Sunday, January 11, 2009

Random Thoughts On Tribune Lost

Posted by Bob Daraio
Broadcast Union News

A year ago Sam Zell bought the Tribune Company for around $8 billion dollars in a leveraged buy out that used the employee's pensions, huge bank loans, a tax avoidance plan that made his non-union employees the new owners of Tribune by way of an ESOP, and was able to personally put up only about 4% of the sale price to purchase the right to buy up to a 40% stake in the company over 15 years.

In other words, Sam got control of Tribune for pennies on the dollar at very little personal risk.

At that time I was upset that Tribune's union represented employees were not included in the new Employee Stock Ownership Plan (ESOP), since I'm an IBEW represented video engineer in New York at Tribune's flagship television station station, WPIX.

What seemed to be a calculated snub, turned out to be a blessing. The "employee owners" have no seat on Tribune's board of directors, no say in company decisions, and could loose their pensions.

With over $211 million dollars in quarterly loan interest, and a much more severe than projected downturn in print and TV advertising, Sam had to sell assets such as Newsday; put the Chicago Cubs, Wrigley Field, the LA Times building, and Tribune Tower up for sale; and laid off a huge number of Tribune employees around the country; all prior to filing for bankruptcy protection.

Tribune's next loan payment of about $512 million dollars on their almost $13 billion dollar debt comes due in June 2009.

The sale of the Chicago Cubs and Wrigley Field is not a part of the Tribune bankruptcy filing. But a sale is expected to generate nearly $900 million dollars in proceeds for Tribune's creditors, and they want the cash.

Tribune's bankruptcy has delayed the Cubs sale, with creditors now seeking a bigger portion of the cash in the deal. Sam Zell had hoped to use a 50% stake in the team as a tax dodge, but must now settle for a disappointing single-digit percentage stake.

This is good news for bidders on the famous MLB team as the successful buyer will have much more equity in the Cubs than was offered in prior sales negotiations.

The sale of the Chicago Cubs must be approved by 75% of the Major League Baseball commission. Current bidders include, Incapital CEO, Tom Ricketts; Marc Utay, Managing Partner Clarion Capital Partners; and Chicago real estate developer, Hersch Klaff.

So, what does the future hold for Tribune employees at WPIX?

Sam could do a shared news gathering plan with another N.Y. TV station to eliminate some ENG crews like they did in Philadelphia, with Tribune owned WTXF, Fox 29, sharing ENG video footage and helicopter services with NBC affiliate WCAU, CH 10.

Sam could outsource operations to, or combine with, another New York station to massively cut back staff at WPIX. Tribune and Local TV Holdings, LLC combined the operations of their stations in Denver and St. Louis. In Denver, the agreement combines Local TV owned FOX affiliate KDVR and Tribue's KWGN. In St. Louis, Tribune's KPLR and Local TV owned FOX affiliate, KTVI, will share services. The two stations in each city will locate in the same facility, use combined news operations, and share certain programming.

The bankruptcy could force Tribune to sell WPIX. Our union contracts would have to be honored in such a sale, so the new owners would have to hammer out a new collective bargaining agreement with us.

Will any of this happen? It's anyone's guess.

As for me, I'll keep showing up to work, on time, sober, and ready to make pretty pictures until the paychecks stop.

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