Monday, August 31, 2009

Murdoch Son: BBC Threatens Independent Journalism

The Associated Press

EDINBURGH, Scotland — The son of media mogul Rupert Murdoch has called the British Broadcasting Corp. a threat to independent journalism.
James Murdoch, the 36-year-old executive in charge of News Corp.'s businesses in Europe and Asia, spoke late Friday at the Edinburgh International Television Festival — 20 years after his father delivered a keynote speech at the same event.

"In this all-media marketplace, the expansion of state-sponsored journalism is a threat to the plurality and independence of news provision, which are so important for our democracy," Murdoch said.

The BBC is subsidized by the British government and funded, in part, by television licenses that consumers must pay if they use a television.

Rupert Murdoch's News Corp. controls British Sky Broadcasting Group PLC, one of the BBC's main competitors in Britain.

"As Orwell foretold, to let the state enjoy a near-monopoly of information is to guarantee manipulation and distortion," Murdoch said, referring to George Orwell's book, "1984."

He said "broadcasting policy had failed to keep pace with changes, relying on regulation and intervention from the state rather than empowering consumers."

Greg Dyke, the BBC's former director general, said Murdoch's argument was "fundamentally flawed."

"Journalism is going through a very difficult time — not only in this country but every country in the world because newspapers, radio and television in the commercial world are all having a very rough time," he said.

Dyke said it was not the fault of the BBC that the recession and loss of advertising revenues had hampered news organizations.

Last month, a journalist told a British parliamentary committee that James Murdoch approved an out-of-court payment to settle a controversial phone hacking case.

News of the World editor Colin Myler said that Murdoch was told that 700,000 pounds ($1.1 million) would be paid to settle a case against the company.

The suit was brought by Gordon Taylor, head of the Professional Footballers' Association, one of the targets of the hacking.

The allegations against the News of the World, part of Rupert Murdoch's News Corp. empire, have been waged as part of a wider scandal concerning journalistic abuses.

Murdoch: Give TV Same Freedom As Newspapers

By Chris Curtis

James Murdoch has launched a furious attack on Ofcom’s “half a million words every year telling broadcasters what they can and cannot say”, and called for TV news to be granted the same freedom as newspapers.

In a predictable but stinging attack, the BSkyB chairman and News Corporation chief executive branded the existing rules governing TV news “an impingement on freedom of speech and on the right of people to choose what kind of news to watch.”

Rather than preventing biased TV reporting, Murdoch said the current system hinders plurality and promotes the type of “state-sponsored media” better suited to George Orwell’s novel 1984.

“We must have a plurality of voices and they must be independent. Yet we have a system in which state-sponsored media – the BBC in particular – grow ever more dominant.”

BBC Bias

He claimed the notion of an impartial BBC was flawed, and that there was inevitable bias at the corporation in selecting which stories to cover and their running order.

“The effect of the system is not to curb bias – bias is present in all news media – but simply to disguise it.”


One of his key points was that TV regulation was out of keeping with the converged media world.

“Would we welcome a world in which The Times was told by the government how much religious coverage it had to carry? In which there was a state newspaper with more money than the rest of the sector put together and 50% of the market?

“In which cinemas were instructed how many ads they were allowed to put before the main feature? In which Bloomsbury had to publish an equal number of pro-capitalist and pro-socialist books? Of course we would not. So why do we continue to assume that this approach is appropriate for broadcasting?”

“There’s a word for this. It’s not one that the system likes to hear, but let’s be honest: the right word is authoritarianism.”

Analogue Attitudes

Murdoch called for politicians and regulators to “leave behind their analogue attitudes and choose a path for the digital present.” He suggested regulation be dramatically reduced and brought in line with the newspaper industry, and that if the status quo was maintained then society would suffer.

“For the future health of our industry and society we must not allow these creationist tendencies to go on limiting the opportunities for independent commercial businesses, whether in journalism of any other form of content,” he said.

AIG Workers Comp Fraud Case To Enter Next Stage


Attorneys will be in federal court in Chicago on Monday to discuss management of a prospective class-action for more than 500 insurers, which accuses American International Group of civil racketeering and fraud.

The case--so complex that a judge said it may take an actuarial expert to unsnarl it--stems from the revelation in 2005 that AIG “for several decades” filed fraudulent reports to avoid the financial impact of taking on its proportionate share of the National Workers’ Compensation Reinsurance Pool (NWCRP).

According to the suit brought by Safeco Insurance Company of America and Ohio Casualty Insurance Company, as a result of AIG’s fraud, they and other insurers participating in the assigned risk pool lost hundreds of millions because of the additional liabilities they had to take on.

The Safeco suit alleges that AIG, despite admitting past illegal activity, has currently engaged in “efforts to substitute new false statements…in furtherance of the AIG defendants’ fraudulent schemes.”

AIG for its part has countersued, claiming other insurers have engaged in false reporting to the pool. The company’s lawyer said he will file a motion contesting any decision to give the suit class-action status.

U.S. District Court Judge Robert W. Gettleman had put a stay on the Safeco action while he dealt with a previous suit by the National Council on Compensation Insurance, Inc. on behalf of insurers in the pool.

He removed the stay on Aug. 20 when he ruled that NCCI lacked standing to bring a case because the insurers in the pool had not given NCCI legal title to their claims against AIG.

His ruling recounted the history of the case, which was sparked by a New York State investigation finding “several decades” of AIG false reporting of its workers’ comp premiums that are the basis for setting a company’s proportionate share of the NWCRP.

AIG reached a $1.6 billion settlement with New York and federal authorities in 2006. Part of that amount involved $42 million to various states and $301 million that was to go to “those victimized,” but according to Safeco, AIG has “yet to make a full and complete restitution for the financial injury caused to the class.”

Judge Gettleman, who is due to meet with the lawyers for Safeco and AIG Monday to set a schedule for arguments, mentioned to the attorneys last week the possibility of having an expert oversee matters.

According to the transcript, the judge commented that “AIG has conceded that it did engage in this conduct. The other issue seems to be whether the other folks [insurers] engaged in this conduct as well. There is a lot of wiggle room there.”

He added that “somewhere down the line, my guess is if we uphold the notion of similar conduct, there would be a Special Master appointed or something like that to sort this all out, some actuary type, something like that, if we could find one without a conflict, which might not be easy.”

Gary Elden, an attorney for Safeco, told the judge that he intends to file a motion amending the company’s complaint, which in addition to AIG companies lists as defendants Thomas R. Tizzo (retired AIG president), Richard L. Thomas (an AIG senior vice president) and Joseph Smetlana (former president and chair of AIG Risk Management), who is called the creator of the false reporting scheme.

Maurice R. Greenberg, AIG’s former CEO and chair--who the complaint says was part of management that directed the false reporting--is not listed as a defendant.

“What I’m saying is that there may not be a class-action case, and therefore nothing needs to be discovered,” Stephen Novack, the attorney representing AIG, said after the judge noted that Safeco would be filing for class certification.

“Well, that hasn’t yet been decided,” the judge responded.

Tribune Chief May Remain For The Cleanup

The New York Times

The Tribune Company could well emerge from bankruptcy this fall with much of its current top management intact, according to people briefed on restructuring plans, but it remains unclear whether that might include the top dog himself, Samuel Zell, the chairman and chief executive who took the company private.

From the day Tribune filed for bankruptcy in December, it has been clear that Mr. Zell’s $315 million investment and warrants to buy a large share of the company would almost certainly be wiped out. He is being sued on multiple fronts over the $8.2 billion deal that took the company private in December 2007; he has called it a mistake and “the deal from hell”; and some people familiar with the plans are guessing that, when the dust settles, he will be out.

But other people close to the restructuring talks, speaking anonymously because the discussions were supposed to remain private, caution that the major creditors have not yet given a clear indication whether they want Mr. Zell to leave or remain in some capacity. Nor has Mr. Zell said clearly whether he wants to go, though he is used to being the man in charge, and his authority would be diminished under new owners.

“I think the jury is out on Sam,” one of them said. “That is going to be a point of discussion.”

Mr. Zell, 67, made billions in real estate by buying depressed assets where others saw more risk than value, and knowing when to sell them. But that touch faltered when, with the Tribune deal, he moved into an unfamiliar field.

Mr. Zell is not granting interviews, according to Tribune, one of the nation’s largest media companies. Its properties include some two dozen television stations and a string of some of the most important newspapers in the country, including The Los Angeles Times, The Chicago Tribune and The Baltimore Sun.

People briefed on the talks say that the company and leading creditors could agree by September or October on a restructuring plan that would wipe out more than $12 billion of the company’s roughly $13 billion in debt. Such a plan would need the approval of the bankruptcy court in Delaware.

In 2007, a group of major banks lent Tribune about $8 billion to go private, but they have since sold much of that debt to other banks and investment firms. Under the anticipated restructuring plan, it is the holders of that senior secured debt — first in line for some repayment — who would end up owning the bulk of the company.

That, too, was considered the likely outcome from the start — in fact, the bankruptcy filing last December was in part an attempt to protect the interest of those lenders as Tribune’s cash reserves dwindled.

Mr. Zell told senior secured creditors then that, in essence, the company was in their hands, and that making a scheduled payment on junior debt would leave less for them, and asked what they wanted to do. They endorsed bankruptcy.

Mr. Zell isn’t the only one responsible for this debacle. With one of the grand old names of American journalism now confronting an uncertain future, it is worth remembering all the people who mismanaged the company beforehand and helped orchestrate this ill-fated deal — and made a lot of money in the process.

They include members of the Tribune board, the company’s management and the bankers who walked away with millions of dollars for financing and advising on a transaction that many of them knew, or should have known, could end in ruin.

It was Tribune’s board that sold the company to Mr. Zell — and allowed him to use the employee’s pension plan to do so. Despite early resistance, Dennis J. FitzSimons, then the company’s chief executive, backed the plan. He was paid about $17.7 million in severance and other payments.

The sale also bought all the shares he owned — $23.8 million worth. The day he left, he said in a note to employees that “completing this ‘going private’ transaction is a great outcome for our shareholders, employees and customers.”

Well, at least for some of them.

Tribune’s board was advised by a group of bankers from Citigroup and Merrill Lynch, which walked off with $35.8 million and $37 million, respectively. But those banks played both sides of the deal: they also lent Mr. Zell the money to buy the company. For that, they shared an additional $47 million pot of fees with several other banks, according to Thomson Reuters. And then there was Morgan Stanley, which wrote a “fairness opinion” blessing the deal, for which it was paid a $7.5 million fee (plus an additional $2.5 million advisory fee).

On top of that, a firm called the Valuation Research Corporation wrote a “solvency opinion” suggesting that Tribune could meet its debt covenants. Thomson Reuters, which tracks fees, estimates V.R.C. was paid $1 million for that opinion. V.R.C. was so enamored with its role that it put out a press release.

Randy Michaels, the chief operating officer installed by Mr. Zell, recently sent a memo to employees saying that for the most part, management and the lenders agreed on how to run the company. “While the ownership structure of the company is likely to change, current operating management is committed, and intends to remain in place during and after the restructuring,” he wrote.

That may have contained an element of bravado, but people briefed on the matter said the major creditors were not unhappy with the current team. “They’re pretty pleased with the way things are running,” one said.

For a few more months, at least, Tribune will remain in the limbo of bankruptcy, unable to make any major moves without court approval and uncertain about who its future leader will be.

Having stopped payment on its long-term debt, Tribune has continued to cut costs, reached a tentative deal to sell the Chicago Cubs baseball team for $845 million, and built its cash cushion from $317 million when it filed for bankruptcy last December to $743 million by the end of June.

But Mr. Zell’s maneuvering also contributed to more than a year of delays in selling the Cubs and, according to some analysts, may have resulted in a lower price than Tribune would have gotten when the economy was stronger. He sought to sell the team and its home, Wrigley Field, separately — the Cubs to a private buyer, the stadium to a government agency and possibly the naming rights to the stadium to a third buyer. But that strategy ran into trouble, and Tribune eventually reverted to an earlier, simpler plan to sell them as a package.

It was also Mr. Zell who engineered the complex deal to take the company private, which nearly tripled the company’s debt and left it with too little free cash flow to weather a sharp drop in advertising.

But what about those employees? They had no seat at the table when the company’s own board let Mr. Zell use part of its future pension plan in exchange for $34 a share. They have no seat on the board of the ESOP that now owns the company.

Mr. Newman, the analyst who predicted the trouble, said in an interview, “The employees were put in a very bad situation.” He added that while boards are typically only responsible to their shareholders, this situation may be different. “There has to be a balance,” he said, “to create sustainability for all the stakeholders.”

A group of employees sued this year, saying that the deal was certain to fail. Last week, a group of Tribune bondholders did the same.

Dan Neil, a Pulitzer Prize-winning columnist for The Los Angeles Times, led the lawsuit with other Tribune employees against Mr. Zell and Tribune. The suit contends “through both the structure of his takeover and his subsequent conduct, Zell and his accessories have diminished the value of the employee-owned company to benefit himself and his fellow board members.”

If the employees win, they will become Tribune creditors — and stand in line with all other creditors in bankruptcy court.

Some bondholders of the Tribune Company are seeking permission from a federal bankruptcy judge to investigate the company’s sale in 2007 to the billionaire investor Samuel Zell, a deal creditors claim led to a bankruptcy filing a year later.

The request was made by the Law Debenture Trust Company, a firm claiming to represent 18 percent of Tribune’s bondholders. The firm is seeking documents related to the leveraged buyout to help prove that the 2007 deal was done despite knowing it could render the company insolvent. The court’s approval would give Law Debenture access to Tribune documents that would otherwise be unavailable.

Should the judge reject the request for an investigation, Law Debenture asked that an independent examiner be appointed as an alternative.
The private equity firm Centerbridge Partners is a lead member of the group that is seeking an investigation, according to a person briefed on the filing. Centerbridge did not respond to a request for comment.

In the filing, Law Debenture points to statements by the Tribune Company that the assumptions behind the debt-heavy deal were “too optimistic.” The bankruptcy filing in December was no surprise to analysts, who have long criticized the sale to Mr. Zell as overburdening the company with more than $11 billion in debt at a time when advertising revenues were plummeting.

Whether either suit can upend the sort of restructuring plan sought by Tribune and its major lenders, or lower Mr. Zell’s chance of remaining in charge, remains to be seen.

A spate of high-dollar, high-leverage deals in 2006 and 2007 put hundreds of American newspapers, including many of the biggest, under new ownership — and in most cases put the new owners in financial jeopardy.

Mr. Zell’s Tribune takeover was the biggest of those deals, it was one of the last, and it was the first to land in bankruptcy.

Since then, Philadelphia Newspapers, owner of that city’s Inquirer and Daily News; The Minneapolis Star Tribune; and others have filed for bankruptcy, while some other publishers have had to restructure their debts to remain solvent.

Friday, August 28, 2009




Tribune's short-lived experiment with employee ownership is coming to an end.

While Tribune is still navigating the bankruptcy process, the creditors are unlikely to keep the employee stock ownership plan, leaving workers with worthless shares, a source involved in the negotiations said.

In 2007, real-estate tycoon Sam Zell used the stock plan, called an ESOP, to gain tax benefits on the $8.2 billion buyout of the struggling 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.

The plan made employees official owners with 100 percent of the equity, but they have no say over management or the board. In the bankruptcy, they are viewed as common shareholders with less claim than other creditors.

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.

"That's the typical scenario for bankruptcy," said Corey Rosen, executive director of the National Center for Employee Ownership. "The creditors say, 'Forget about the ESOP. It's common stock and well down the list of creditor situations.'"

When the plan began, Tribune's board appointed GreatBanc Trust to serve as the trustee for the ESOP.

GreatBanc's Marilyn Marchetti, who helped structure the transaction, declined to comment on creditors' plans but said the trustee remains involved in the negotiations.

"We are certainly representing the ESOP in the bankruptcy process," she told The Post. "We've been very active."

Although Tribune's ESOP has created a lot of confusion, experts said it is important to note that workers didn't directly fund the plan. Instead, the company agreed to make contributions like it would to other benefit plans, such as a 401(k) or pension.

The contributions were supposed to be invested in Tribune stock. However, Tribune filed for bankruptcy before it made its first contribution.

IRS investigators are “attempting to determine if the transaction was for the benefit of employees,” according to a declaration filed by a Waukesha, Wis.-based agent in charge of the probe. If the IRS determines that the transaction wasn’t prudent, Tribune could be subject to an excise tax and corporate income tax for 2008.

In June the IRS told the Bankruptcy Court judge that its investigation “has been hampered by debtor’s delays in providing accurate information to the auditors.”

The IRS audit could create a hefty bill for the media company. As much as $1.8 billion could be at stake, the amount that Tribune wrote off in net deferred income tax liabilities after Mr. Zell’s takeover was completed in December 2007.

In addition, he U.S. Department of Labor is investigating the ESOP, a probe Tribune called “routine.”

Former Los Angeles Times employees are also suing Mr. Zell and board members over the ESOP.

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.

Tribune, which owns the Los Angeles Times, Chicago Tribune, the Baltimore Sun, the Hartford Courant and other dailies, as well as 23 TV stations, sought bankruptcy protection last December because of dwindling advertising revenues and $13 billion in debt.

(The Associated Press contributed to this report.)


What do you think?

Joseph P. wrote:
Cost of anti-union consultants and lawyers to prevent employees from organizing or joining a union........$750,000.00/year (est.)Using the employees pension money to pay stockholders and executive bonuses..........PRICELESS!

John C. wrote:
It is about time! GO IRS! This was a sham from day one!

A&E Television Net Acquires Lifetime Entertainment

Posted by Amanda Ernst

A&E Television Networks, which is a joint venture between the Disney-ABC Television Group, Hearst Corp. and NBC Universal -- has entered into an agreement to acquire Lifetime Entertainment Services, which will put several cable channels under one management team.

The new parent company, which will be called A&E Television Networks, will now encompass many channels including A&E Network, History, Lifetime Television, Lifetime Movie Network, Bio, History International, Lifetime Real Women, History en Español, Military History and Crime & Investigation Network.

Under the terms of the deal, NBCU can "elect or be required to exit the company over a period of up to 15 years," reported Broadcasting and Cable.

If NBCU exits, Hearst and Disney would become 50/50 partners.
Abbe Raven, president and CEO of A&E, will serve as head of the newly combined company.

Lifetime's CEO Andrea Wong, Nancy Dubuc at the History Channel and Robert DiBitetto at A&E will be keeping their positions, and they will all report to Raven, B&C reported.

Now that A&E Network, History, Lifetime Television, Lifetime Movie Network, Bio, History International, Lifetime Real Women, History en Español, Military History and Crime & Investigation Network are all operating under one corporate umbrella, we should think about organizing this bastion of non-union broadcasting.


Thursday, August 27, 2009

Tribune Bondholders Fault Zell Takeover

The Wall Street Journal

Disgruntled Tribune Co. bondholders have asked a U.S. bankruptcy judge to let them investigate Sam Zell's 2007 buyout of the newspaper-and-television chain in an effort to derail a plan that would hand the company over to its banks.

The filing, made late Wednesday, calls the $8.2 billion transaction a "fraudulent conveyance" that left Tribune insolvent from the onset of the 2007 deal. It accuses senior lenders led by J.P. Morgan Chase & Co. of completing a leveraged buyout they should have known would push the company into bankruptcy.

Angry debt holders who purchased Tribune bonds before real estate mogul Sam Zell led the leveraged buyout are asking a bankruptcy judge to let them investigate the deal. Their request, made in a court filing Wednesday, comes as Tribune, owner of the Chicago Tribune, Los Angeles Times and other newspaper and TV properties, slogs through its ninth month in bankruptcy court.

More specifically, the bondholders–who call themselves “the pre-LBO creditors”–say lawyers and financial advisers working for the creditors’ committee can’t possibly investigate the Zell deal, because they also represent the banks that financed the buyout. They also take shots at firms representing Tribune, saying they have various conflicts preventing a necessary look at the Zell deal.

In court papers, representatives for the bondholders say neither Tribune nor the creditors’ committee “has conducted a complete factual investigation into the circumstances surrounding the LBO.…Despite the normal expectation that the committee would immediately probe deeply into the facts and circumstances surrounding the leveraged buyout, after nine months, nothing of substance addressing recoveries has transpired and no claims have been brought.”

The bondholders call out creditors’ committee counsel Chadbourne & Parke, noting that it represents J.P. Morgan and other banks and thus can’t pursue litigation against those banks or other deal advisers. They also single out Landis, Rath & Cobb, noting its representation of J.P. Morgan and other conflicts means it can’t give adequate representation to all creditors. AlixPartners, the committee’s financial adviser, gets the conflict treatment, too.

The bondholders note it has the banks as clients in certain cases and points to an AlixPartners affidavit that says the firm might not be able to pursue litigation against those clients.

The bondholders' request is fairly typical after leveraged buyouts land companies in Chapter 11. If a judge approves their request, the bondholders could end up filing claims against Zell or the banks that provided financing for the deal and now stand to take over the company.

These creditors could also ask the bankruptcy court to require that the banks that participated in the buyout get paid after other debt holders.
Either of those options could pressure Tribune to give the bondholders a better deal in a reorganization plan.

"Sometimes the threat is better than an investigation," said Ira Herman, a bankruptcy attorney with Thompson & Knight.

The filing said it was on behalf of creditors who hold 18 percent of Tribune's bonds, but it did not reveal their names.

"What they want is to maximize their payout," said Juliet Moringiello, a law professor at Widener University. "They want to make sure they get paid what they deserve."

The request was made late Wednesday by the Law Debenture Trust Company, a firm claiming to represent 18 percent of Tribune’s bondholders.

The firm is seeking documents related to the leveraged buyout to help prove that the 2007 deal was done despite knowing it could render the company insolvent. The court’s approval would give Law Debenture access to Tribune documents that would otherwise be unavailable.

Should the judge reject the request for an investigation, Law Debenture asked that an independent examiner be appointed as an alternative.

Law Debenture’s legal argument touches upon a claim known as “fraudulent conveyance,” an assertion that Tribune and its lenders should have known that sale would leave Tribune in precarious financial health.

The private equity firm Centerbridge Partners is a lead member of the group that is seeking an investigation, according to a person briefed on the filing. Centerbridge did not respond to a request for comment Thursday.

Zell, who is expected to leave the company in the bankruptcy reorganization, engineered the complicated deal to take Tribune private two years ago and create an employee stock-ownership plan. It quickly turned out that the architects of the buyout had made overly optimistic projections for the advertising revenue Tribune's newspapers would generate.

The recession has pummeled the newspaper business, with major publishers reporting ad revenue declines of as much as 30 percent.
By the time it filed for bankruptcy protection in December 2008, Tribune had accumulated $13 billion in borrowings to $7.6 billion in assets.

In their filing Wednesday, the bondholders claimed the buyout was fraudulent, pushing the company into insolvency without giving it "equivalent value" in return for taking on the debt, which mainly went to cash out Tribune stockholders.

"The idea is the company took on a tremendous amount of debt and at the end of the day didn't have any assets to show for it," said John Penn of Haynes and Boone LLP. "Usually when you borrow money, you've got the money and you get to buy stuff with it."

The bondholders said they want to see e-mails and other communications about the deal and to interview those who participated in negotiations.
"For these claims to be potentially whitewashed and swept under the rug would make this case a travesty," the bondholders said in the filing. "Chapter 11 clearly should not be a vehicle to deliver reorganized equity to the lenders that caused the debtors' demise."

An investigation could help them make the case that Zell or the banks are culpable, but making claims stick could be difficult.

"We knew it would be tough from the very beginning and thought (Zell's) projections were optimistic," said Dave Novosel, a media analyst with Gimme Credit. "But I don't know that that's illegal."

Tribune Co. did not directly address the claims in a statement Thursday.
"Our goal is to develop and implement a plan that maximizes the value of the company for all parties ... and treats all creditors fairly, and to do so as quickly as reasonably possible," the company said.

The four banks that financed the 2007 Tribune buyout were JP Morgan Chase & Co., Citigroup Inc., Bank of America Corp. and Merrill Lynch & Co., which is now part of Bank of America.

JP Morgan Chase spokeswoman Christine Holevas said the bank doesn't comment on pending litigation. Calls to Citigroup and Bank of America, which now owns Merrill Lynch, were not immediately returned Thursday.

The bondholder action was interpreted as a prelude to a possible lawsuit.

“Anybody who was reasonable should have foreseen this,” said Bill Brandt, a restructuring specialist based in Chicago. “Very few people are going to do well in this bankruptcy, except those at the top of the food chain, because the values simply aren’t being realized. It is precisely that circumstance that causes this litigation to appear on the horizon.”

The plan is expected to be presented by early fall, according to a person briefed on the matter. Tribune filed for bankruptcy last December with the assent of its bank lenders.

“Chapter 11 clearly should not be a vehicle to deliver reorganized equity to the lenders that caused the debtors’ demise,” lawyers for Law Debenture wrote in the filing.

Law Debenture said that it made its filing because it believed that Tribune’s official creditors committee — a group of the company’s largest claimholders — was conflicted: two of the group’s largest members are JPMorgan and Merrill Lynch.

FCC Diversity Chief Asked Liberals to Copy FDR, Take on Limbaugh, Murdoch, Supreme Court

By Matt Cover – Federal Communications Commission Chief Diversity Officer Mark Lloyd called on fellow liberals to follow the model of former President Franklin Delano Roosevelt and challenge conservative media moguls and station owners, particularly figures such as Rush Limbaugh, Rupert Murdoch, and “a pro-big business Supreme Court aligned” with them.

Lloyd made the call in a 2007 article for the liberal Center for American Progress while he was a senior fellow there. Entitled “Media Maneuvers: Why the Rush to Waive Cross-Ownership Bans,” the article ostensibly talks about the Federal Communications Commission’s (FCC) decision to allow Chicago real estate mogul Sam Zell to purchase the then-failing Chicago Tribune Co., owner of the Chicago Tribune newspaper.

Lloyd, however, uses the Zell case, in which Zell ultimately prevailed, to make a broader argument that liberals should look to the tactics employed by FDR to combat his conservative critics in the media, saying that liberals must challenge outspoken conservatives who own media outlets.

“Progressives should take a page from FDR’s media diversity playbook,” Lloyd wrote. “At the end of a second FDR administration [in 1940] when the New Dealers were still battling a conservative print media and a conservative Supreme Court to fix the great debacle of American capitalism – the Great Depression. “FDR’s fireside chats and his ready access to radio allowed him to speak directly to Americans and continue to push a progressive agenda,” said Lloyd. “But FDR was becoming increasingly concerned about the purchase of radio operations by the newspaper publishers.”

Lloyd highlights one Roosevelt tactic in particular, using the Justice Department to take his conservative media critics to court on anti-trust grounds. He highlights the case of then Chicago Tribune publisher Col. Robert R. McCormick, a stalwart Roosevelt critic.

Says Lloyd: “One of the most vehement Roosevelt-haters was Col. Robert R. McCormick, the longtime editor and publisher of the Chicago Tribune. McCormick considered it his duty to remove Roosevelt from office and he used every means at his disposal to further this aim, including his radio station WGN (AM). “But there is little doubt that FDR understood what he was up against,” wrote Lloyd. “He understood not only how to use media effectively, but also the importance of media ownership and the rules that determined media ownership.”

Roosevelt took the Associated Press and McCormick, an AP member, to court, alleging that they were engaged in illegal, monopolistic practices. Ultimately, a then Roosevelt-friendly Supreme Court ruled that the First Amendment did not give newspapers the right to be monopolies.

Lloyd referenced the case to call on liberals to act like Roosevelt and challenge what he saw as conservative dominance in media. “Just as FDR and the New Deal Progressives understood that media consolidation posed a major problem in a democracy, modern progressives need to understand the importance of this battle,” said Lloyd.

He warned that Zell, who tended to support conservative politicians, could be a modern-day McCormick, ready to ally with other conservative media moguls such as Rupert Murdoch and Rush Limbaugh against liberals. “The vast majority of Zell’s political contributions go to support conservative candidates and causes,” wrote Lloyd. “Is Zell a modern Col. McCormick waiting in the wings to join forces with Rupert Murdoch and Rush Limbaugh?”

Lloyd said such conservatives were “frantic” to get favorable ownership regulations in place before liberals could re-take Congress and the White House in 2008. “Conservatives, including conservatives in media, are frantic to get a wide range of regulations that favor the interests of big business in place as soon as possible,” wrote Lloyd. “They are justifiably concerned that a public fed up with seven years of failed conservative policies in Iraq, a souring economy, and rising health care costs will put a stronger progressive voice in Congress and in the White House.”

Lloyd warned that conservatives such as Limbaugh and Murdoch were in league with a “pro-big business” Supreme Court and ready to battle the incoming liberal majority, just like in FDR’s day. “A pro-big business Supreme Court aligned with Murdoch, Limbaugh, and Zell and ready to battle a progressive in the White House begins to sound a lot like the early years of the FDR administration,” said Lloyd. “Will progressives sound like FDR and commit to creating a media policy that actually serves democracy and promotes diverse and antagonistic sources of news?”

Tuesday, August 25, 2009


Seth D. Michaels
Online Communications Coordinator
Employee Free Choice Act

A Competitive Economy Needs Labor Law Reform

Small businesses are the backbone of our economy, employing almost half of the American workforce.

Small business owners strongly believe that their employees are a vital asset to their success. Yet, our labor law is not ensuring a level playing field for responsible businesses, large and small.

Businesses that comply with the law face unfair competition from companies who refuse to respect the rights of their employees to join unions. The current labor law system allows employers to veto the will of workers, violate the law with relative impunity, and systematically delay sitting down at the table to negotiate a first contract.

The Employee Free Choice Act makes no changes to the existing National Labor Relations Act’s definition of a small business, which is largely based on revenue and type of business. It does, however, restore the role of our labor laws to act as a watchdog to make sure every business is playing by the rules, while at the same time restoring every American’s
right to join or form a union so they can reach for the American Dream.

The legislation will give back to small businesses the freedom to compete based on innovation and quality instead of who can afford the most expensive anti-union consultants. In this economic crisis, the nation has a duty to enable entrepreneurs and start-up companies to focus on building sustainable, long-term success, instead of being forced to compete against irresponsible businesses in an unwinnable, low-wage race to the bottom.

Urgent action is needed if we are to join together, management and workers alike, and climb out of this economic recession. The Employee Free Choice Act provides a process to get us there that is streamlined and efficient.

Claims of Negative Impact Simply Not True

Small and large businesses across the nation who have respected their employees’ choice to form a union have reported that the sky did not fall – far from it. In fact, a 2005 report by an economist on behalf of the Small Business Administration found that a higher percentage of unionized workers in a state significantly reduced the probability
of small business failures.

More generally, University of Michigan scholar John DiNardo has a body of research demonstrating that firms that become unionized are no more likely to fail than comparable firms that remain non-union.

Moreover, workers emerge from successful organizing drives with an enhanced sense of their common stake in the long-term stability and profitability of their company. This results in negotiated wage increases that are commonly designed to be implemented slowly over time. This stability can help small employers plan and forecast better.

Finally, if we look at the larger context, we see economic policy that has allowed a handful of greedy speculators to wreak havoc. Their power has been unchecked.

Small businesses are not receiving bailout funds, but they are certainly paying the price. This country has been at its strongest when it has made sure that the voices of the most powerful among us are balanced with those with less power, like small business owners, family farmers, and working people.

The Employee Free Choice Act is explicitly designed to help restore that balance.

A Win-Win for Small Businesses

Boost Consumer Spending

First and foremost, small businesses need customers to purchase their products and services. An estimated 70 percent of our nation’s economy comes from consumer activity.

The Center for American Progress Action Fund found that if union membership rates increased just 5 percent over current levels, newly unionized workers would earn an estimated $25.5 billion more in wages and salaries per year—money that will be pumped right back into our economy.

Another recent study conducted by the nonprofit Economic Roundtable found that the wages negotiated by union workers in Los Angeles add $7.2 billion a year in pay. As these workers spend their income on food, clothing, child care, car and home repairs, and other items, their additional buying power creates 64,800 jobs and $11 billion in
economic output.

Access to Training

There is a general consensus among economists that unionization is linked to reduced turnover. In a small company, even losing one or two trained workers can hit the bottom line hard. Thus it’s no surprise that across the country, businesses are working in tandem with unions to help with training, skills building, and career development.

Small businesses that are limited in their budgets can benefit enormously from union-sponsored training programs that combine resources over multiple employers and draws on the well-established training and apprenticeship infrastructures of labor unions.

Pooling to Reduce Healthcare Costs

Many business owners say they want to offer or to continue to offer health insurance and believe it is vital to attracting and retaining high-quality employees. But skyrocketing healthcare costs are making this nearly impossible.

Unions are stepping in with healthcare plans that pool many unionized workers and small businesses together to bring costs down. Many unions and businesses are working together for meaningful reforms on issues that strongly affect small businesses such as public funding for home care and child care, fair trade, pension reform, and financial assistance for
start-up green companies.

AFL-CIO leader chosen to be N.Y. Fed chairman

By Michael McKee
Bloomberg News

Denis Hughes, president of the New York State AFL- CIO, has been designated as chairman of the New York Federal Reserve Bank's board of directors for the remainder of 2009, bank spokesman Calvin Mitchell said in a statement.

Hughes, 59, has served as acting chairman since May, when Stephen Friedman resigned from the position to avoid the appearance of a conflict of interest over his ties to Goldman Sachs Group Inc.

Friedman, a director on Goldman Sachs' board and a former chairman of the investment bank, purchased shares in Goldman Sachs while serving as chairman of the New York Fed. The district bank oversees Goldman Sachs.

Friedman, chairman of Stone Point Capital LLC, had received a waiver to continue serving on the Fed board after Goldman Sachs became a bank-holding company last September after the bankruptcy of Lehman Brothers Holdings Inc.

Hughes joined the New York Fed board in January 2004.

Lee Bollinger, the president of Columbia University, was designated as vice chairman. Bollinger, 63, became a director in January 2007. He has been reappointed to a new three-year term that begins Jan. 1.

The New York Fed is one of 12 regional Fed banks that, along with the Board of Governors, make up the Federal Reserve system.

Next AFL-CIO chief pledges to press for health care, labor law reform

By Michael Mishak (contact)

Richard Trumka fashions himself after some of the 20th century’s labor firebrands.

Set to become AFL-CIO president next month, the mustachioed third-generation mine worker from southwestern Pennsylvania cuts an imposing figure. His fists are the size of softballs and he pounds the lectern to make his point. But he’ll need more than might to reinvigorate a flagging movement beset by globalization, corporate power and union infighting.

On Monday, Trumka said he’s up to the challenge, pledging to capitalize on Democratic majorities in Congress — and to heal bitter union divisions. He told convention delegates of the international painters union here that he would recast the nation’s largest labor federation into an “agitating, mobilizing, organizing” machine.

Health care and labor law reform, he said, will set the stage. The AFL-CIO has stepped up pressure on both fronts, with Trumka taking partial credit in an interview for turning back an apparent effort to ditch the so-called public option in health legislation. In the past week Senate Democrats have talked openly about using a rare procedure to overcome Republican opposition and centrists in their own party.

Sen. Max Baucus, the chairman of the Senate Finance Committee who is leading bipartisan negotiations, recently voiced his support for the public option.

“I think we helped them do that,” Trumka said.

It’s one example of a more aggressive brand of politics the AFL-CIO intends to play after being outmaneuvered early on in the health care and labor law debates this year. For instance, Senate Democrats negotiating a compromise bill that would make it easier for workers to organize reportedly conceded a key provision to advance the legislation.

“It’s up to us to help Congress and the president do what’s right by working people,” Trumka said. “Trust me, we intend to help them do what’s right.”

He added: “It’s in their heart. Now we need to get it down on paper and make it law. We will take well-defined positions and we’ll fight to keep those positions … Politicians who vote against (health care reform) do so at their own peril.”

Trumka vowed victories on health care and labor law reforms this year.
With Democrats in control of Congress and the White House, union leaders see a rare opportunity to shape labor policy for the first time since the Great Depression and are redoubling their efforts after seeing signs that some of their allies in Washington are wavering.

Trumka said labor will settle for nothing less than fundamental reforms. As for management style, Trumka said he planned to grow the movement from the grass roots, drawing contrasts between himself and labor leader Andy Stern of the Service Employees International Union, the fastest-growing labor organization in the country. Stern’s union has drawn criticism for compromising contract standards in return for organizing rights.

Stern has countered that the moves are part of a long-term strategy that will boost membership and lead to gains down the road.

“When you look at the policies of the last 30 years, they’ve put a box around labor,” Trumka said, citing widespread deregulation and a series of pro-business decisions by the National Labor Relations Board. “That system has proved an utter failure. The difference between me and (Stern) is that he believes you can look at that system and play within that box by accommodating employers. I believe that the system has to be changed because it’s designed for employers to win and workers, every time, to lose.”

Trumka said he isn’t alone in that philosophy. He’s in reunification talks with three unions that Stern helped lead out of the AFL-CIO in 2005, a split that cost the federation “years of momentum,” he said. Among those unions is Unite Here, parent of the Culinary Union. Trumka is also meeting with the National Education Association, the country’s largest union, representing 3.2 million teachers and retired educators.

A reconstituted labor movement must focus on organizing younger workers and unions must stop raiding one another to win over existing members, Trumka said.

Toward those ends, he said the AFL-CIO would build a “reserve army” of 1,000 organizers to assist in strategic drives and prevent union raids.

Trumka’s animating vision: Don’t be timid. Act bold.

It’s the kind of thing Trumka’s father taught him.

“If it was right you fought for it. If it was wrong, you fought against it,” he said. “And there was no in between.”

Looks like the family legacy lives on.

Why Are So Few Women Directing In Television?


Caught between the camera and the cradle: Why are so few women making television films?

TELEVISION production does not just need more women, it needs many, many more women, according to Lord Rees-Mogg, chairman of the Broadcasting Standards Council. He recently bemoaned the fact that television is dominated by male executives who fail to represent the interests of women and children. They are responsible for violent programmes that no woman would make, he believes.

In fact, however, the film and television world is not only inundated with the female sex, they underpin the whole industry. The problem is that they are in the engine room and not on the bridge.

Pivotal to determining the quality and meaning of a film is the role of director. The job requires vision, conviction and organisation, coupled with humility and toughness - qualities that are not exclusive to men. Yet there are far fewer women than men directors.

Is this because women are discriminated against, or is it because the profession is so demanding that it forces most women to choose between family life and a career?

From mainstream drama and documentary to lesbian films, the consensus is that film-making is an ideal activity for obsessives. Which is not to say one cannot have a partner, family and work, but, as one woman director put it: 'The industry is no respecter of a private life, let alone a home.'

The documentary director Molly Dineen is frank about the difficulties of combining her job with a personal life.

'I did try for a month, I thought right, put yourself out to tender, Dineen, and get on with it. The presumption was terrible - that people were going to appear because suddenly I was in the mood to create some kind of private life.'

She is best known for her portraits in films like Home from the Hill, a documentary about the English expatriate Hillary Hook, which was twice shown on the BBC. She is now working for the BBC on a series about London Zoo. 'It preoccupies me a bit because I'm 33, still up the back end of a rhino, and totally obsessive about what I do, and I feel locked into that. I'm not going to pretend I can spend 13 hours a day in London Zoo and go home and look after a family.'

Sarah Hellings is probably responsible for more prime-time television drama than any other director - man or woman. Her numerous credits include Capital City, Lovejoy, and The Ruth Rendell Mystery Movie. She has received two BAFTA nominations.

She says that throughout her twenties and thirties her creative instincts went into her work. She doesn't believe children are compatible with her job. She has been married twice - both times to men in the film industry.

She says that marriages in the industry are usually tripartite affairs: husband, wife and the film. In terms of personal relationships, she believes she is perhaps unfulfilled, and she bemoans what she sees as a choice women in the industry have to make between children and a career.

She also believes that some of the skills of a good director, such as motivating and leading without coming across as bossy, are 'particularly hard for women to do. I wanted to be liked, but from an early age I decided it wasn't always possible.'

She has twice been turned down for jobs because a member of the cast objected to working with a woman director.

Most of Cheryl Farthing's work has been for Out, Channel 4's gay and lesbian series. She believes that 'women see the world through completely different eyes, (and that view is) of as much interest to men as it is to other women'. At 29 she has recently completed a short cinema feature called Rosebud, which is a lesbian love story deliberately made with mass appeal.

'It was very important to me that the film looked good, was accessible and sexy for everyone: and I think it's sexy for straight women and men and lesbians. I've even had gay men say they found it sexy.'

She blames cautious producers and commissioning editors for not giving more women a chance and believes sexism has a lot to answer for, starting with training.

In her experience, women tend to differ from men in mixed training groups and this affects 'the way they enter the industry and how ambitious they are in setting ceilings for themselves'.

Fizz Waters, 35, started her career at 16 as a tea lady in the Thames Television canteen. Now a first assistant director, the right hand to a drama or feature film director, her credits include many of Thames's long-running successes, such as The Benny Hill Show, Rumpole and The Bill.

'I used to take my tea trolley around to all the departments and one of the heads was a lovely fellow who I used to wake gently with a cup of tea.' He later had the confidence to take Fizz on as a 'call boy'. When the Sex Discrimination Act became law, her title was changed to 'floor assistant'.

Early on, while she was still Benny Hill's 'floor polisher', Hill used to tell her to carry a pencil and paper and ask herself what she had done that day to further her career.

'Sometimes I think it would be nice to be half of a couple again and then I think no, it might get in the way of doing what I want to do when I want.'
Like Sarah Hellings, she also thinks women can find being in charge difficult. 'Maybe women are put off being first assistants because you have to be bossy,' she says.

Sharon Miller, 35, began as an actress, but, being 6ft tall, she was quickly confined to playing 'big girl' roles; first with Ronnie Corbett and then as Bill Oddie's mum in The Goodies.

'It was so devastating to any kind of artistic integrity when the only reason you're hired is for your height and the fact that you can have your tits padded.'

So, minus the padding, she went into children's programmes, a traditional employer of women and sometimes a ghetto: 'There's an image of a director who works for the children's department - the kind of woman who doesn't have children, and wears loud stockings and brogues.'

For a while she was 'that girl from children's' who got out - even if it was straight into a pothole full of bats, dripping water, and the cast and crew of an episode of Casualty. From there she directed further episodes and eventually had the clout to do work such as A Woman Alone with Lynn Redgrave.

Women directors do not want to be seen as strident or whingeing. They acknowledge that many of their work difficulties are shared by men, but most feel they have to work harder, especially in the early stages of their careers.

Film-making has always been competitive, especially so now that there is a recession, so does it matter that there are so few women directors?
Molly Dineen is not convinced it does: 'There are fewer women in most things, but is that a problem?' she asks.' I mean, we are physically built to do a different task. I basically believe in natural functions, and my generation assumes we can have both. It's bollocks.'

She recalls making a film about London's underground, working with a former sound recordist- turned-mum: 'I was trying to get her to stay in the station all night and get drunk with me and the ticket collectors (and) she basically really wanted to be with her babies, and that's when you realise there is something a little bit out of the ordinary about making films like this and trying to have your own life. A boyfriend once said: 'I think I'll make films now and have babies when I'm about 46' - I wish I could say that.

'I think, at the moment, people who have nannies are guilty that they've got nannies. People who don't have nannies feel inadequate because they're not working. People who don't have children think that they're going to be barren and terribly sad career women in nylon suits at 50. I'm terrified of it, I absolutely don't want to be in a power suit at 49. You know, I consciously find myself going to things, wearily thinking, well I'd better go because I might meet somebody, and I hate it because I might as well go to Dateline.'

So speaks one of the leading figures of British documentary cinema, whose illuminating films about 'the ordinary', as she puts it, could perhaps only have been made by a woman. 'And let's be frank, it's bloody unfair, but why does anyone expect life to be fair? I think it's equally ghastly for a geezer to suppose he's got to produce financial support.'

Sharon Miller also believes women have to choose: 'The demands of the business made the choice for me, which was that I neglected my private life while my professional life benefited hugely. You are permanently under attack in this business, your confidence, your energy and your validity, and it's difficult for any partner to understand the complexity of what you're going through.

'It's very hard when you're in your mid-thirties and you've got to make some sort of decision. I want both - I want a family and I want to make a wonderful film, and that's the dilemma.'

The author is a freelance producer and director.

Monday, August 24, 2009

Job Openings At WPIX

Hi All,

There are job openings at WPIX posted over at:

Except for the Director of Engineering job, the other positions could go to IBEW 1212 members if shared jurisdiction actually meant "shared".


8/21/2009 Director, Operations & Engineering WPIX-TV

8/21/2009 Commercial Coordinator WPIX-TV

8/21/2009 Entertainment Segment Producer WPIX-TV

8/21/2009 Web Producer WPIX-TV

Friday, August 21, 2009

Tribune Finalizes Sale Of Cubs To Ricketts Family

By: Mike Colias

(Crain’s) – Tribune Co. made it official Friday, announcing an $800 million deal to sell the Chicago Cubs, Wrigley Field and a 25% stake in Comcast SportsNet to the Ricketts family.

Tribune will retain a 5% stake in the assets, as expected, which means the overall transaction is valued at about $845 million, Tribune said.

“Our family is thrilled to have reached an agreement to acquire a controlling interest in the Chicago Cubs, one of the most storied franchises in sports," Joe Ricketts, family patriarch and founder of T.D. Ameritrade, said in a statement. "The Cubs have the greatest fans in the world, and we count our family among them. We look forward to closing the transaction so that we can begin leading the Cubs to a World Series title.”

The two sides reached a tentative agreement in January, but the deal was thrown into question last month when Tribune re-opened talks with the runner-up bidding group. Tribune first put the franchise on the selling block in the spring of 2007.

Report: Tribune Says It Expects Changes; Debt Reduced

Tribune Co., owner of the Orlando Sentinel, said in an internal memo that its ownership will likely change as it emerges from bankruptcy protection.
A report from The Wall Street Journal states that the note informed employees that even though the ownership structure of the company will change, current operating management intends to stay in place during and after restructuring.

The Thursday note to workers came from Tribune Chief Operating Officer Randy Michaels, the Journal reports. Citing two people close with negotiations, the Journal also reports what the New York Post has reported this week -- that Tribune lenders will end up owning most of the company. The move will shrink the company's debt by 90 percent.

The Post reported this week that creditors who seek to oust Tribune CEO Sam Zell probably won’t keep the employee stock ownership plan either. The Post, citing a source familiar with the matter, states that Zell is close to leaving the company.

Zell owes these creditors $8.6 billion. However, the Journal reports that Zell and other executives have convinced the lenders that Tribune will never return to the profit levels it once saw. They’ve convinced the creditors to cut the debt down to $500 million from $8.6 billion.

The Journal reports that the lenders include Deutsche Bank AG, JP Morgan Chase & Co. Angelo Gordon and Avenue Capital. No solid reorganization plan has been reached, the report states.

Michaels’ note on Thursday releases the most details on Tribune and the rumors since June.

Michaels told employees that Tribune hopes to have a reorganization plan fleshed out by fall, the report states.

Tribune Aims To Give Competitive Wages - Memo

Aug 21 (Reuters) - An internal memo at Tribune Co (TRBCQ.PK) said the bankrupt media company was working to provide market-level competitive wages for employees and sought to allay employee concerns.

"It would be absurd to think that this company will be 'liquidated'," Tribune Chief Operating Officer Randy Michaels wrote in a letter to employees, which was obtained by Reuters.

The company's ownership structure is likely to change, but the current operating management intends to remain in place during and after the restructuring, Michaels said.

Earlier this week, the New York Post reported that Tribune Chief Executive Sam Zell was close to giving up his claims to buy a 40 percent stake in the company.

Tribune, which owns the Los Angeles Times, Chicago Tribune and other U.S. papers, filed for bankruptcy last December.

Tribune could not immediately be reached for comment by Reuters outside regular U.S. business hours.

(Reporting by Robert MacMillan in New York and S. John Tilak in Bangalore; Editing by Muralikumar Anantharaman)

Tribune Expects Changes

The Wall Street Journal

Tribune Co. said its ownership is likely to change as the newspaper-and-television company emerges from bankruptcy-court protection, a shift that people familiar with the matter say would likely put the company in the hands of its lenders and shrink primary debt by more than 90%.

In a note Thursday to employees, Tribune Chief Operating Officer Randy Michaels said "the ownership structure of the company is likely to change." He added that "current operating management is committed, and intends to remain in place during and after the restructuring."

Two of the people familiar with the matter said Tribune's senior lenders are likely to end up owning nearly all of the equity in a reorganized company, with a small amount reserved for Tribune management, employees and unsecured debtholders.

Mr. Michaels's note is the most details Tribune has released about its fate since the company entered bankruptcy protection in December. The collapse made the Chicago-based company the poster child for the decline of the newspaper industry.

Samuel Zell, the real-estate mogul who in 2007 led a debt-heavy buyout of Tribune, came in promising to revive the moribund newspaper industry. Instead, the bankruptcy taints Mr. Zell's reputation as an investor able to a turn big profit from troubled companies.

At least four other newspaper publishers have filed for bankruptcy protection since December.

The possible ownership change caps a nearly two-year saga that began when Mr. Zell closed a deal for Tribune, the owner of newspapers including the Chicago Tribune and Los Angeles Times, a string of 23 local-television stations and the Chicago Cubs baseball team.

The foundation of Mr. Zell's hold on Tribune is a warrant that entitles him to buy as much as 40% of Tribune's equity for at least $500 million. Two of the people familiar with the matter said his warrant is likely to be wiped out in the bankruptcy process.

It is unclear whether Mr. Zell would remain involved in Tribune after it emerges from bankruptcy. One of the people familiar with the matter said while Mr. Zell might not stay as CEO, it is logical for him to remain on Tribune's board, in part because he has hand-picked nearly all of Tribune's top management.

Mr. Zell was out of the country Thursday and couldn't be reached, a spokeswoman said.

Mr. Zell and other Tribune executives have convinced creditors that Tribune can't return to earlier profit levels, and the company needs to substantially reduce debt. Senior lenders have agreed to cut their debt to roughly $500 million from $8.6 billion, according to the people familiar with the matter.

The diverse group of senior lenders include Deutsche Bank AG, JPMorgan Chase & Co., distressed-investment firm Angelo Gordon and Avenue Capital.

Bankruptcy talks are fluid, and a final plan hasn't been reached, people familiar with the matter say. The company's creditors may be offered some compensation other than equity, according to two of the people familiar with the matter. Tribune has a pending agreement to sell its Chicago Cubs and related assets for about $900 million, and the money could be funneled directly to creditors, one of these people said.

Mr. Michaels said the Tribune bankruptcy negotiations are a "slow process because we and they are trying to be very deliberate." Mr. Michaels said Tribune hopes to have a restructuring plan "fully fleshed out" this fall.

Write to Shira Ovide at

Thursday, August 20, 2009

Tribune Co. Executive: Operating Management Will Stay With Media Company

By Michael Oneal
Tribune staff reporter

Responding to recent media reports he called "inaccurate," a top Tribune Co. executive sent a note to the company's employees Thursday saying that Tribune Co.'s current "operating management" intends to stay at the company following the Chicago media conglomerate's emergence from bankruptcy court.

Randy Michaels, Tribune's chief operating officer, also termed "absurd" suggestions in the reports that the company might be liquidated as part of its Chapter 11 plan of reorganization.

Apparently responding to a story in the Chicago Sun-Times last week predicting Tribune Co.'s lenders would gain control of the media conglomorate, oust Tribune CEO Sam Zell and sell the company's assets, Michaels said, "while the ownership structure of the company is likely to change, current operating management is committed, and intends to remain in place during and after the restructuring."

He also said that "we believe there is tremendous value in our current asset mix" and that "the whole of Tribune is greater than its sum of parts."

He noted that "in many respects, we're finding that our creditor groups agree with these principles, but of course, there are a lot of details to be worked out."

Michaels did not specifically acknowledge the Sun-Times story in the employee memo. But he said that "operating management" intended to stay, noting that "our business units, including all of our newspapers, are profitable. It would be absurd to think that this company will be liquidated."

U.S. Trustee And Unions Question Tribune Co. Bonus Plan

The U.S. Bankruptcy Trustee in Tribune Co.'s Chapter 11 case and three unions representing workers of the Chicago-based media conglomerate raised objections to Tribune management's plan to pay out tens of millions of dollars in performance bonuses.

The filings came in response to Tribune Co.'s July 22 request for authorization from the U.S. Bankruptcy Court in Delaware to pay from $21 million to almost $67 million in bonuses to more than 700 managers and other key employees for their work this year.

Tribune Co., which owns the Chicago Tribune, Los Angeles Times and other media properties, also sought to pay nine of its top 10 executives $3.1 million in belated 2008 bonuses.

Sam Zell, the company's chairman and chief executive, is not part of the group of 10.In its response to Tribune Co.'s motion, the U.S. Trustee said the company didn't provide enough information to justify its incentive plan.

Specifically, the Trustee asserted that there is "insufficient information" in Tribune Co.'s motion to prove that the payments are for "bona fide programs and awards based on real performance targets."The Trustee, which is charged with enforcing the bankruptcy laws written by Congress, said that the awards are based on meeting specific cash flow targets but that Tribune Co. does not "give any factual and/or historical context to back up their characterization of that performance target as being 'real.'"

It also questions whether the awards are in the "ordinary course of business" as required by law.

Consequently, the Trustee said the company should provide cash flow targets for 2006 through 2008 and actual performance against those targets. Likewise, Tribune Co. should provide cash flow projections and actual results for 2009.

The Trustee said it reserves the right to supplement its response or object to the bonus request once it has this and other information. It objected outright to Tribune Co.'s request to seal certain parts of a consultant's report filed in support of its motion.

In a statement, Tribune Co. said, "The motion now before the court has the support of our senior lenders and the unsecured creditors committee. Importantly, the bulk of these incentive programs benefit more than 700 employees across the company and are performance-based. We believe our 2009 incentive program is both moderate and reasonable."

Four of Tribune Co.'s unions, meanwhile, lodged their own objections to the plans. The Washington-Baltimore Newspaper Guild, which sits on the unsecured creditors committee in Tribune Co.'s case and represents employees at The Sun, Tribune Co.'s daily in Baltimore, filed an objection which was joined by local units of the International Brotherhood of Teamsters in Baltimore, the Communications Workers of America and International Brotherhood of Electrical Workers in New York.

"At a time when media companies are suffering incomparable losses and struggling to survive, the Debtors have proposed spending $69.9 million to reward their top management for financial performance that, year-over-year, evidences declining fortunes," the union filing said.

"While creditors face limited recovery on their claims and most rank-and-file employees live with frozen pay and benefits, the Debtors believe a proper exercise of business judgment results in millions of dollars distributed to management."

The unions question whether the goals set by the bonus plans are challenging enough and whether the awards can be considered "ordinary course" payments. They also contend that that Tribune Co. has provided no evidence that there is a causal link between the requested payments and the continued operation of the business.

"The (bonus plan) is not designed to drive employee performance toward challenging goals which are subject to the risks of the marketplace," the filing said. "Rather the (plan) is designed to reward insiders for remaining in the Debtors' employ through the end of the (plan) period.

Tribune Co., which filed for Chapter 11 protection last December because it was struggling to manage the heavy debt it took on in going private a year earlier, has said that the bonus payments are needed to motivate managers working under difficult conditions. They will only be paid in full if the company well exceeds performance targets.

Wednesday, August 19, 2009

Setting the Health Reform Record Straight

Many Americans are concerned that health care reform could be detrimental to their health benefits based on a great deal of erroneous information.

Congresswoman Lowey has compiled answers to the most frequent myths she has heard from constituents at Neighborhood Office Hours, during telephone town halls and roundtables, and via phone calls and emails to her office.

If you are worried about one of the myths listed below, please click on it to see what the House proposal for health care would do to address your concern.

MYTH: Health insurance reform would socialize medicine.

MYTH: Health insurance reform will increase the deficit.

MYTH: Health insurance reform will result in higher taxes for middle-class families.

MYTH: Health insurance reform will result in “rationing” medical treatment.

MYTH: Health insurance reform will force you to change your insurance.

MYTH: Health insurance reform means fewer choices for Americans.

MYTH: Health insurance reform will force Americans to buy insurance they can’t afford.

MYTH: Health insurance reform will force businesses to cut jobs by charging them increased taxes.

MYTH: Medicare benefits will be cut or eliminated entirely.

MYTH: Members of Congress are creating lousy public insurance for the rest of Americans while they will continue to have superior care.

MYTH: Members of Congress have not read the health care bill.

MYTH: The bill will provide coverage for illegal aliens.

MYTH: The bill requires that everyone covered by Medicare be visited by an “end of life council” to determine if they can still receive benefits for a terminal illness.

MYTH: The bill doesn’t do anything to address the pressing need for long-term care.

MYTH: Congress is eliminating Medicare Advantage plans to pay for health care.

MYTH: Congress is wrongly focusing on health care instead of the more immediate and serious economic crisis.

MYTH: The bill provides funding for abortions.

MYTH: The proposal will limit pay for doctors.

MYTH: Employees who receive employer-provided health benefits will be forced to enroll in the public insurance plan.

68 to lose jobs in KGMB, KHNL, K5 merger; programming will be retained

By Rick Daysog

The owners of KGMB9, KHNL and K5 television stations will eliminate 68 jobs, or more than a third of their staff, as they merge their operations.

Alabama-based Raycom Media, owner of KHNL and K5, said today that they plan to combine its newsrooms with that of KGMB, creating the state's largest television news department.

Ownership at none of the stations will change and programming currently running on three stations will largely be retained. Some of the news programming will be simulcast on KHNL and KGMB.
KGMB is owned by MCG Capital Corp.

Paul McTear, president and CEO of Raycom, said the deal will help preserve the news operations of three television stations that have been hard-hit by the downturn in the advertising market. He noted that annual television ad revenues will be down by about $20 million, or about 30 percent, from three years ago.

"Rather than experiencing the loss of one, or possibly two stations in Hawaii, we intend to preserve three stations that provide important and valuable local, national and international programming to viewers in Hawaii," McTear said.

McTear declined to provide estimates on job losses but KGMB's Web site noted that out of the three stations' 198 employees, about 130 will become part of the new combined organization.

Staffers at KGMB said the newsroom staff was told they will all be officially laid off on Oct. 18, and those selected to stay will be rehired.
Raycom Media is one the nation's largest broadcasters and owns and operates 46 television stations in 36 markets. MCG Capital is a private equity fund.

The deal is expected to close in 60 days. During that period, management will interview staffers for positions at the combined newsroom.
Here is the press release that went out at 11 this morning.

HONOLULU — Raycom Media, owner of KHNL and K5, and MCG Capital Corporation, owner of KGMB, announced today a Shared Services Agreement which, upon completion, the two companies would combine the three stations to creatively and successfully address the impact of the negative economy and to secure the future of all three television stations in Hawaii.

"The purpose of a Shared Services Agreement is to not only secure the future of KHNL, K5 and KGMB, but to operate them more efficiently and effectively without diminishing the quality of news and other programming provided to our customers in Hawaii,"said Paul McTear, President and CEO of Raycom Media.

"We realize there may be other financial and business options available, and while we are certainly open to discussing these with any interested party, the economic reality is that this market cannot support five traditionally separated television stations, all with duplicated costs. Rather than experiencing the loss of one, or possibly two stations in Hawaii, we intend to preserve three stations that provide important and valuable local, national and international programming to viewers in Hawaii."

Under the agreement, Raycom Media would provide certain services to all three stations. The agreement is an operational arrangement, not an ownership change agreement. Raycom Media retains ownership of KHNL/K5 and MCG Capital Corporation retains ownership of KGMB.

"Companies that think and act far more creatively to protect their businesses and employees in this economy are the ones that are going to weather the storm and emerge stronger," said McTear. "Raycom Media is proud of its long relationship with Hawaii, and with the University of Hawaii, and we are excited that an agreement would allow us to, not only continue to serve the islands, but to serve residents in even more and better ways."

Raycom Media's KFVE, or "K5," produces and broadcasts well over 100 live sports events each year for the University of Hawaii.

The Shared Services Agreement creates what would be the largest local television news operation available to cover local, national and international news for Hawaii. The KGMB, KHNL, K5 newsroom and all those working there plan to produce more than 40 hours of local news each week, making it among the most productive newsrooms in the country. The stations will also continue to provide local web sites rich in news, weather, sports, entertainment, business, advertising and other content of community interest.

"Such an agreement allows the three stations to field the largest number of news professionals, particularly during times of major breaking news or severe weather, providing better coverage of stories impacting the lives of everyone who lives on the islands, and produced on multiple platforms – television, internet and on mobile devices." added McTear.

"Given the challenges of operating a standalone station in these very difficult markets, MCG views the Shared Services Agreement as a smart and creative way to manage its continuing ownership investment in KGMB," said Rick Blangiardi, President and General Manager of KGMB and MCG Capital's representative in Hawaii.

"We are very proud of our employees and the work that they do. Under a new agreement, KGMB, and the people who work there, will benefit from the scale and diversity which comes from a company like Raycom Media, recognized as a company that will be an integral part of the broadcast industry for years to come."

Under a Shared Services Agreement, the three stations will share in the news services as well as other combined services. It's anticipated that, once the two companies swap call letters, the national networks and other programming, along with the accompanying channel positions of each of the three stations, will remain the same.

Raycom Media, an employee-owned company, is one of the nation's largest broadcasters and owns and operates 46 television stations in 36 markets and 18 states, including Hawaii. In addition to television stations, Raycom owns Raycom Sports, a marketing, production and events management and distribution company; Raycom Post, a post production facility; Broadview Media, a post production telecommunications company; and CableVantage, a cable advertising sales group.

MCG Capital Corporation is a solutions-focused commercial finance company providing capital and advisory services to middle-market companies throughout the United States. Our investment objective is to achieve current income and capital gains. Our capital is generally used by our portfolio companies to finance acquisitions, recapitalizations, buyouts, organic growth and working capital. For more information, please visit

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Report: Tribune Employees To Get Shortchanged

Los Angeles Business from bizjournals

Creditors who seek to oust Tribune CEO Sam Zell probably won’t keep the employee stock ownership plan -- a move that will leave employees with worthless shares, the New York Post reports Wednesday.

The Post cites a source involved in creditor negotiations.

In 2007, Zell used the stock plan to gain tax benefits on the $8.2 billion Tribune buyout.

Under the plan, workers have 100 percent ownership of the company but no say on management or the board. Bankruptcy views them as shareholders.

On Tuesday, the Post reported that Tribune is giving up on an attempt to buy a large stake in the company. A report surfaced Friday that the real estate tycoon could be ousted as part of reorganization plan put forth by creditors.

Tribune, which Zell privatized in 2007, operates newspapers and TV stations including the Los Angeles Times, Chicao Tribune, KTLA, WPIX, and WGN.

Tribune entered bankruptcy protection in December.

Friday’s report says that the creditors Zell owes payments to plan to stage a takeover of their own and sell off the company's newspapers and broadcast stations as they see fit.

Zell owes these creditors $8.6 billion, and those creditors are reportedly becoming impatient with him. But the creditors must wait until Nov. 30 before they can file a plan since Zell was granted an extension on his own Tribune reorganization. That extension was granted on Aug. 10.

Reports came out in June that stated Zell would lose Tribune to the same group of investors.

That report stated that "the plan centers on a debt-for-equity swap that probably would give the senior lenders a large majority ownership stake in the reorganized company.

Reports: IRS Auditing Tribune ESOP

The Internal Revenue Service is auditing the Employee Stock Ownership Plan that was a key component of Sam Zell's purchase of the Tribune Co., according to media reports.

Under Tribune's ESOP, workers have 100 percent ownership of the company but no say on management or the board.

According to the reports, an IRS agent in Wisconsin is looking at the ESOP's $250 million purchase of new shares issued by Tribune. The question regarding the purchase is whether or not the purchase would be considered to the benefit of Tribune employees.

Should the purchase be considered to be of benefit, it would be classified as tax exempt. If not, Tribune would potentially have to pay corporate income taxes and excise taxes, the reports say.

The IRS agent filed a statement regarding the investigation with the U.S. Bankruptcy Court, the reports say. Tribune is currently under Chapter 11 bankruptcy protection.


Former Tribune Exec Dennis FitzSimons Joins Media General Board

Media General Inc., the parent company of The Tampa Tribune and WFLA-Channel 8, has expanded its board of directors to 10 members to make room for its newest member: former Chicago Tribune executive Dennis FitzSimons.

“Dennis FitzSimons is a proven and innovative business leader who led a premier media company through times of outstanding growth and tough challenges,” said Marshall N. Morton, Media General’s president and chief executive officer, in a filing with the Securities and Exchange Commission. “His industry knowledge and experience with the changing media landscape and the synergies of print, broadcast and online platforms will bring a valuable perspective to the Media General board’s deliberations.”

FitzSimons was the chairman, chief executive officer and president of Tribune Co. until December 2007 after completing the sale of the company to Sam Zell for $8.2 billion, ending a 25-year relationship with the company. FitzSimons is said to have earned $41 million in that deal.

Getting his start in the company’s broadcast division, FitzSimons was named an executive vice president at Tribune in January 2000 and earned an election to Tribune’s board of directors that same year, according to the SEC filing. He would become president and chief operating officer in July 2001 and then elevated to chief executive officer in January 2003.

Tribune Co. filed for bankruptcy in December 2008, caused mostly by the media company’s efforts to go private a year earlier.

Outside directors to the Media General board receive an annual retainer of $116,000 for all scheduled meetings as well as an additional $1,750 for each unscheduled board meeting and each committee meeting attended beyond the two included in the retainer, according to SEC filings. Half of that compensation is issued in deferred Class A stock, and each director can elect to receive the other half either in cash, deferred stock units, or split evenly in cash and deferred stock.

Media General (NYSE: MEG) reported a loss of $21.3 million, or 96 cents per share, in the most recent quarter ended March 29, deeper than a $20.3 million, or 92 cents per share loss, the year before. Revenue fell from $194.5 million in the first quarter of 2008 to $159.5 million in the most recent quarter.

Media General shares were trading at $2.06 just after 4 p.m. Wednesday, up more than 7 percent from their previous-day close of $1.92. The media company’s shares have traded between $1.25 and $27.18 over the past year.