 billion.
"Factors beyond our control have created a perfect storm—a precipitous decline in revenue and a tough economy coupled with a credit crisis that makes it extremely difficult to support our debt," Zell said, acknowledging the disaster.
Zell is right about the credit crisis. But it would have been a lot easier for Tribune to weather the storm if he'd never come along.
Ted Rall is the author of the seminal Generation X manifesto "Revenge of the Latchkey Kids" and a former loan officer for The Industrial Bank of Japan. He draws cartoons and writes columns for Universal Press Syndicate.
BoiseWeekly.com
Stop speculators from ruining strong companies
JAMAICA, VERMONT—The Crash of '08 offers the incoming Obama administration a rare chance to rein in the excesses of our economic system. I can think of few better places to start than banning leveraged buyouts.
Leveraged buyouts are Wall Street's solution to American capitalism's dirtiest secret and biggest problem: No one has any money. Really. Working as an investment banker during the 1980s, I was repeatedly astonished when deals would fall apart because would-be buyers of major corporations didn't have enough cash on hand to buy a house in the Hamptons. Many of the wealthiest people in the world, it turned out, have zero or negative net worth. According to The New York Times, for example, one of Donald Trump's biggest sources of income was his job hosting the TV show The Apprentice. Those buildings with his name on them? He leased his name to developers who liked his brand.
It's true: The rich are different from you and me. But not because they're rich. If most "wealthy" people ever had to settle up with their creditors, they'd be worth less than the average homeless Iraq War vet. What they do have—or, until recently, had—are big lines of credit.
LBOs are a way for cash-poor "rich" people and corporations to buy companies they can't really afford. First the would-be acquirer buys enough stock to get controlling interest in the targeted company. A bank lends him the rest of the purchase price, using the purchased company's own assets as collateral. Overnight, a profitable company with a healthy balance sheet can find itself burdened with staggering debt—its own purchase price.
Now the corporate raider owns the company. But the company owes big payments to the bank. The raider has two options. He can use his management skills to make it more efficient and profitable. Or he can sell off pieces of the company. More often than not, "turnaround" experts find that they're not much smarter than the management they replaced and end up selling assets and cutting costs. For other acquirers, turnarounds aren't the point. They're out to gut the joint from the start.
The results are the same in both scenarios. Each sale of a division and each round of layoffs reduces the already cash-starved acquired company's chances of survival. The formerly profitable company is forced to file bankruptcy. Its employees lose their jobs. Because the law inexplicably lets corporations use retirement plans as collateral for loans, they often lose their pensions, too. Suppliers are stiffed. Customers suffer higher costs due to less competition.
It's bad news for most people—but not for everyone. The corporate raider sells off his equity stake in the company before the fiscal excrement encounters the fan, then pays himself and his friends millions in golden parachutes. The bank, which collected high interest payments as the company began its post-LBO decline, seizes and sells off what remains of the company's assets.
Here's another way to look at it: Let's say you want to buy a car you can't afford, like a Rolls Royce. You "buy" the fancy handcrafted auto using the car itself as collateral. When the payments come due, you sell the engine, tires, carburetor, CD player and other parts to a chop shop. You pocket the cash and default on your loan. This, of course, is illegal—yet in this scenario, all that's been lost is a nice car.
LBOs inflict much greater damage. They transform profitable companies into bankrupt ones, throw thousands of people out of work, stifle competition and deprive government of the tax revenues it needs in order to build schools, maintain roads and drop bombs on Muslims. Yet LBOs are legal.
Generally speaking, LBOs succeed under two conditions: an expanding economy and a management team able to radically increase profits in a short time. These conditions are rarely present at the same time, and almost never for very long.
Signs that the LBO model was untenable began appearing 20 years ago, when two of corporate raider Robert Campeau's victims, the Revco drugstore chain and Federated Department Stores, went bankrupt. Federated, which employed thousands of American workers before Campeau came along, had been saddled with LBO debt equal to 97 percent of its net assets.
LBO transactions have since led to scores of bankruptcies and hundreds of thousands of Americans losing their jobs—all to line the pockets of a tiny cabal of greedy speculators. The LBO goons' latest victims, ironically enough, are the media giants lionized by their own business reporters in breathless puff pieces.
In 2007 Sam Zell, described as "a 65-year-old billionaire and president of Chicago-based Equity Group Investments," bought the Tribune Company for $8.23 billion. Tribune was one of the largest media chains in the United States, owning the Chicago Tribune, the Los Angeles Times, The Baltimore Sun, 20 television stations, and other properties—as well as the Chicago Cubs baseball team. Like most "billionaires," Zell didn't have any money. Like most takeover artists, he didn't know anything about the multibillion-dollar business he wanted to run.
Zell invested a mere $315 million (3.6 percent of the purchase price) and stuck Tribune with $8.4 billion of debt, promising to make early debt payments by selling the Cubs and turning around the company's flagging newspapers.
Everyone saw trouble ahead. "The leveraged buyout is making Tribune one of the riskiest newspaper companies, according to John Puchalla, a media analyst at Moody's Investors Service in New York," reported the Bloomberg business wire service at the time. Now, a year later, Tribune has filed for Chapter 11. Layoffs are coming fast and furious. After just 18 months under Zell's careful stewardship, Tribune—formerly a profitable company—reports assets of $7.6 billion and debt of $13 billion.
"Factors beyond our control have created a perfect storm—a precipitous decline in revenue and a tough economy coupled with a credit crisis that makes it extremely difficult to support our debt," Zell said, acknowledging the disaster.
Zell is right about the credit crisis. But it would have been a lot easier for Tribune to weather the storm if he'd never come along.
Ted Rall is the author of the seminal Generation X manifesto "Revenge of the Latchkey Kids" and a former loan officer for The Industrial Bank of Japan. He draws cartoons and writes columns for Universal Press Syndicate.
Tuesday, December 23, 2008
Hope Amid the Gloom
By BOB HERBERT
Op-Ed Columnist
The New York Times
Is the end of the war in sight?
I don’t mean Iraq. I’m talking about the war against working people in the U.S. that has taken such a vicious economic toll over the past three decades.
Even as Americans by the thousands sign up for jobless benefits in this horrendous holiday season, or line up to declare bankruptcy, or stand sorrowfully aside as their homes are foreclosed upon, there are some slender reasons to hope.
On Friday, George W. Bush, in the slapstick final weeks of his disastrous presidency, grudgingly announced that, yes, emergency loans would be made available to prevent the collapse of the U.S. auto industry. He looked like a boy who had been forced to eat his spinach, or drink his castor oil.
But the economy is in such an awful state that even the most backward administration of our lifetime recognized that risking the chain reaction of a complete auto industry meltdown was not an option. (The Bush deal is unfairly onerous to auto workers, but the loans will serve as a bridge to the Obama era, when, presumably, a more equitable arrangement could be worked out.)
Mr. Bush’s announcement came a day after it was learned that President-elect Obama had chosen Representative Hilda Solis of California, a fierce advocate of workers, to be his labor secretary. The Obama administration also is committed to moving quickly on an economic stimulus package that could reach $1 trillion over two years.
These are developments that portend a radically different environment for the nation’s workers. From Ronald Reagan’s voodoo economics to Henry Paulson’s $700 billion Troubled Asset Relief Program, we’ve put the mighty resources of the national government overwhelmingly on the side of those who were already rich and powerful.
Ordinary workers have suffered. It took years to get a lousy little boost in the minimum wage for the working poor. Attempts to expand health insurance coverage were fought almost to a standstill. Guaranteed pensions vanished. And the maniacs who set fire to the economy with their incendiary financial instruments (yet another form of voodoo) were hot to privatize Social Security.
As Andy Stern, president of the huge Service Employees International Union, told me on Friday: “We’ve had a 25-year experience with market-worshipping, deregulating, privatizing, trickle-down policies, and it has ended us up with the greatest economy on earth staggering, and with the greatest amount of inequality since the Great Depression.”
The contempt for workers over this long period has hardly been hidden. Until Mr. Bush was forced by circumstances to tap the TARP program for the auto industry loans (small potatoes compared with the gargantuan Wall Street bailouts), the administration had gone out of its way to keep the program’s hundreds of billions of dollars reserved for the elites of the financial services industry and their associates.
These elites, of course, were the geniuses who ruined the most powerful economy on earth. When Citigroup went into yet another swoon last month, the rush to rescue it was breathtaking. Posses don’t come more elegant: the outgoing treasury secretary, Hank Paulson; the incoming treasury secretary (and president of the Federal Reserve Bank of New York), Timothy Geithner; and a former treasury secretary (not to mention Citigroup board member), Robert Rubin.
They materialized magnificently, armed with hundreds of billions in taxpayer bailout cash.
Leo Gerard, president of the steelworkers union, summed up the government’s attitude nicely when he said: “Washington will bail out those who shower before work, but not those who shower afterwards.”
Working people have been treated like enemies, a class to be preyed upon. Labor unions were ferociously attacked. Jobs were shipped overseas by the millions. People were hired as temps or consultants so benefits could be denied.
All of this may finally be changing. It remains to be seen how strong a voice Ms. Solis will have in the Obama administration, but she is pro-worker to her core, a politician who actually knows what it’s like to walk a picket line.
And there have been other promising developments. More than 200 laid-off workers staged a successful six-day sit-in at a factory in Chicago this month, demanding and eventually getting severance pay and benefits that they were owed by law.
A more substantial victory occurred in Tar Heel, N.C., last week when workers, after a brutal 15-year struggle, succeeded in organizing the notorious Smithfield Packing slaughterhouse, the largest hog-killing and processing plant in the world.
These are shaky steps in the overall scheme of things, to be sure. But at long last, they are steps in the right direction.
Op-Ed Columnist
The New York Times
Is the end of the war in sight?
I don’t mean Iraq. I’m talking about the war against working people in the U.S. that has taken such a vicious economic toll over the past three decades.
Even as Americans by the thousands sign up for jobless benefits in this horrendous holiday season, or line up to declare bankruptcy, or stand sorrowfully aside as their homes are foreclosed upon, there are some slender reasons to hope.
On Friday, George W. Bush, in the slapstick final weeks of his disastrous presidency, grudgingly announced that, yes, emergency loans would be made available to prevent the collapse of the U.S. auto industry. He looked like a boy who had been forced to eat his spinach, or drink his castor oil.
But the economy is in such an awful state that even the most backward administration of our lifetime recognized that risking the chain reaction of a complete auto industry meltdown was not an option. (The Bush deal is unfairly onerous to auto workers, but the loans will serve as a bridge to the Obama era, when, presumably, a more equitable arrangement could be worked out.)
Mr. Bush’s announcement came a day after it was learned that President-elect Obama had chosen Representative Hilda Solis of California, a fierce advocate of workers, to be his labor secretary. The Obama administration also is committed to moving quickly on an economic stimulus package that could reach $1 trillion over two years.
These are developments that portend a radically different environment for the nation’s workers. From Ronald Reagan’s voodoo economics to Henry Paulson’s $700 billion Troubled Asset Relief Program, we’ve put the mighty resources of the national government overwhelmingly on the side of those who were already rich and powerful.
Ordinary workers have suffered. It took years to get a lousy little boost in the minimum wage for the working poor. Attempts to expand health insurance coverage were fought almost to a standstill. Guaranteed pensions vanished. And the maniacs who set fire to the economy with their incendiary financial instruments (yet another form of voodoo) were hot to privatize Social Security.
As Andy Stern, president of the huge Service Employees International Union, told me on Friday: “We’ve had a 25-year experience with market-worshipping, deregulating, privatizing, trickle-down policies, and it has ended us up with the greatest economy on earth staggering, and with the greatest amount of inequality since the Great Depression.”
The contempt for workers over this long period has hardly been hidden. Until Mr. Bush was forced by circumstances to tap the TARP program for the auto industry loans (small potatoes compared with the gargantuan Wall Street bailouts), the administration had gone out of its way to keep the program’s hundreds of billions of dollars reserved for the elites of the financial services industry and their associates.
These elites, of course, were the geniuses who ruined the most powerful economy on earth. When Citigroup went into yet another swoon last month, the rush to rescue it was breathtaking. Posses don’t come more elegant: the outgoing treasury secretary, Hank Paulson; the incoming treasury secretary (and president of the Federal Reserve Bank of New York), Timothy Geithner; and a former treasury secretary (not to mention Citigroup board member), Robert Rubin.
They materialized magnificently, armed with hundreds of billions in taxpayer bailout cash.
Leo Gerard, president of the steelworkers union, summed up the government’s attitude nicely when he said: “Washington will bail out those who shower before work, but not those who shower afterwards.”
Working people have been treated like enemies, a class to be preyed upon. Labor unions were ferociously attacked. Jobs were shipped overseas by the millions. People were hired as temps or consultants so benefits could be denied.
All of this may finally be changing. It remains to be seen how strong a voice Ms. Solis will have in the Obama administration, but she is pro-worker to her core, a politician who actually knows what it’s like to walk a picket line.
And there have been other promising developments. More than 200 laid-off workers staged a successful six-day sit-in at a factory in Chicago this month, demanding and eventually getting severance pay and benefits that they were owed by law.
A more substantial victory occurred in Tar Heel, N.C., last week when workers, after a brutal 15-year struggle, succeeded in organizing the notorious Smithfield Packing slaughterhouse, the largest hog-killing and processing plant in the world.
These are shaky steps in the overall scheme of things, to be sure. But at long last, they are steps in the right direction.
Comments
Hi All,
I've received a question on how Comments are moderated on this blog.
Here's the deal:
All comments must be signed and a contact e-mail provided. If you don't want your name published, say so and it will be published anonymously.
No cursing, obscene rants will not be published.
Posts must have something to do with general union news and/or broadcasting, film, TV, print, media, or theater related labor issues.
Comments are appreciated. The more we communicate with each other the better we will be able to cope with the challenges we face as working people in these difficult times.
Thank you for your support. All the best to everyone in this Holiday Season.
Fraternally,
Robert Daraio
Moderator
Broadcast Union News
bdaraio@yahoo.com
I've received a question on how Comments are moderated on this blog.
Here's the deal:
All comments must be signed and a contact e-mail provided. If you don't want your name published, say so and it will be published anonymously.
No cursing, obscene rants will not be published.
Posts must have something to do with general union news and/or broadcasting, film, TV, print, media, or theater related labor issues.
Comments are appreciated. The more we communicate with each other the better we will be able to cope with the challenges we face as working people in these difficult times.
Thank you for your support. All the best to everyone in this Holiday Season.
Fraternally,
Robert Daraio
Moderator
Broadcast Union News
bdaraio@yahoo.com
LA Times: Disclosure Failure
The LA Times published an anti-union, anti-Hilda Solis op-ed today by Bret Jacobson, the co-founder of the Center for Union Facts -- Rick Berman's anti-union front group. Unfortunately they failed to disclose any of Jacobson's ties to the Center and cited him only as a researcher and strategist.
Original article: http://www.latimes.com/news/opinion/commentary/la-oew-jacobson22-2008dec22,0,146187.story
Matt Hamlin takes a run at them on his personal blog, Hold Fast, and thinks this is the sort of thing we'll see a lot more of as the business groups step up their op-ed campaigns against Employee Free Choice.
From Hold Fast, a blog by Matt Browner Hamlin
In today's Los Angeles Times a man named Bret Jacobson writes a virulently anti-union screed attacking Labor Secretary nominee, Congresswoman Hilda Solis. Here's how the LA Times describes Jacobson at the bottom of his op-ed:
Bret Jacobson is founder and president of Maverick Strategies LLC, a research and communications firm serving business and free-market think tanks.
We've seen a lot of anti-union, anti-Obama, anti-worker, and anti-Free Choice op-eds penned by business consultants and "free-market think tank" types of late, so this isn't a terribly shocking biography for drivel like this. Of course, this isn't all Jacobson is. Here's what the highly-informative BretJacobson.com has to say:
Prior to founding Maverick Strategies, Bret co-founded the Center for Union Facts, overseeing that organization's research activities, guiding its communications, launching its new-media capabilities, and helping plan its strategic national advertising and earned-media campaigns.
And just for those not paying attention at home, here's Sourcewatch:
The Center for Union Facts is a secretive front group for individuals and industries opposed to union activities. It is part of lobbyist Rick Berman's family of front groups including the Employment Policies Institute.
The domain name, www.unionfacts.com was registered to Berman & Co. in May 2005.
American Rights At Work is a bit more hard hitting in their assessment of the Center for Union Facts:
The Center is the latest public relations campaign and front group devised by "notorious D.C. lobbyist" and veteran spin doctor Richard "Rick" Berman with his firm, Berman and Company.
The Center for Union Facts is a front group focused on damaging the public image of unions, depressing workers' rights, pushing legislation that would make it more difficult for workers to join unions, and furthering an anti-union business climate.
Berman earned his status as one of The Hill's top lobbyists, along with Jack Abramoff, by working on behalf of unpopular clients like the tobacco, alcohol, and fast food industries. Berman's campaigns have attempted to relax drunk driving laws, argue obesity is not a public health issue, prevent increases in the federal or state minimum wage, and attack advocacy groups like Mothers Against Drunk Driving (MADD).
…
The Center for Union Facts' legislative agenda is strikingly similar to the U.S. Chamber of Commerce's.
The big business lobbying group both adamantly opposes the Employee Free Choice Act, and is in strong support of the Secret Ballot Protection Act. Berman formerly devised union avoidance strategies for the U.S. Chamber of Commerce, and he still has strong ties to the Chamber through Randel Johnson, Vice President for Labor at the U.S. Chamber of Commerce.
Berman told The New York Times that he asked Chamber of Commerce officials at a state conference to recommend that businesses in their states donate to his anti-union campaign. Randel Johnson has repeatedly denied any Chamber funding of the Center, yet admitted "he had served as an adviser to the Center."
On its website, the Center claims it is "supported by foundations, businesses, union members, and the general public." Berman will only divulge that several companies and a foundation fund the Center, but will not release the names of his donors.
No individuals, foundations, or corporations have come forward to admit any sponsorship of the Center.
Why wouldn't they want to distance themselves from Berman's hyperbolic and unsupported rhetoric? Berman gets paid to say what responsible business leaders don't want attributed to them. The Washington Post reported that food industry officials, who would only be interviewed about Berman, "on the condition that they not be identified by name or by where they work, said that by keeping the sponsors anonymous, Berman's group can be more vociferous, provocative and irreverent in its criticisms.
In short, the Center for Union Facts is the key organization in Big Business efforts to stop the progress of labor in America, most notably through fighting against the Employee Free Choice Act. One of their co-founders, Bret Jacobson, was given license to push the Center's anti-union, anti-worker agenda in an op-ed against the nominee for Labor Secretary, while the Times failed to disclose the only informative part of his biography. He's the founder of a research firm? What is that supposed to tell the Times' readers?
Pretty much every person I know who works in politics does some level of consulting. The most important piece of Jacobson's biography - his professional connection to one of the biggest anti-union groups in America - is left out of a column that specifically pushes the Center's agenda.
In an AP article three days ago, a spokesman for the Center attacked President-elect Obama's pick of Solis for Labor Secretary (though, amazingly, the AP cited the Center as "a group critical of organized labor").
There has been a heavy, persistent trend in the mainstream press of anti-union articles and op-eds. The business lobby has been very good about getting their surrogates' op-eds placed in big papers like the LA Times, NY Times, Washington Post, and Wall Street Journal. There is a major fight going on between big business and America's workers about the future of organizing to increase worker rights in America. The fight is centered around the Employee Free Choice Act, but clearly the Secretary of Labor is now another front in this fight.
As frustrating as it is to repeatedly read columns, like Jacobson's, which include outright lies about what the Employee Free Choice Act is and does, I am 100% willing to take part in a national debate about how our country relates to working families. There are obviously different sides in this debate and there is nothing wrong with the debate being played out in the press. But in this atmosphere of daily volleys back and forth between big business front groups like the Center for Union Facts and the Obama administration and the American labor movement, it behooves the press to be honest about who is taking part in the debate.
The LA Times was brutally negligent to not disclose Bret Jacobson's employment at the Center for Union Facts, the only piece of his biography that had any bearing on his column. By not disclosing Jacobson's ties to this anti-worker group, the LA Times succeeded in giving their pages over to a press release from a big business front group, with no means for their reader to discern it from a non-partisan piece on President-elect Obama's pick to chair the Department of Labor.
So editors of the Los Angeles Times, let me show you how this is done:
Disclosure: I'm proud to work for the Service Employees International Union…so proud that I disclose it when I write about issues that relate to my employer. That said, this post was not approved by nor written with the knowledge of SEIU. It is representative of my views alone.
Now that wasn't hard, was it?
Matt's post at Hold Fast:
http://holdfastblog.com/2008/12/23/somone-call-a-blogger-ethics-panel/
Original article: http://www.latimes.com/news/opinion/commentary/la-oew-jacobson22-2008dec22,0,146187.story
Matt Hamlin takes a run at them on his personal blog, Hold Fast, and thinks this is the sort of thing we'll see a lot more of as the business groups step up their op-ed campaigns against Employee Free Choice.
From Hold Fast, a blog by Matt Browner Hamlin
In today's Los Angeles Times a man named Bret Jacobson writes a virulently anti-union screed attacking Labor Secretary nominee, Congresswoman Hilda Solis. Here's how the LA Times describes Jacobson at the bottom of his op-ed:
Bret Jacobson is founder and president of Maverick Strategies LLC, a research and communications firm serving business and free-market think tanks.
We've seen a lot of anti-union, anti-Obama, anti-worker, and anti-Free Choice op-eds penned by business consultants and "free-market think tank" types of late, so this isn't a terribly shocking biography for drivel like this. Of course, this isn't all Jacobson is. Here's what the highly-informative BretJacobson.com has to say:
Prior to founding Maverick Strategies, Bret co-founded the Center for Union Facts, overseeing that organization's research activities, guiding its communications, launching its new-media capabilities, and helping plan its strategic national advertising and earned-media campaigns.
And just for those not paying attention at home, here's Sourcewatch:
The Center for Union Facts is a secretive front group for individuals and industries opposed to union activities. It is part of lobbyist Rick Berman's family of front groups including the Employment Policies Institute.
The domain name, www.unionfacts.com was registered to Berman & Co. in May 2005.
American Rights At Work is a bit more hard hitting in their assessment of the Center for Union Facts:
The Center is the latest public relations campaign and front group devised by "notorious D.C. lobbyist" and veteran spin doctor Richard "Rick" Berman with his firm, Berman and Company.
The Center for Union Facts is a front group focused on damaging the public image of unions, depressing workers' rights, pushing legislation that would make it more difficult for workers to join unions, and furthering an anti-union business climate.
Berman earned his status as one of The Hill's top lobbyists, along with Jack Abramoff, by working on behalf of unpopular clients like the tobacco, alcohol, and fast food industries. Berman's campaigns have attempted to relax drunk driving laws, argue obesity is not a public health issue, prevent increases in the federal or state minimum wage, and attack advocacy groups like Mothers Against Drunk Driving (MADD).
…
The Center for Union Facts' legislative agenda is strikingly similar to the U.S. Chamber of Commerce's.
The big business lobbying group both adamantly opposes the Employee Free Choice Act, and is in strong support of the Secret Ballot Protection Act. Berman formerly devised union avoidance strategies for the U.S. Chamber of Commerce, and he still has strong ties to the Chamber through Randel Johnson, Vice President for Labor at the U.S. Chamber of Commerce.
Berman told The New York Times that he asked Chamber of Commerce officials at a state conference to recommend that businesses in their states donate to his anti-union campaign. Randel Johnson has repeatedly denied any Chamber funding of the Center, yet admitted "he had served as an adviser to the Center."
On its website, the Center claims it is "supported by foundations, businesses, union members, and the general public." Berman will only divulge that several companies and a foundation fund the Center, but will not release the names of his donors.
No individuals, foundations, or corporations have come forward to admit any sponsorship of the Center.
Why wouldn't they want to distance themselves from Berman's hyperbolic and unsupported rhetoric? Berman gets paid to say what responsible business leaders don't want attributed to them. The Washington Post reported that food industry officials, who would only be interviewed about Berman, "on the condition that they not be identified by name or by where they work, said that by keeping the sponsors anonymous, Berman's group can be more vociferous, provocative and irreverent in its criticisms.
In short, the Center for Union Facts is the key organization in Big Business efforts to stop the progress of labor in America, most notably through fighting against the Employee Free Choice Act. One of their co-founders, Bret Jacobson, was given license to push the Center's anti-union, anti-worker agenda in an op-ed against the nominee for Labor Secretary, while the Times failed to disclose the only informative part of his biography. He's the founder of a research firm? What is that supposed to tell the Times' readers?
Pretty much every person I know who works in politics does some level of consulting. The most important piece of Jacobson's biography - his professional connection to one of the biggest anti-union groups in America - is left out of a column that specifically pushes the Center's agenda.
In an AP article three days ago, a spokesman for the Center attacked President-elect Obama's pick of Solis for Labor Secretary (though, amazingly, the AP cited the Center as "a group critical of organized labor").
There has been a heavy, persistent trend in the mainstream press of anti-union articles and op-eds. The business lobby has been very good about getting their surrogates' op-eds placed in big papers like the LA Times, NY Times, Washington Post, and Wall Street Journal. There is a major fight going on between big business and America's workers about the future of organizing to increase worker rights in America. The fight is centered around the Employee Free Choice Act, but clearly the Secretary of Labor is now another front in this fight.
As frustrating as it is to repeatedly read columns, like Jacobson's, which include outright lies about what the Employee Free Choice Act is and does, I am 100% willing to take part in a national debate about how our country relates to working families. There are obviously different sides in this debate and there is nothing wrong with the debate being played out in the press. But in this atmosphere of daily volleys back and forth between big business front groups like the Center for Union Facts and the Obama administration and the American labor movement, it behooves the press to be honest about who is taking part in the debate.
The LA Times was brutally negligent to not disclose Bret Jacobson's employment at the Center for Union Facts, the only piece of his biography that had any bearing on his column. By not disclosing Jacobson's ties to this anti-worker group, the LA Times succeeded in giving their pages over to a press release from a big business front group, with no means for their reader to discern it from a non-partisan piece on President-elect Obama's pick to chair the Department of Labor.
So editors of the Los Angeles Times, let me show you how this is done:
Disclosure: I'm proud to work for the Service Employees International Union…so proud that I disclose it when I write about issues that relate to my employer. That said, this post was not approved by nor written with the knowledge of SEIU. It is representative of my views alone.
Now that wasn't hard, was it?
Matt's post at Hold Fast:
http://holdfastblog.com/2008/12/23/somone-call-a-blogger-ethics-panel/
Friday, December 19, 2008
Zell could recoup investment, but employees likely won't
By Julie Johnsson and Mary Ellen Podmolik | Tribune reporters
Entities tied to CEO are creditors likely to be paid
Sam Zell potentially stands to recoup some of his investment as troubled media giant Tribune Co. reorganizes under Chapter 11 protection.
But Tribune Co. employees are unlikely to see any gain from their brief stint as owners of their company through a transaction engineered by Zell that left the Chicago media firm saddled with $13 billion in debt, bankruptcy experts said.
Tribune Co., after United Airlines, is the second major Chicago company to seek bankruptcy protection this decade after forming an employee stock ownership plan.
In engineering a deal to take the media company private last year, Zell struck an agreement that left him poised to benefit richly if the complex transaction succeeded, while potentially hedging his losses if Tribune Co. wound up in bankruptcy.
For $315 million, entities affiliated with Zell bought a $225 million "subordinated promissory note" as well as warrants that would allow Zell to eventually buy 40 percent of Tribune Co. for as little as $500 million.
"He's a very smart guy and structured this to benefit him all the way," said Chicago compensation expert Don Delves.
The $225 million note means that Zell-controlled entities are a major unsecured creditor and, under bankruptcy law, will be compensated ahead of shareholders when a Delaware bankruptcy judge settles Tribune Co.'s debts, Monday's bankruptcy filings indicate.
Experts think the leveraged ESOP that gave Tribune Co. employees theoretical control of their company will likely be wiped out.
"The ESOP still exists and its value and role, long term, will be determined in the restructuring," said Gary Weitman, a spokesman for Tribune Co., which owns the Chicago Tribune and other media properties.
While United workers funded their ESOP by deferring pay raises, Tribune Co. workers stood to gain stock as their company paid off debt. Tribune Co. workers aren't vested yet, and the plan, less than 2 years old, hasn't garnered significant assets.
"Employees are marginally worse off now than before the ESOP," said Corey Rosen, executive director of the National Center for Employee Ownership.
For now, Tribune Co. says it intends to continue paying pensions, which aren't part of the ESOP.
Tribune Co. paid $59.5 million from pension assets as special one-time pension payments to 1,500 employees who left the company during the first nine months of this year.
The company said Monday that it had stopped ongoing severance and deferred-compensation payments to a handful of former employees, who will be required to file a claim with the court.
The bankruptcy filing comes less than three months after a group of six current and former Los Angeles Times employees sued Zell and Tribune Co. over the deal. The suit states: "Because Zell's outlay is primarily debt, Zell has greater protection in the event of bankruptcy; the employee-owners' shares, as equity, would not."
Phil Gregory, an attorney representing those suing Zell, said Monday: "This is exactly what we said would happen."
jjohnsson@tribune.com
___________________________________________
Chicago Tribune to print Wall Street Journal, Barron's
Chicago Tribune Deal expected to net company $2 million a year
The Chicago Tribune announced a new deal with Dow Jones & Co. to print daily and weekend editions of The Wall Street Journal and the weekly Barron's in the Midwest.
The Tribune already has had a distribution deal with News Corp.-owned Dow Jones.
Printing the Dow Jones papers at the Tribune's Freedom Center—a deal anticipated in early November when Dow Jones & Co. said it planned to shutter its printing facility in Naperville—is expected to net the Chicago Tribune more than $2 million annually, while reducing Dow Jones' expenses in the region.
"We're thrilled to be growing our business relationship with Dow Jones," Becky Brubaker, Tribune senior vice president of manufacturing and distribution, said in a statement.
Creditors picked in Tribune filing
Tribune Co.'s official committee of unsecured creditors will include Wall Street banks and the Pension Benefit Guaranty Corp.
JPMorgan Chase Bank NA, Merrill Lynch Capital Corp. and Deutsche Bank National Trust also won seats on the eight-member committee of unsecured creditors, which represents the interest of all holding debt not backed by collateral.
Tribune Co., the Chicago-based owner of the Chicago Tribune, filed for bankruptcy Dec. 8, less than a year after real estate billionaire Sam Zell took it private as an employee-owned company in an $8.3 billion deal that saddled it with debt. Most of the company's $13 billion in debt isn't guaranteed by Tribune Co.'s newspapers and broadcasting stations.
Entities tied to CEO are creditors likely to be paid
Sam Zell potentially stands to recoup some of his investment as troubled media giant Tribune Co. reorganizes under Chapter 11 protection.
But Tribune Co. employees are unlikely to see any gain from their brief stint as owners of their company through a transaction engineered by Zell that left the Chicago media firm saddled with $13 billion in debt, bankruptcy experts said.
Tribune Co., after United Airlines, is the second major Chicago company to seek bankruptcy protection this decade after forming an employee stock ownership plan.
In engineering a deal to take the media company private last year, Zell struck an agreement that left him poised to benefit richly if the complex transaction succeeded, while potentially hedging his losses if Tribune Co. wound up in bankruptcy.
For $315 million, entities affiliated with Zell bought a $225 million "subordinated promissory note" as well as warrants that would allow Zell to eventually buy 40 percent of Tribune Co. for as little as $500 million.
"He's a very smart guy and structured this to benefit him all the way," said Chicago compensation expert Don Delves.
The $225 million note means that Zell-controlled entities are a major unsecured creditor and, under bankruptcy law, will be compensated ahead of shareholders when a Delaware bankruptcy judge settles Tribune Co.'s debts, Monday's bankruptcy filings indicate.
Experts think the leveraged ESOP that gave Tribune Co. employees theoretical control of their company will likely be wiped out.
"The ESOP still exists and its value and role, long term, will be determined in the restructuring," said Gary Weitman, a spokesman for Tribune Co., which owns the Chicago Tribune and other media properties.
While United workers funded their ESOP by deferring pay raises, Tribune Co. workers stood to gain stock as their company paid off debt. Tribune Co. workers aren't vested yet, and the plan, less than 2 years old, hasn't garnered significant assets.
"Employees are marginally worse off now than before the ESOP," said Corey Rosen, executive director of the National Center for Employee Ownership.
For now, Tribune Co. says it intends to continue paying pensions, which aren't part of the ESOP.
Tribune Co. paid $59.5 million from pension assets as special one-time pension payments to 1,500 employees who left the company during the first nine months of this year.
The company said Monday that it had stopped ongoing severance and deferred-compensation payments to a handful of former employees, who will be required to file a claim with the court.
The bankruptcy filing comes less than three months after a group of six current and former Los Angeles Times employees sued Zell and Tribune Co. over the deal. The suit states: "Because Zell's outlay is primarily debt, Zell has greater protection in the event of bankruptcy; the employee-owners' shares, as equity, would not."
Phil Gregory, an attorney representing those suing Zell, said Monday: "This is exactly what we said would happen."
jjohnsson@tribune.com
___________________________________________
Chicago Tribune to print Wall Street Journal, Barron's
Chicago Tribune Deal expected to net company $2 million a year
The Chicago Tribune announced a new deal with Dow Jones & Co. to print daily and weekend editions of The Wall Street Journal and the weekly Barron's in the Midwest.
The Tribune already has had a distribution deal with News Corp.-owned Dow Jones.
Printing the Dow Jones papers at the Tribune's Freedom Center—a deal anticipated in early November when Dow Jones & Co. said it planned to shutter its printing facility in Naperville—is expected to net the Chicago Tribune more than $2 million annually, while reducing Dow Jones' expenses in the region.
"We're thrilled to be growing our business relationship with Dow Jones," Becky Brubaker, Tribune senior vice president of manufacturing and distribution, said in a statement.
Creditors picked in Tribune filing
Tribune Co.'s official committee of unsecured creditors will include Wall Street banks and the Pension Benefit Guaranty Corp.
JPMorgan Chase Bank NA, Merrill Lynch Capital Corp. and Deutsche Bank National Trust also won seats on the eight-member committee of unsecured creditors, which represents the interest of all holding debt not backed by collateral.
Tribune Co., the Chicago-based owner of the Chicago Tribune, filed for bankruptcy Dec. 8, less than a year after real estate billionaire Sam Zell took it private as an employee-owned company in an $8.3 billion deal that saddled it with debt. Most of the company's $13 billion in debt isn't guaranteed by Tribune Co.'s newspapers and broadcasting stations.
Thursday, December 18, 2008
Fox TV producers asked to trim budgets 2 percent
Yahoo News
LOS ANGELES – News Corp.'s 20th Century Fox Television studio has asked producers of shows such as Fox's "24" and "My Name is Earl," produced for NBC, to trim their budgets this season by 2 percent, a spokesman said Wednesday.
The cuts will affect between 16 and 20 shows currently in production, but will probably not result in layoffs, said spokesman Chris Alexander.
"We don't anticipate that there will be any layoffs. Where the cuts will be made will be at the discretion of every show runner," he said. "Everyone understands that revenues are down and these steps are necessary to protect our business."
The move is part of a wider cost-cutting initiative at News Corp.'s Fox properties, from TV stations and the film studio to MySpace, as advertising revenue has fallen across all media. The company has been cutting travel and entertainment budgets and leaving vacant jobs unfilled.
The Walt Disney Co.'s ABC Studios made a similar 2 percent budget cut across its TV shows in November.
CBS Corp. said Tuesday that it laid off a small number of executives and staff at its in-house programming arm, CBS Entertainment, and its production studio, CBS Paramount Network TV.
Earlier this month, General Electric Co.'s NBC Universal cut 500 positions, or 3 percent of its work force; and Viacom Inc., owner of the MTV and BET networks, laid off 850, a 7 percent reduction.
LOS ANGELES – News Corp.'s 20th Century Fox Television studio has asked producers of shows such as Fox's "24" and "My Name is Earl," produced for NBC, to trim their budgets this season by 2 percent, a spokesman said Wednesday.
The cuts will affect between 16 and 20 shows currently in production, but will probably not result in layoffs, said spokesman Chris Alexander.
"We don't anticipate that there will be any layoffs. Where the cuts will be made will be at the discretion of every show runner," he said. "Everyone understands that revenues are down and these steps are necessary to protect our business."
The move is part of a wider cost-cutting initiative at News Corp.'s Fox properties, from TV stations and the film studio to MySpace, as advertising revenue has fallen across all media. The company has been cutting travel and entertainment budgets and leaving vacant jobs unfilled.
The Walt Disney Co.'s ABC Studios made a similar 2 percent budget cut across its TV shows in November.
CBS Corp. said Tuesday that it laid off a small number of executives and staff at its in-house programming arm, CBS Entertainment, and its production studio, CBS Paramount Network TV.
Earlier this month, General Electric Co.'s NBC Universal cut 500 positions, or 3 percent of its work force; and Viacom Inc., owner of the MTV and BET networks, laid off 850, a 7 percent reduction.
Bankruptcy judge to rule on sale of Pappas TV stations
By Virgil Larson
Omaha World-Herald
Omaha World-Herald (NE) Via Acquire Media NewsEdge) Dec. 18--Investors holding the debt of Omaha television stations KPTM and KXVO as well as KMEG and KPTH in the Sioux City, Iowa, market and others around the country have tentatively bought the stations.
New World TV Group LLC will be the new owner of the stations if a federal bankruptcy judge in Delaware approves the sale. New World TV Group is a creation of Fortress Credit Corp., which bid $260 million in an auction Friday.
The 11 stations auctioned are part of Pappas Broadcast Group, a collection of companies that operated 30 television stations. Thirteen of the stations in May filed for bankruptcy protection, a move taken to buy time and avoid selling at distress prices.
Eleven of the stations, including those in Omaha and Sioux City, were named as debtors in the bankruptcy action. Two others were debt guarantors. Pappas stations in Lincoln and Kearney, Neb., and Des Moines and Ames, Iowa, were not in the debtor group that filed for bankruptcy protection.
A bankruptcy judge in Wilmington, Del, is to review the sale at a hearing Monday.
Howard Schrier of Omaha, senior vice president and chief operating officer of Pappas Broadcast Group, said Wednesday that viewers will probably notice no difference if the sale goes through.
--Contact the writer: 444-1081, virgil.larson@owh.com
Omaha World-Herald
Omaha World-Herald (NE) Via Acquire Media NewsEdge) Dec. 18--Investors holding the debt of Omaha television stations KPTM and KXVO as well as KMEG and KPTH in the Sioux City, Iowa, market and others around the country have tentatively bought the stations.
New World TV Group LLC will be the new owner of the stations if a federal bankruptcy judge in Delaware approves the sale. New World TV Group is a creation of Fortress Credit Corp., which bid $260 million in an auction Friday.
The 11 stations auctioned are part of Pappas Broadcast Group, a collection of companies that operated 30 television stations. Thirteen of the stations in May filed for bankruptcy protection, a move taken to buy time and avoid selling at distress prices.
Eleven of the stations, including those in Omaha and Sioux City, were named as debtors in the bankruptcy action. Two others were debt guarantors. Pappas stations in Lincoln and Kearney, Neb., and Des Moines and Ames, Iowa, were not in the debtor group that filed for bankruptcy protection.
A bankruptcy judge in Wilmington, Del, is to review the sale at a hearing Monday.
Howard Schrier of Omaha, senior vice president and chief operating officer of Pappas Broadcast Group, said Wednesday that viewers will probably notice no difference if the sale goes through.
--Contact the writer: 444-1081, virgil.larson@owh.com
IFA chairman's firm to sit out on Tribune bankruptcy
By Ameet Sachdev | Tribune staff reporter
William Brandt, chairman of the Illinois Finance Authority, said that his consulting firm will have no role in the Tribune Co. bankruptcy to avoid any potential conflict of interest.
Brandt said Wednesday that some Tribune Co. creditors have approached his company, Chicago-based Development Specialists Inc., to see if the company would advise them. Development Specialists specializes in bankruptcy advisory services to debtors and creditors. Brandt is president and chief executive officer.
Brandt and IFA staff have had discussions recently with Tribune Co. officials over financing the sale of Tribune-owned Wrigley Field to the state. Because of those negotiations, Brandt said it was best for his company to stay away from the bankruptcy of the media company, which also owns the Chicago Tribune, filed in Delaware.
"To pass on the Tribune case is a big sacrifice," Brandt said.
The U.S. trustee in the case will appoint on Thursday a committee to represent the largest unsecured creditors. The committee will then hire lawyers and financial advisers to assist with its duties. The selection process is usually done by a so-called beauty contest, where lawyers and other professionals make a pitch to represent the committee.
Development Specialists was invited to participate in the beauty contest, Brandt said.
asachdev@tribune.com
William Brandt, chairman of the Illinois Finance Authority, said that his consulting firm will have no role in the Tribune Co. bankruptcy to avoid any potential conflict of interest.
Brandt said Wednesday that some Tribune Co. creditors have approached his company, Chicago-based Development Specialists Inc., to see if the company would advise them. Development Specialists specializes in bankruptcy advisory services to debtors and creditors. Brandt is president and chief executive officer.
Brandt and IFA staff have had discussions recently with Tribune Co. officials over financing the sale of Tribune-owned Wrigley Field to the state. Because of those negotiations, Brandt said it was best for his company to stay away from the bankruptcy of the media company, which also owns the Chicago Tribune, filed in Delaware.
"To pass on the Tribune case is a big sacrifice," Brandt said.
The U.S. trustee in the case will appoint on Thursday a committee to represent the largest unsecured creditors. The committee will then hire lawyers and financial advisers to assist with its duties. The selection process is usually done by a so-called beauty contest, where lawyers and other professionals make a pitch to represent the committee.
Development Specialists was invited to participate in the beauty contest, Brandt said.
asachdev@tribune.com
Wednesday, December 17, 2008
Hoffa Says Tribune Workers Should Come First in Bankruptcy Court
The following is an official statement from Teamsters General President James P. Hoffa.
WASHINGTON, Dec 17, 2008 /PRNewswire-USNewswire via COMTEX/ -- Official Statement of Teamsters General President James P. Hoffa
"When billionaire Sam Zell took Tribune private in an overleveraged, doomed deal that swiftly brought down the 161-year-old media giant, the risks involved were placed squarely on the shoulders of Tribune workers. Now, as Tribune's creditors head to bankruptcy court for payback, these workers should go directly to the front of the line.
By transferring 100 percent ownership of the company and some $13 billion of debt to an S-Corp Employee Stock Ownership Plan (ESOP) in the buyout, Zell insulated himself from tax responsibilities and mortgaged the future retirement savings of Tribune employees.
Despite owning 100 percent of the company, employees were given no voice in the governance of the company or in the plan itself. They've had no say in the terms of their own debt obligations or decisions related to how best to service that debt.
Tribune contributions to employee retirement savings for employee-owners changed from a defined benefit plan to a defined contribution plan structured as the ESOP. Employees participating in the ESOP can't diversify their holdings until they reach age 55.
The first of the company's contributions to the ESOP was expected to happen in the first quarter, but now -- with the Tribune mired in Chapter 11 bankruptcy -- it's unclear whether that will happen or whether those shares will have any value.
Not everyone lost on the deal. Tribune executives made millions, including CEO Dennis FitzSimons, who engineered the deal with Zell and raked in $17.7 million in severance and other payments and cashed in his stock for $23.8 million.
Shareholders traded in stock rated deep into junk territory for cash representing a 21 percent premium over the stock price just before the transaction. The banks that lent Tribune the money shared some $47 million in fees.
Citigroup and Merrill Lynch who advised Tribune on the deal received $35.8 million and $37 million respectively. And billionaire Zell, who put up only $315 million in the deal, is expected to stand ahead of employees in the creditors' line at bankruptcy court.
One thing is for sure -- the Teamsters will remain vigilant during the bankruptcy process to ensure that our members and all Tribune employee interests are advanced."
The International Brotherhood of Teamsters represents approximately 1,000 Tribune workers. Founded in 1903, the Teamsters Union represents more than 1.4 million hardworking men and women in the United States and Canada.
SOURCE International Brotherhood of Teamsters
http://www.teamster.org
WASHINGTON, Dec 17, 2008 /PRNewswire-USNewswire via COMTEX/ -- Official Statement of Teamsters General President James P. Hoffa
"When billionaire Sam Zell took Tribune private in an overleveraged, doomed deal that swiftly brought down the 161-year-old media giant, the risks involved were placed squarely on the shoulders of Tribune workers. Now, as Tribune's creditors head to bankruptcy court for payback, these workers should go directly to the front of the line.
By transferring 100 percent ownership of the company and some $13 billion of debt to an S-Corp Employee Stock Ownership Plan (ESOP) in the buyout, Zell insulated himself from tax responsibilities and mortgaged the future retirement savings of Tribune employees.
Despite owning 100 percent of the company, employees were given no voice in the governance of the company or in the plan itself. They've had no say in the terms of their own debt obligations or decisions related to how best to service that debt.
Tribune contributions to employee retirement savings for employee-owners changed from a defined benefit plan to a defined contribution plan structured as the ESOP. Employees participating in the ESOP can't diversify their holdings until they reach age 55.
The first of the company's contributions to the ESOP was expected to happen in the first quarter, but now -- with the Tribune mired in Chapter 11 bankruptcy -- it's unclear whether that will happen or whether those shares will have any value.
Not everyone lost on the deal. Tribune executives made millions, including CEO Dennis FitzSimons, who engineered the deal with Zell and raked in $17.7 million in severance and other payments and cashed in his stock for $23.8 million.
Shareholders traded in stock rated deep into junk territory for cash representing a 21 percent premium over the stock price just before the transaction. The banks that lent Tribune the money shared some $47 million in fees.
Citigroup and Merrill Lynch who advised Tribune on the deal received $35.8 million and $37 million respectively. And billionaire Zell, who put up only $315 million in the deal, is expected to stand ahead of employees in the creditors' line at bankruptcy court.
One thing is for sure -- the Teamsters will remain vigilant during the bankruptcy process to ensure that our members and all Tribune employee interests are advanced."
The International Brotherhood of Teamsters represents approximately 1,000 Tribune workers. Founded in 1903, the Teamsters Union represents more than 1.4 million hardworking men and women in the United States and Canada.
SOURCE International Brotherhood of Teamsters
http://www.teamster.org
CBS Is Tops In Ratings For 11th Week In A Row, Fires 30 People In Its Entertainment Division
CBS is tops overall for 11th week in a row
With seven of the 10 most-watched programs, CBS had another dominant week in the ratings, notching its 11th straight weekly victory among total viewers.
Led by "CSI: Crime Scene Investigation" (20.9 million), the No. 2 program, CBS carried the week ending Dec. 14 with an average of 11.9 million viewers, according to figures published Tuesday by Nielsen Media Research.
CBS has posted year-to-year ratings gains for five straight weeks, relying on a roster of existing scripted series plus a noteworthy newcomer, the cop drama "The Mentalist." Last week also included the Sunday finale of "Survivor: Gabon" (13.8 million).
The network's strength was not confined to total viewers. Among the ad-friendly demographic of adults aged 18 to 49, CBS had six of the top 10 shows, led by "CSI."
CBS Fires Nearly 30 People in Its Entertainment Division
By Meg James
Los Angeles Times
The media firm is grappling with the deepening recession, which has prompted companies to slash their advertising budgets.
Bracing for continued tough times, CBS Corp. this week became the latest media company to reduce the number of employees in its entertainment division.
CBS fired nearly 30 people, primarily in its network programming but also at its CBS Paramount Network Television production studios in Los Angeles and Studio City, two people close to the network said.
The highest-profile cuts included Maria Crenna, the second in command at CBS Paramount, and Brian Banks, head of comedy development. The New York company declined to specify the number or the percentage of cuts.
"These steps are designed to deploy our resources in line with market conditions, while at the same time making sure that development and production needs are met at the network and the studio -- both now and in the future," CBS said in a statement.
Most media companies are grappling with the deepening recession, which has prompted some of their biggest advertisers, including car companies and retailers, to slash their advertising budgets.
CBS is particularly vulnerable because it derives more than 70% of its revenue from television, radio and billboard advertising.
Robert J. Coen, forecasting director for ad-buying company Magna, predicted last week that advertising spending in the U.S. probably would fall 4.5% in 2009 to $258.7 billion.
"The main source of the advertising slowdown has been drains on consumer spending, slow income growth, high debt and the rise in many consumer expenses," Coen wrote in a report. "There is little likelihood of relief for consumers in 2009."
Last week, NBC combined its TV network and studio operations and laid off about 40 people in Los Angeles as part of NBC Universal's efforts to reduce its budget next year by $500 million. Walt Disney Co. also is considering a workforce reduction and a possible consolidation of its ABC network and TV studio. An ABC spokesman declined to comment.
CBS has no plans to combine its network and studio operations, one executive said.
The layoffs come despite CBS' success in prime time. The network has garnered a growing audience in recent weeks with such popular shows as "Two and a Half Men," "NCIS" and its latest hit drama, "The Mentalist."
Early this year, CBS eliminated several high-profile newscast anchors and workers at its television stations, including KCBS-TV Channel 2 and KCAL-TV Channel 9 in Los Angeles.
"Until automotive, retail and financial services get stronger, the TV stations are going to be challenged," CBS Chief Executive Leslie Moonves said last week.
"Those are three of our most important categories, probably, with automotive at the top," he said.
meg.james@latimes.com
With seven of the 10 most-watched programs, CBS had another dominant week in the ratings, notching its 11th straight weekly victory among total viewers.
Led by "CSI: Crime Scene Investigation" (20.9 million), the No. 2 program, CBS carried the week ending Dec. 14 with an average of 11.9 million viewers, according to figures published Tuesday by Nielsen Media Research.
CBS has posted year-to-year ratings gains for five straight weeks, relying on a roster of existing scripted series plus a noteworthy newcomer, the cop drama "The Mentalist." Last week also included the Sunday finale of "Survivor: Gabon" (13.8 million).
The network's strength was not confined to total viewers. Among the ad-friendly demographic of adults aged 18 to 49, CBS had six of the top 10 shows, led by "CSI."
CBS Fires Nearly 30 People in Its Entertainment Division
By Meg James
Los Angeles Times
The media firm is grappling with the deepening recession, which has prompted companies to slash their advertising budgets.
Bracing for continued tough times, CBS Corp. this week became the latest media company to reduce the number of employees in its entertainment division.
CBS fired nearly 30 people, primarily in its network programming but also at its CBS Paramount Network Television production studios in Los Angeles and Studio City, two people close to the network said.
The highest-profile cuts included Maria Crenna, the second in command at CBS Paramount, and Brian Banks, head of comedy development. The New York company declined to specify the number or the percentage of cuts.
"These steps are designed to deploy our resources in line with market conditions, while at the same time making sure that development and production needs are met at the network and the studio -- both now and in the future," CBS said in a statement.
Most media companies are grappling with the deepening recession, which has prompted some of their biggest advertisers, including car companies and retailers, to slash their advertising budgets.
CBS is particularly vulnerable because it derives more than 70% of its revenue from television, radio and billboard advertising.
Robert J. Coen, forecasting director for ad-buying company Magna, predicted last week that advertising spending in the U.S. probably would fall 4.5% in 2009 to $258.7 billion.
"The main source of the advertising slowdown has been drains on consumer spending, slow income growth, high debt and the rise in many consumer expenses," Coen wrote in a report. "There is little likelihood of relief for consumers in 2009."
Last week, NBC combined its TV network and studio operations and laid off about 40 people in Los Angeles as part of NBC Universal's efforts to reduce its budget next year by $500 million. Walt Disney Co. also is considering a workforce reduction and a possible consolidation of its ABC network and TV studio. An ABC spokesman declined to comment.
CBS has no plans to combine its network and studio operations, one executive said.
The layoffs come despite CBS' success in prime time. The network has garnered a growing audience in recent weeks with such popular shows as "Two and a Half Men," "NCIS" and its latest hit drama, "The Mentalist."
Early this year, CBS eliminated several high-profile newscast anchors and workers at its television stations, including KCBS-TV Channel 2 and KCAL-TV Channel 9 in Los Angeles.
"Until automotive, retail and financial services get stronger, the TV stations are going to be challenged," CBS Chief Executive Leslie Moonves said last week.
"Those are three of our most important categories, probably, with automotive at the top," he said.
meg.james@latimes.com
Tuesday, December 16, 2008
$73 an Hour: Adding It Up
Seventy-three dollars an hour. That figure — repeated on television and in newspapers as the average pay of a Big Three autoworker — has become a big symbol in the fight over what should happen to Detroit. To critics, it is a neat encapsulation of everything that’s wrong with bloated car companies and their entitled workers.
So what is the reality behind the number? Detroit’s defenders are right that the number is basically wrong. Big Three workers aren’t making anything close to $73 an hour (which would translate to about $150,000 a year).
The calculations show, accurately enough, that for every hour a unionized worker puts in, one of the Big Three really does spend about $73 on compensation.
1) Wages, overtime and vacation pay, and comes to about $40 an hour.
2) Fringe benefits, like health insurance and pensions amount to $15 an hour or so.
Add the two together, and you get the true hourly compensation of Detroit’s unionized work force: roughly $55 an hour.
It’s a little more than twice as much as the typical American worker makes, benefits included. The more relevant comparison, though, is probably to Honda’s or Toyota’s (nonunionized) workers. They make in the neighborhood of $45 an hour, and most of the gap stems from their less generous benefits.
3) Benefits for retirees, by dividing those costs by the total hours of the current work force you get a cost of $15 or so per hour.
Total labor cost: Wages - $40, Benefits - $15, Retiree Benefits - $15, Total $70.00 per hour.
The crucial point, though, is this $15 isn’t mainly a reflection of how generous the retiree benefits are. It’s a reflection of how many retirees there are. The Big Three built up a huge pool of retirees long before Honda and Toyota opened plants in this country. You’d never know this by looking at the graphic behind Wolf Blitzer on CNN last week, contrasting the “$73/hour” pay of Detroit’s workers with the “up to $48/hour” pay of workers at the Japanese companies.
We should also compare executive compensation. At Toyota in 2006, the top 37 executives earned a total of $21.6 million, just about as much as Alan Mullally, CEO of General Motors, made in 2007. Toyota's top executive made only $903,000 the year before."
Imagine that a Congressional bailout effectively pays for $10 an hour of the retiree benefits. That’s roughly the gap between the Big Three’s retiree costs and those of the Japanese-owned plants in this country. Imagine, also, that the U.A.W. agrees to reduce pay and benefits for current workers to $45 an hour — the same as at Honda and Toyota.
Do you know how much that would reduce the cost of producing a Big Three vehicle?
Only about $800.
That’s because labor costs, for all the attention they have been receiving, make up only about 10 percent of the cost of making a vehicle.
An extra $800 per vehicle would certainly help Detroit, but the Big Three already often sell their cars for about $2,500 less than equivalent cars from Japanese companies, analysts at the International Motor Vehicle Program say.
Even so, many Americans no longer want to own the cars being made by General Motors, Ford and Chrysler. So, the actual solution must include making a better product.
The economy is in the worst recession in a generation. You can think of the Detroit bailout as a relatively cost-effective form of stimulus. It’s cheaper to keep workers in their jobs than to create new jobs.
So what is the reality behind the number? Detroit’s defenders are right that the number is basically wrong. Big Three workers aren’t making anything close to $73 an hour (which would translate to about $150,000 a year).
The calculations show, accurately enough, that for every hour a unionized worker puts in, one of the Big Three really does spend about $73 on compensation.
1) Wages, overtime and vacation pay, and comes to about $40 an hour.
2) Fringe benefits, like health insurance and pensions amount to $15 an hour or so.
Add the two together, and you get the true hourly compensation of Detroit’s unionized work force: roughly $55 an hour.
It’s a little more than twice as much as the typical American worker makes, benefits included. The more relevant comparison, though, is probably to Honda’s or Toyota’s (nonunionized) workers. They make in the neighborhood of $45 an hour, and most of the gap stems from their less generous benefits.
3) Benefits for retirees, by dividing those costs by the total hours of the current work force you get a cost of $15 or so per hour.
Total labor cost: Wages - $40, Benefits - $15, Retiree Benefits - $15, Total $70.00 per hour.
The crucial point, though, is this $15 isn’t mainly a reflection of how generous the retiree benefits are. It’s a reflection of how many retirees there are. The Big Three built up a huge pool of retirees long before Honda and Toyota opened plants in this country. You’d never know this by looking at the graphic behind Wolf Blitzer on CNN last week, contrasting the “$73/hour” pay of Detroit’s workers with the “up to $48/hour” pay of workers at the Japanese companies.
We should also compare executive compensation. At Toyota in 2006, the top 37 executives earned a total of $21.6 million, just about as much as Alan Mullally, CEO of General Motors, made in 2007. Toyota's top executive made only $903,000 the year before."
Imagine that a Congressional bailout effectively pays for $10 an hour of the retiree benefits. That’s roughly the gap between the Big Three’s retiree costs and those of the Japanese-owned plants in this country. Imagine, also, that the U.A.W. agrees to reduce pay and benefits for current workers to $45 an hour — the same as at Honda and Toyota.
Do you know how much that would reduce the cost of producing a Big Three vehicle?
Only about $800.
That’s because labor costs, for all the attention they have been receiving, make up only about 10 percent of the cost of making a vehicle.
An extra $800 per vehicle would certainly help Detroit, but the Big Three already often sell their cars for about $2,500 less than equivalent cars from Japanese companies, analysts at the International Motor Vehicle Program say.
Even so, many Americans no longer want to own the cars being made by General Motors, Ford and Chrysler. So, the actual solution must include making a better product.
The economy is in the worst recession in a generation. You can think of the Detroit bailout as a relatively cost-effective form of stimulus. It’s cheaper to keep workers in their jobs than to create new jobs.
Tribune Company Names Ed Wilson CRO
By CYNTHIA LITTLETON
Variety
Broadcasting president takes on new role
A week after filing for Chapter 11 bankruptcy, Tribune Co. has tapped its broadcasting president Ed Wilson to take on additional duties as the company's chief revenue officer.
Gig tasks Wilson with responsibility for "growing the company's publishing, broadcasting and interactive revenues," Tribune said Monday. Wilson will remain prexy of Tribune Broadcasting, overseeing the company's 23 TV stations, the WGN America channel and WGN Radio. He reports to Randy Michaels, Tribune's chief operating officer.
Wilson's expanded role comes as the company is on the verge of naming Don Corsini, the well-regarded former G.M. of CBS' Los Angeles duopoly, KCBS-TV and KCAL-TV, to the top job at Tribune's KTLA-TV Los Angeles (Daily Variety, Aug. 20). There's been speculation that Corsini is also in line for broader responsibility within the station group.
The G.M. job at KTLA has been vacant for nearly a year, since shortly after Tribune Co. changed hands in a heavily leveraged buyout deal spearheaded by Sam Zell.
A crushing $13 billion debt load forced the company to seek Chapter 11 protection last week, amid the general economic slump and plunging ad revenue at Tribune's eight daily newspapers and TV stations (Daily Variety, Dec. 9).
Given the severity of the situation, industryites were "appalled," in the words of one exec, to see Tribune's press release on Wilson's appointment include the jokey material that has highlighted the company's missives since Zell took the helm. Monday's release joked about Wilson also taking a third job at Starbucks and donating his salary to Tribune.
Wilson's expanded profile also reinforces the internal chatter that Tribune aims to become a more TV-centric company after it renegotiates its debt and emerges from bankruptcy. A veteran syndie sales exec, Wilson joined Tribune in February after serving as head of distribution and affiliate relations for Fox for four years.
Since joining Tribune, Wilson has supervised the makeover of the former WGN Superstation into a Nick at Nite-esque channel with vintage TV fare in primetime and the new WGN America moniker. He was also a key player in the short-lived deal that saw financier-producer Media Rights Capital take over CW's Sunday night sked, with Tribune helping to sell the advertising time in the block. That arrangement was scuttled last month after the shows MRC fielded for the lineup drew barely ratings and it failed to keep up with payments to the netlet.
Variety
Broadcasting president takes on new role
A week after filing for Chapter 11 bankruptcy, Tribune Co. has tapped its broadcasting president Ed Wilson to take on additional duties as the company's chief revenue officer.
Gig tasks Wilson with responsibility for "growing the company's publishing, broadcasting and interactive revenues," Tribune said Monday. Wilson will remain prexy of Tribune Broadcasting, overseeing the company's 23 TV stations, the WGN America channel and WGN Radio. He reports to Randy Michaels, Tribune's chief operating officer.
Wilson's expanded role comes as the company is on the verge of naming Don Corsini, the well-regarded former G.M. of CBS' Los Angeles duopoly, KCBS-TV and KCAL-TV, to the top job at Tribune's KTLA-TV Los Angeles (Daily Variety, Aug. 20). There's been speculation that Corsini is also in line for broader responsibility within the station group.
The G.M. job at KTLA has been vacant for nearly a year, since shortly after Tribune Co. changed hands in a heavily leveraged buyout deal spearheaded by Sam Zell.
A crushing $13 billion debt load forced the company to seek Chapter 11 protection last week, amid the general economic slump and plunging ad revenue at Tribune's eight daily newspapers and TV stations (Daily Variety, Dec. 9).
Given the severity of the situation, industryites were "appalled," in the words of one exec, to see Tribune's press release on Wilson's appointment include the jokey material that has highlighted the company's missives since Zell took the helm. Monday's release joked about Wilson also taking a third job at Starbucks and donating his salary to Tribune.
Wilson's expanded profile also reinforces the internal chatter that Tribune aims to become a more TV-centric company after it renegotiates its debt and emerges from bankruptcy. A veteran syndie sales exec, Wilson joined Tribune in February after serving as head of distribution and affiliate relations for Fox for four years.
Since joining Tribune, Wilson has supervised the makeover of the former WGN Superstation into a Nick at Nite-esque channel with vintage TV fare in primetime and the new WGN America moniker. He was also a key player in the short-lived deal that saw financier-producer Media Rights Capital take over CW's Sunday night sked, with Tribune helping to sell the advertising time in the block. That arrangement was scuttled last month after the shows MRC fielded for the lineup drew barely ratings and it failed to keep up with payments to the netlet.
Monday, December 15, 2008
Tribune: After the Fall; Company's Troubles May Cost Studios
By Paige Albiniak
BN - Broadcast Newsroom
Digital Media Online, Inc.
Could seek to reset deals with syndicators
Warner Bros., Twentieth Television, Disney-ABC and NBC Universal face multimillion-dollar ramifications after Tribune's announcement last week that it was declaring Chapter 11 bankruptcy protection to restructure its massive debt.
Tribune's 23 TV stations are among the biggest buyers of syndicated shows, including Warner Bros.' Two and a Half Men and Friends, Twentieth's Family Guy, Disney-ABC's Legend of the Seeker and NBC Universal's Maury, Jerry Springer and Steve Wilkos.
Moreover, a deal to launch CBS Television Distribution's T.D. Jakes next fall is pending. The future of that show, which had been cleared on Tribune stations, is now uncertain, according to many sources. A spokeswoman said CTD had no comment.
According to Tribune's bankruptcy filing before a federal court in Delaware last week, Tribune owes Warner Bros. $23.7 million, Twentieth $8.1 million, Disney-ABC $6.2 million and NBCU $4.9 million. Tribune has a few options it can exercise to deal with its outstanding studio debts. It could just proceed with business as usual, paying its bills on time. It could also negotiate longer payout terms with the studios.
Another possibility is that studios will be forced to take writedowns for portions of payments they expected to receive and accounted for, but now will not be paid. Regardless of any revenue hits, studios will likely want to work with Tribune to find ways to preserve future business.
None of the studios or Tribune would comment for this story. But players in the industry say the manner in which the studios resolve this issue could set a precedent should other TV broadcast groups be forced to declare bankruptcy in the rocky months to come, a scenario that wouldn't surprise many industry executives.
“Whatever the studios do for Tribune, they will have to do for everyone else,” says Bill Carroll, VP of programming for Katz Television Group Programming. “If the studios are smart, they will figure out a way that doesn't hurt them that much. They'll all be better off if they have a healthy Tribune to deal with at some time in the near future.”
Tribune's unsecured bills to the studios are relatively small compared to the amount of money it owes its major secured financial-sector creditors: JP Morgan Chase, Tribune's main lender; Merrill Lynch Capital Corp.; Deutsche Bank; Goldman Sachs Group; investment management firm Angelo Gordon & Co.; and hedge fund Highland Capital Management. Tribune's next debt payment of $593 million was due to come up in June but is now stayed because of the bankruptcy. Overall, the company is $12.9 billion in debt while it holds $7.6 billion in assets.
When billionaire investor Sam Zell bought the company in April 2007, Tribune's financials looked stronger, justifying a deal that in hindsight looks incredibly shaky. As Zell said on CNBC last week, “We looked at Tribune before we made our offer. It had basically eroded at about a 3% level in the previous five years. We underwrote [the deal assuming] 6%, and we ended up with 20. And in an operating leverage business like this, a 20% reduction in gross revenue is a disaster on a cash-flow line.”
That said, Tribune's TV stations remain profitable. In its filings, Tribune says it doesn't expect to operate its TV stations any differently than it ever has. And while Tribune may not be shopping as aggressively for new syndicated product in the near-term as it has in the past, no one expects to count the group out as a buyer.
“The positive out of all of this,” says Chuck Larsen, president of October Moon Television, a television distribution consulting company, “is that hopefully Tribune will come out the other side a healthier company that's better able to support its stations.”
Broadcasting & Cable
Reed Business Information
A division of Reed Elsevier Inc.
Tribune Granted Approval of Motions on Pay, Benefits and Other Items
Tribune Press Release:
CHICAGO, Dec. 10 /PRNewswire/ -- Tribune Company today announced that the United States Bankruptcy Court for the District of Delaware has approved all of the First-Day Motions submitted by the company on December 8, 2008. The rulings enable Tribune to continue to operate its businesses in the ordinary course, including:
-- Maintaining employee payroll and health benefits,
-- Continuing Tribune's pre-bankruptcy cash management system, and
-- Honoring customer programs The court also approved Tribune's request to
maintain its existing securitization facility.
In addition, under the authority of the Bankruptcy Code, Tribune continuespaying its vendors/suppliers for post-filing goods and services.
"We are pleased that the court approved our 'first-day' motions, enablingus to continue to operate smoothly," said Chandler Bigelow, Tribune's chieffinancial officer. "We are committed to publishing our newspapers and runningour television stations, websites and other businesses, serving ourcommunities and delivering results for our customers -- just as we've alwaysdone."
For more information on the filing, visit
Tribune.com or http://chapter11.epiqsystems.com/tribune, or call 888/287-7568.
The companywill provide updates regarding the restructuring process as new informationbecomes available.
TRIBUNE is America's largest employee-owned media company, operating businesses in publishing, interactive and broadcasting. In publishing,Tribune's leading daily newspapers include the Los Angeles Times, Chicago Tribune, The Baltimore Sun, Sun-Sentinel (South Florida), Orlando Sentinel,Hartford Courant, Morning Call and Daily Press. The Company's broadcasting group operates 23 television stations, WGN America on national cable, Chicago's WGN-AM, and the Chicago Cubs baseball team. Popular news and information websites complement Tribune's print and broadcast properties andextend the Company's nationwide audience. At Tribune we take what we do seriously and with a great deal of pride. We also value the creative spiritand nurture a corporate culture that doesn't take itself too seriously.
BN - Broadcast Newsroom
Digital Media Online, Inc.
Could seek to reset deals with syndicators
Warner Bros., Twentieth Television, Disney-ABC and NBC Universal face multimillion-dollar ramifications after Tribune's announcement last week that it was declaring Chapter 11 bankruptcy protection to restructure its massive debt.
Tribune's 23 TV stations are among the biggest buyers of syndicated shows, including Warner Bros.' Two and a Half Men and Friends, Twentieth's Family Guy, Disney-ABC's Legend of the Seeker and NBC Universal's Maury, Jerry Springer and Steve Wilkos.
Moreover, a deal to launch CBS Television Distribution's T.D. Jakes next fall is pending. The future of that show, which had been cleared on Tribune stations, is now uncertain, according to many sources. A spokeswoman said CTD had no comment.
According to Tribune's bankruptcy filing before a federal court in Delaware last week, Tribune owes Warner Bros. $23.7 million, Twentieth $8.1 million, Disney-ABC $6.2 million and NBCU $4.9 million. Tribune has a few options it can exercise to deal with its outstanding studio debts. It could just proceed with business as usual, paying its bills on time. It could also negotiate longer payout terms with the studios.
Another possibility is that studios will be forced to take writedowns for portions of payments they expected to receive and accounted for, but now will not be paid. Regardless of any revenue hits, studios will likely want to work with Tribune to find ways to preserve future business.
None of the studios or Tribune would comment for this story. But players in the industry say the manner in which the studios resolve this issue could set a precedent should other TV broadcast groups be forced to declare bankruptcy in the rocky months to come, a scenario that wouldn't surprise many industry executives.
“Whatever the studios do for Tribune, they will have to do for everyone else,” says Bill Carroll, VP of programming for Katz Television Group Programming. “If the studios are smart, they will figure out a way that doesn't hurt them that much. They'll all be better off if they have a healthy Tribune to deal with at some time in the near future.”
Tribune's unsecured bills to the studios are relatively small compared to the amount of money it owes its major secured financial-sector creditors: JP Morgan Chase, Tribune's main lender; Merrill Lynch Capital Corp.; Deutsche Bank; Goldman Sachs Group; investment management firm Angelo Gordon & Co.; and hedge fund Highland Capital Management. Tribune's next debt payment of $593 million was due to come up in June but is now stayed because of the bankruptcy. Overall, the company is $12.9 billion in debt while it holds $7.6 billion in assets.
When billionaire investor Sam Zell bought the company in April 2007, Tribune's financials looked stronger, justifying a deal that in hindsight looks incredibly shaky. As Zell said on CNBC last week, “We looked at Tribune before we made our offer. It had basically eroded at about a 3% level in the previous five years. We underwrote [the deal assuming] 6%, and we ended up with 20. And in an operating leverage business like this, a 20% reduction in gross revenue is a disaster on a cash-flow line.”
That said, Tribune's TV stations remain profitable. In its filings, Tribune says it doesn't expect to operate its TV stations any differently than it ever has. And while Tribune may not be shopping as aggressively for new syndicated product in the near-term as it has in the past, no one expects to count the group out as a buyer.
“The positive out of all of this,” says Chuck Larsen, president of October Moon Television, a television distribution consulting company, “is that hopefully Tribune will come out the other side a healthier company that's better able to support its stations.”
Broadcasting & Cable
Reed Business Information
A division of Reed Elsevier Inc.
Tribune Granted Approval of Motions on Pay, Benefits and Other Items
Tribune Press Release:
CHICAGO, Dec. 10 /PRNewswire/ -- Tribune Company today announced that the United States Bankruptcy Court for the District of Delaware has approved all of the First-Day Motions submitted by the company on December 8, 2008. The rulings enable Tribune to continue to operate its businesses in the ordinary course, including:
-- Maintaining employee payroll and health benefits,
-- Continuing Tribune's pre-bankruptcy cash management system, and
-- Honoring customer programs The court also approved Tribune's request to
maintain its existing securitization facility.
In addition, under the authority of the Bankruptcy Code, Tribune continuespaying its vendors/suppliers for post-filing goods and services.
"We are pleased that the court approved our 'first-day' motions, enablingus to continue to operate smoothly," said Chandler Bigelow, Tribune's chieffinancial officer. "We are committed to publishing our newspapers and runningour television stations, websites and other businesses, serving ourcommunities and delivering results for our customers -- just as we've alwaysdone."
For more information on the filing, visit
Tribune.com or http://chapter11.epiqsystems.com/tribune, or call 888/287-7568.
The companywill provide updates regarding the restructuring process as new informationbecomes available.
TRIBUNE is America's largest employee-owned media company, operating businesses in publishing, interactive and broadcasting. In publishing,Tribune's leading daily newspapers include the Los Angeles Times, Chicago Tribune, The Baltimore Sun, Sun-Sentinel (South Florida), Orlando Sentinel,Hartford Courant, Morning Call and Daily Press. The Company's broadcasting group operates 23 television stations, WGN America on national cable, Chicago's WGN-AM, and the Chicago Cubs baseball team. Popular news and information websites complement Tribune's print and broadcast properties andextend the Company's nationwide audience. At Tribune we take what we do seriously and with a great deal of pride. We also value the creative spiritand nurture a corporate culture that doesn't take itself too seriously.
Friday, December 12, 2008
IBEW 1212 Responds To Tribune Bankruptcy
IBEW 1212 Responds To Tribune Bankruptcy
IBEW Local 1212
225 West 34th Street
Suite 1120 New York NY 10122
(212) 354-6770
To: IBEW Local 1212 represented employees at WPIX
From: Ralph Avigliano, Senior Representative
Date: 11 December 2008
As you know, Tribune filed for bankruptcy protection under Chapter 11 this past Monday.
Here is some information regarding the effect of this action on the IBEW represented employees at WPIX.
1) There are two types of bankruptcy:
Chapter 7 - Liquidation: closing the company and selling their assets and
Chapter 11 - Reorganization: their debt obligations are put on hold while the company restructures, reorganizes, renegotiates their debt obligations, and looks for new financing. Many companies, United Airlines for example, have gone through reorganization under Chapter 11 and emerged successfully.
2) Tribune has filed under Chapter 11. The company has been given 180 days to develop a reorganization plan acceptable to the bankruptcy court. Failing that, the court will consider alternate plans from Tribune's creditors and other stakeholders.
3) Under Chapter 11, the company continues to operate, pay the employees and venders, and is under the supervision of a Judge, assisted by a committee of creditors (people Tribune owes money).
4) By law, Tribune must honor their union contracts. Although they can ask the union to modify the current contract and, if the union refuses, both parties present their case to the Judge. Even if the Judge rules in favor of Tribune, IBEW retains bargaining rights, requiring the company to negotiate with the union.
5) If the station is sold, IBEW retains the right to bargain with the new owners of WPIX.
6) The IBEW will review and share with the membership any changes proposed by Tribune.
7) Although pension and 401K plans can be affected, changes can only be made after all concerned parties have made their case to the Judge. If the court allows changes, the union can revisit this issue with the Judge at a later date to increase benefits.
8) The IBEW represented employees at WPIX were excluded from participation in the Employee Stock Ownership Plan (ESOP), so our members will not have to deal with the problems the bankruptcy will cause the "employee owners" of Tribune.
9) Tribune has stopped severance payments to all laid off employees. Fortunately, no full time staff members of IBEW have been laid off to date, so we remain unaffected by this as well.
10) The IBEW will continue to represent the interests of the members at WPIX throughout Tribune's bankruptcy process.
IBEW Local 1212
225 West 34th Street
Suite 1120 New York NY 10122
(212) 354-6770
To: IBEW Local 1212 represented employees at WPIX
From: Ralph Avigliano, Senior Representative
Date: 11 December 2008
As you know, Tribune filed for bankruptcy protection under Chapter 11 this past Monday.
Here is some information regarding the effect of this action on the IBEW represented employees at WPIX.
1) There are two types of bankruptcy:
Chapter 7 - Liquidation: closing the company and selling their assets and
Chapter 11 - Reorganization: their debt obligations are put on hold while the company restructures, reorganizes, renegotiates their debt obligations, and looks for new financing. Many companies, United Airlines for example, have gone through reorganization under Chapter 11 and emerged successfully.
2) Tribune has filed under Chapter 11. The company has been given 180 days to develop a reorganization plan acceptable to the bankruptcy court. Failing that, the court will consider alternate plans from Tribune's creditors and other stakeholders.
3) Under Chapter 11, the company continues to operate, pay the employees and venders, and is under the supervision of a Judge, assisted by a committee of creditors (people Tribune owes money).
4) By law, Tribune must honor their union contracts. Although they can ask the union to modify the current contract and, if the union refuses, both parties present their case to the Judge. Even if the Judge rules in favor of Tribune, IBEW retains bargaining rights, requiring the company to negotiate with the union.
5) If the station is sold, IBEW retains the right to bargain with the new owners of WPIX.
6) The IBEW will review and share with the membership any changes proposed by Tribune.
7) Although pension and 401K plans can be affected, changes can only be made after all concerned parties have made their case to the Judge. If the court allows changes, the union can revisit this issue with the Judge at a later date to increase benefits.
8) The IBEW represented employees at WPIX were excluded from participation in the Employee Stock Ownership Plan (ESOP), so our members will not have to deal with the problems the bankruptcy will cause the "employee owners" of Tribune.
9) Tribune has stopped severance payments to all laid off employees. Fortunately, no full time staff members of IBEW have been laid off to date, so we remain unaffected by this as well.
10) The IBEW will continue to represent the interests of the members at WPIX throughout Tribune's bankruptcy process.
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