Tuesday, August 18, 2009



So much for Sam Zell, newspaperman.

The developer, who arranged a controversial $11.7 billion employee buyout of newspaper giant Tribune only to see the company careen into bankruptcy a year later, is on the verge of giving up his claims to buy a huge stake in the company and, according to a source familiar with the matter, is ready to walk away from the company.

As the employees who own the company see the value of their stake evaporate, sources said Zell himself appears to be ready to give up a warrant that gives him the right to buy 40 percent of the company for $500 million without being compensated.

Zell had raised eyebrows in late 2007 when he used a tax-exempt employee stock option plan, or ESOP, to finance Tribune's purchase. It meant Zell had little skin in the game, while the company's employees were left holding the bag.

Now that Tribune is in bankruptcy, the ESOP's value will be further diminished as creditors hold $8.6 billion in debt that will likely be settled up first.

Said a Tribune spokesman, "No agreements have been reached to date. Sam, as well as the rest of the management team, remain actively engaged and committed to Tribune.

"The restructuring is still in progress and it is premature to speculate about the company's final ownership structure."

Meanwhile, some of Tribune's junior lenders are maneuvering to get paid before senior creditors do, arguing that the latter's financing role caused the company to become immediately insolvent as a result of the deal.

The junior creditors hired law firm Zuckerman Spaeder to determine whether they have a claim to fees that the banks involved in the buyout -- Citigroup, JPMorgan Chase and Merrill Lynch -- were paid for their services.

The idea would be for the junior creditors to leapfrog ahead of them in the capital structure in order to be paid back first, a source said.

Zuckerman Spaeder prevailed once before in a similar case in which it helped creditors reach an undisclosed settlement with Bain Capital over its buyout and dividend of KB Toys, which helped drive the retailer into bankruptcy.

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Losing Job, Consumer Columnist Cries Foul

The New York Times

The Hartford Courant and its former consumer columnist, George Gombossy, agree on one thing: that Mr. Gombossy was laid off this month. But was it because he would not stop unfavorable articles about advertisers, or because his job was simply eliminated?

The disagreement addresses a delicate area in journalism. As ad revenue drops, publishing executives are willing to go far to keep advertisers happy, running front-page ads and ads that look like news articles. Mr. Gombossy is claiming that Courant executives, under pressure from advertisers, did not want him to write critical reports about them, and fired him when he would not change his stance.

But Courant executives say that their reporters are welcome to write about advertisers, and that the separation between advertising and editorial content still stands. Mr. Gombossy’s complaints are just those of a “disgruntled employee,” Richard Graziano, the paper’s publisher, said on a voicemail message.

The argument comes at a time of upheaval for The Courant. It is owned by the Tribune Company, which filed for bankruptcy protection in December. The Courant laid off 100 employees in February as part of continued staff reductions.

In the spring, the Tribune Company merged operations of its Hartford television properties and The Courant. It replaced the paper’s publisher with Mr. Graziano, a Tribune television executive, and installed Jeff Levine as senior vice president and director of content, overseeing editorial operations. The paper’s top two editors, longtime employees, departed soon after Mr. Levine joined, and Naedine Hazell became editor and print platform manager.

The new bosses meant new rules, Mr. Gombossy said. He had been at The Courant for 40 years, and became the investigative consumer columnist three years ago, writing a watchdog column where he resolved complaints of readers and looked into unfair practices at companies.

A few months ago, Mr. Gombossy said, he was called into a meeting with Courant executives. He had written columns about a Connecticut contracting company that was also a Courant advertiser. Mr. Levine said that he had received a letter from the contractor about the columns, and asked Mr. Gombossy to meet with the company and to “be nice to them” because an advertising deal was at risk, Mr. Gombossy said.

“At that point, I told them I’m refusing and I said, ‘You’ve got to fire me if you insist on me doing that,’ ” Mr. Gombossy said. According to him, Mr. Levine then backpedaled on the demand to meet with the advertiser, but said that he could not write about a major advertiser unless it was cleared by Mr. Levine.

Ms. Hazell, who also attended the meeting, had a different recollection. “We said we wanted to go to more helpful news, and less gotcha news,” she said.

When Mr. Gombossy asked for an example, she pointed to his articles about the contracting company, which had asked to speak with him. “Would he be willing to at least talk to them, and could he be nice in a conversation like that?” she recalled saying.

He said no. “It was a very broad conversation about overall tone, and we said, would you be willing to talk to people” — that is, companies he was investigating — “about their complaints.” She said there was no mandate that he get clearance from editors to write about advertisers.

Mr. Gombossy said he had another run-in with the executives after posting a reader comment on his blog about a grocery chain that was a large advertiser. “This time, I was told that the publisher was furious with me and they’re thinking about firing me, and by running that blog I had caused the possible loss of a $100,000 advertising contract,” Mr. Gombossy said in a telephone interview.

He was told, he said, that he could not post blog comments critical of big advertisers, in addition to not writing about them without approval by an editor.

Ms. Hazell’s account is different. The meeting was about blog comments that were “fairly inflammatory and in some cases libelous,” she said. “We never said he had to get clearance to write about an advertiser,” she said. But she did alert him to an agreement between the advertising and news sides that her predecessor had agreed to, and that she would be adhering to.

“If there was going to be a story in the newspaper about a major advertiser, the advertiser would get a heads-up. They wouldn’t know the tenor of the story,” she said. Mr. Gombossy then requested a list of major advertisers, which the executives supplied.

One of the advertisers on the list, Mr. Gombossy said, was the mattress company Sleepy’s. Mr. Gombossy had been looking into consumer complaints about the company, and had prepared a column to be printed on Aug. 2. That column said that the Connecticut attorney general was investigating the company, a fact the attorney general, Richard Blumenthal, confirmed in an interview last week.

Mr. Gombossy said he had the column approved by his editor. But the article did not run, and on Aug. 3, he said, he was called into the office. “I was told that my position was being eliminated, and they were going to have a different kind of consumer columnist,” he said. He said his performance reviews had always been strong. “They had no intention of laying me off until this happened.”

Ms. Hazell said the Sleepy’s column was held, not killed. “George could have written about Sleepy’s,” she said. “We’ve never had and never will have a policy to favor advertisers in any form,” she said. “Our concerns had largely to do with sourcing.” In fact, she said, Mr. Gombossy’s final column, which ran on Sunday, was about an advertiser, Connecticut Light & Power.

Mr. Gombossy was laid off because he was not interested in a different position, which would focus on consumer complaints and not investigative work, Ms. Hazell said. “My understanding is that he just wasn’t interested in the direction we were going,” she said.

Mr. Gombossy said he plans to file a lawsuit against The Courant. He has started a Web site, ctwatchdog.com, where he has posted the column about Sleepy’s. Ms. Hazell said the posting was slightly different from the last version she saw.

Mr. Blumenthal, who often worked with Mr. Gombossy, said that he did not know what had happened between the columnist and The Courant, but that his departure was a “huge, gaping loss for consumers.”
“He is one of a kind,” Mr. Blumenthal said.

WashPost Interns Make $44k Yearly; Or $2k More Than Web Producers

Posted by Rachel Kaufman

The Washington City Paper reports that the WashPost guild has been busy negotiating salary for Web reporters. As the company completes its newsroom merger of print and web, the Web employees—which have gone a decade without union representation—are coming under the umbrella of the NABET-CWA Newspaper Guild.

But it's not that smooth, of course: Post management has proposed that the web producers start at $40,000.

Newsroom interns earn $44,416 yearly.

A Newspaper Guild statement explains all the duties a Web producer may be expected to handle:

Producers are expected to, among other things, update and maintain editorial content; assist in developing and producing monthly feature packages and tools; create new content for the website, including live streams of breaking news events and updating existing content; work with web publishing systems; and gather, write and edit news stories for text, photographic and video presentation.

Producers are also expected to stay abreast of breaking news and help mobilize coverage where necessary; seek to enhance online pages with photographs, multimedia and other tools; and think creatively about element highlights.

The Newspaper Guild says it's negotiated producers' starting pay up to $42k, but that's still less than a (print) intern.

It also says that the Grey Lady agreed to salary equity between web and print, which may be a bad move: why would "If your biggest competitor is doing it, you should too" be a convincing argument?

The City Paper notes that the Newspaper Guild has pledged to "strive for salary equity at The Post for as long as it takes."

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