Thursday, October 22, 2009

Tribune Exec Defends Bonus Plan In Bankruptcy Hearing

WILMINGTON, Del. — The chief financial officer for the Tribune Co. is defending proposed bonuses of up to $70 million for the company's top managers.

Chandler Bigelow III told a federal bankruptcy court in Delaware on Friday that Tribune wants to motivate key managers working in a difficult media environment and trying to emerge from Chapter 11.

But The Newspaper Guild, representing employees of Tribune's Baltimore newspaper, The Sun, says the bonuses are unwarranted. It is joined in its objection by at least three other unions.

The chief judge, Kevin J. Carey, who is presiding over the bankruptcy case, said that a company fighting for its life needed top-tier talent, but also said, “in a troubled industry as this one, the argument could be made that bonuses should not be paid, or certainly not of this magnitude.” He will make a decision soon, perhaps in the coming weeks.

Tribune, which also owns the Los Angeles Times, Chicago Tribune and other dailies, along with 23 TV stations, filed for bankruptcy protection in December because of dwindling advertising revenues and $13 billion in debt. Much of the debt was amassed when Sam Zell took the company private in 2007.

Tribune Creditors Want Zell Out

The Chicago Sun-Times reported that bankruptcy, creditors – including investment banks that are owed $8.6 billion of a total $13 billion debt – are working on their own reorganization that will shove Zell out the door.

William Brandt Jr., president of Chicago-based Development Specialists Inc., said, “This was a textbook case of a leverage buyout gone bad. These were imbeciles who had no idea what they were doing.”

The Sun-Times noted that “Tribune debt recently traded for about 7 cents on the dollar, meaning investors think a lottery ticket is just as likely to pay off.”

Tribune Co. also owns the Los Angeles Times, The Hartford Courant, other big dailies and 23 TV stations.

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