Tuesday, August 31, 2010
Chicago Breaking News
The board of directors of bankrupt Tribune Co. formed a special committee to oversee the media company’s contentious reorganization process and to manage any legal claims arising from its 2007 leveraged buyout.
Sources said the step is an effort to remove conflicts of interest from the debtor’s decision making process since some Tribune Co. board members and officers may be the target of buyout-related claims.
In a court filing, the company said four directors will sit on the committee, all of whom joined the board when the 2007 transaction closed or after. They are: Mark Shapiro, former chief executive of Six Flags Inc.; Maggie Wilderotter, chief executive of Frontier Communications Corp.; Jeffrey Berg, chairman of International Creative Management Inc.; and Frank Wood, chief executive of Secret Communications and formerly chief executive of Jacor Communications, once owned by Tribune Co. Chairman Sam Zell.
According to an article by Tom Hals, the committee's formation was disclosed in a court request to employ the Jones Day law firm to advise the committee. Tribune Co is being advised by Sidley Austin. The bankruptcy had been directed by lenders and a group of senior bondholders. However, the agreement between those two groups crumbled following an independent examiner's report that found billions of dollars of lenders' claims could be disqualified.
The case is In Re Tribune Co, U.S. Bankruptcy Court, District of Delaware, No. 08-13141.
Mark Fitzgerald, form Editor and Publisher wrote; "Tribune said the decision to form the special committee followed the report by court-appointed examiner Kenneth Klee, who concluded that a court was likely to find that aspects of the deal engineered by real estate magnate Sam Zell were or bordered on fraudulent conveyance, meaning the deal, which larded $8.2 billion of debt on a company that already carried about $5 billion of debt, made Tribune insolvent from day one."
Antenna TV will offer a combination of movies and classic television shows including: “Three’s Company,” “All in the Family,” “Sanford and Son,” “Benny Hill,” “Maude,” “The Nanny” and “Married with Children.” Even older classic series will air overnight, including: “Dennis the Menace,” “The Donna Reed Show” and “The Three Stooges.”
Tribune plans to air Antenna TV as a digital multicast on its own stations. It will be offered for national distribution to non-Tribune stations in other markets.
“Tribune is committed to making full use of our bandwidth to offer viewers a broad spectrum of programming. Earlier this year Tribune expanded its relationship with MGM to launch THIS TV, a digital channel of classic movies, in additional markets. The addition of Antenna TV offers a strong compliment to THIS TV and to our stations’ existing programming,” said Sean Compton, President of Programming for Tribune Broadcasting.
Saturday, August 28, 2010
Just ahead of its monthly operating report (which will include an amended plan to exit bankruptcy) for July with the Court for set to be released 8/27, Tribune announced 8/26 that it now has about $1.6 billion in cash.
The filing may be Tribune management’s last – and best -- chance to broker a friendly compromise with the company’s creditors: JPMorgan Chase and two hedge funds, Angelo, Gordon & Co. and Oaktree Capital Management.
The filing could convince the court that their plan to move forward is the right one, and head off the creditors’ reported exploratory conversations with prospective candidates who could operate Tribune once it emerges from bankruptcy protection. Former Disney CEO Michael Eisner is in discussions that could lead to his return to the media biz as chairman of Tribune.
Recently, we reported JPMorgan and Angelo, Gordon & Co. withdrew support for Tribune’s reorg plan. Nontheless, Tribune execs are still talking to the creditors laying out their vision of what would be a fair settlement. They are hoping the filing will get enough creditors on board to get a plan confirmed by the court.
A note sent 8/26 to Tribune employees from CEO Randy Michaels and COO Gerry Spector reassures them of the company’s strength in these tough times: “There’s been a lot of media speculation lately regarding our Chapter 11 process—and the temptation is to let it distract us from the things that matter most: focusing on our business and serving our customers and communities. Try not to pay attention to the outside noise. Our employees are our greatest asset, and our financial performance so far this year has been remarkable—and that is what counts. Consolidated operating cash flow is up 44% through July, and we’ve substantially increased operating cash flow in both publishing and broadcasting.
This afternoon we will announce some financial highlights through the first seven months of 2010 in the attached press release. These results are further testimony to your talent, your creativity, and your hard work. Keep it up. We have a lot more to do…but we’ve established some solid momentum.”
Other financial highlights for the seven-month period ending August 1, 2010: Operating cash flow increased substantially in both publishing and broadcasting compared to the same period in 2009. The company generated approximately $100 million more in consolidated operating cash flow compared to the same period last year, and in the month of July alone, generated $18 million more in consolidated operating cash flow compared to July 2009. Consolidated operating cash flow increased 44% and consolidated operating cash flow margin increased to 18% from 12% for the first seven months of 2009.
“We continue transforming Tribune from a collection of media businesses to a single media company,” said Michaels. “Working together enables us to continue leveraging the development of scalable, common systems throughout the company, which is the primary factor behind our ability to reduce expenses. Consolidated cash operating expenses were down 7 percent through July, 2010.”
More from the company's YTD financials, released 8/26:The company’s cable network, WGN America, is more profitable than it has ever been, thanks to new programming, a 25% increase in ratings among all adults, and strong upfront advertising sales. Next month the network will add “Entourage,” “Curb Your Enthusiasm,” “The New Adventures of Old Christine,” and “How I Met Your Mother” to its programming line-up.
Tribune's television group has added more than 130 hours per week of local news programming since 2008, and later this fall will broadcast a total of eight NFL football games in select markets.
On the publishing side, the company has launched “breaking news” centers in each of its markets, introduced new niche print products and expects to have slowed the trend of circulation declines at its newspapers when it reports results to the Audit Bureau of Circulations in September.
“Our employees have done an incredible job,” said Michaels. “They are talented, innovative, and dedicated to serving our readers, viewers, advertisers and communities. We have built some momentum and accomplished a lot, but there is much more to do.”
The owner of the Los Angeles Times, Chicago Tribune and more than 20 television stations, Tribune had said it would put out a new plan on August 27. But the company decided against doing so, it told employees, citing the "ongoing nature" of talks with creditors.
A Tribune spokesman declined to comment further.
Tribune filed for bankruptcy in December of 2008, less than a year after real estate developer Sam Zell led a more than $8 billion leveraged buyout of the media company. Last month, a court examiner said in his report investigating the buyout that he thought it was likely a court would find fraud in the transaction.
That report caused a delay in the company's ability to emerge from bankruptcy, which had been set for the end of this month. It is now expected in October at the earliest.
Typically, a company's bankruptcy restructuring plan is built through a negotiating process that includes both the company and its senior creditors.
Earlier this week the Los Angeles Times reported that former Walt Disney Co CEO Michael Eisner had been in discussions with creditors to succeed Zell as Tribune chairman.
(Reporting by Caroline Humer and Dan Levine; Editing by Andre Grenon and Richard Chang)
The case is In re Tribune Co., 08-13141, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Tribune continuing talks with creditors
The Associated Press - Randall Chase - 18 hours ago
DOVER, Del. — The Tribune Co. is continuing to talk to creditors as it tries to win support for a reorganization plan. Creditors withdrew their support of a ...
Tribune Delays New Reorganization Plan to Continue Talks With Creditors
Bloomberg - Steven Church - 18 hours ago
Tribune Co., the owner of the Los Angeles Times, decided not to file a new plan to exit bankruptcy because ...
Tribune Files No New Bankruptcy Plan
ABC News - Caroline Humer, Dan Levine - 19 hours ago
NEW YORK (Reuters) - Tribune Co, struggling to win broad creditor support for its plan to emerge from bankruptcy, said on Friday it would not tweak the ...
A top Comcast official eyed to help run Tribune Co.
Philadelphia Inquirer - Bob Fernandez - Aug 27, 2010
The top programming executive at Comcast Corp. in Philadelphia, former News Corp. executive Jeff Shell, is being considered for a role at ...
Time running short for Tribune Co. management
Los Angeles Times - Michael Oneal - Aug 26, 2010
After 20 months and millions in attorney fees, time is running short on Tribune Co.'s campaign to control its own destiny ...
Tribune Co. has $1.6 bln in cash in bankruptcy
BusinessWeek - Aug 26, 2010
Tribune Co., the newspaper and TV station owner
Director of Communications
Writers Guild of America, East
First Digital News Workers to Become WGAE Members
NEW YORK CITY -- In a first for the Writers Guild of America, East (WGAE), web news writer/producers at Chicago CBS station WBBM voted unanimously to be represented by the Writers Guild, East on August 26th. These are the first news writer/producers working exclusively on web content to join the WGAE, the union that has long represented CBS News employees writing for television and radio.
“This victory for web writers demonstrates that even in the digital age writers want the strength union representation provides. The news industry is shifting to digital platforms and their decision to join us helps ensure that writing and producing news continues to be a good job into the 21st Century,” said WGAE Executive Director Lowell Peterson.
WBBM web writer Michael Ramsey said, “We voted to join the Guild because we want the stability and voice on the job that a union provides. We are proud to be the first web news writers and web producers to join the Guild, but I’m sure we won’t be the last. Web writers and producers may work in a different medium than the writers the Guild traditionally represents, but our needs are essentially the same. WBBM previously indicated they would negotiate with us in good faith if we chose to organize, and we are looking forward to sitting down with management to negotiate an initial contract.”
The Writers Guild of America, East, AFL-CIO, is a labor union representing writers in motion pictures, television, cable, digital media, and broadcast news. The WGAE conducts programs, seminars, and events on issues of interest to, and on behalf of, writers. In addition, it represents writers’ interests on the legislative level.
For more information on the Writers Guild of America, East, visit http://www.wgaeast.org/.
Broadcast Union News: I agree with the comment by Elana Levin, Director of Communications at WGAE; "Having the News writers at the CBS TV affiliate in Chicago vote to join the Writers Guild of America, East is a big deal because as we all know, news is moving online. Soon that's all there will be. Why can someone writing for a TV screen at CBS have union representation but someone writing for the computer screen for CBS can't? We're fixing that. This organizing victory is an important precedent." Yes it is, Well done WGAE! - BD
Los Angeles Times
The merger, which has been valued at $30 billion, would unite the nation's biggest cable and broadband operator with the parent company of the NBC broadcast network, Universal Pictures and a host of powerful cable channels such as USA, MSNBC, Bravo and Syfy. The FCC and the Justice Department are conducting the regulatory review of the deal and what, if any, conditions should be put on Comcast and NBC before the merger is approved.
The economists will be representing companies and organizations that have come out both for and against the much-debated deal. Among those represented at the meeting, which is scheduled for Friday, will be Comcast, Bloomberg and the American Cable Assn., which is a lobbying arm for smaller cable operators. Representatives for satellite broadcasters Dish Network and DirecTV may also participate.
Interestingly a member of the Justice Department, which is conducting its own review of the deal, is also expected to participate in the FCC gathering.
At issue is what a combined Comcast - NBC entity would mean for both consumers and the industry. Public advocacy groups have argued that if Comcast gets control of so much content, it will be able to raise prices for consumers and harm the competition. Furthermore, they argue, it will have too much muscle when it comes to how content is offered online.
Comcast has countered that the deal is a positive for the marketplace. "It will enhance consumer choice and accelerate the development of new digital products and services," Comcast Chief Executive Brian Roberts said at the time the agreement was unveiled.
Because there will be a lot of confidential material discussed at this meeting, it is open only to those who have agreed to a protective order designed to ensure sensitive material is not leaked or used by competitors of Comcast. Furthermore, attendance is limited to representatives of the companies wanting a say in what the deal means for the media landscape, but not company executives themselves. In other words, what's seen and heard in the meeting, stays in the meeting.
However, the FCC will release an edited transcript of the gathering with all the sensitive material redacted. In other words, after "hello" and "welcome" expect a lot of pages with blacked out sentences on them.
Thursday, August 26, 2010
Reporting from Chicago — After 20 months and millions of dollars in attorney fees, time is running short on Tribune Co.'s campaign to control its own destiny in Bankruptcy Court.Faced with warring creditors and ample evidence that the most powerful among them are eager to take control of the Chapter 11 process, the embattled Chicago media company's management is scheduled to file a revised restructuring plan on Friday that may prove to be the group's last, best chance to broker a friendly compromise in the chaotic case.
Thursday's news that senior creditors are talking with former Walt Disney Co. Chairman Michael Eisner and other candidates about possibly managing the company signaled their willingness to push aside Tribune Chairman Sam Zell and Chief Executive Randy Michaels. And creditors have been blunt about their readiness to file alternate restructuring schemes without management's support.
The Tribune team's ability to avoid being marginalized in its own case will likely rest on how many recalcitrant creditors — both senior and junior — it can win over with Friday's plan.
Tribune owns the Los Angeles Times, Chicago Tribune, KTLA-TV in Los Angeles and other media properties including WPIX in New York.
A week ago, settlement talks collapsed over several key questions, sources said.How could a plan acceptable to senior creditors also appease a junior group emboldened by an independent examiner's finding that the company's 2007 leveraged buyout may have left Tribune insolvent? And would creditors generally accept provisions protecting Tribune directors and officers from buyout-related litigation?
Several sources said recent talks have focused on solving the first problem with a legal device called a litigation trust that would isolate the company's financial and operational restructuring from the legal claims that have been bogging down the case.
At the heart of the arguments in Bankruptcy Court is a claim that Zell's leveraged buyout involved a fraudulent conveyance, which rendered the company insolvent from the start. If that could be proved, claims held by lenders could be wiped out and the estate could seek to claw back payments made to selling shareholders.
Junior creditors also have claimed that Tribune's directors and officers, including Zell, breached their fiduciary duty to investors.
In April, Tribune and several of its largest creditors crafted a settlement of those potential claims that would have given senior creditors such as JPMorgan Chase and distressed-debt hedge fund Angelo, Gordon & Co. 91.2% of the company's equity. Junior bondholders would have received a 7.4% stake worth $450 million. The lenders, directors, officers and shareholders would have been given full indemnification against all other potential claims.
Although the plan was billed as a global settlement, it met immediate opposition from a splinter group of senior creditors led by Oaktree Capital Management, a distressed-debt investor based in Los Angeles. Oaktree claimed that it had no exposure to the buyout claims, yet was being asked to fund settlement payments.
In July, court-appointed independent examiner Kenneth Klee issued a massive report supporting some of the claims over the buyout and debunking others. Klee's findings destabilized the fragile settlement and launched a new round of negotiations.
In recent weeks, sources close to the situation said, JPMorgan, Angelo Gordon and Oaktree finally came together around a plan based on a litigation trust. The junior creditors would get something less than $450 million in value upfront but would be the beneficiaries of a trust containing claims that the Klee report suggested had significant potential value.
While the company tentatively signed on to the plan, the official committee of unsecured creditors in the case demanded adjustments to the trust that would broaden its scope, thereby increasing its potential value.
An important group of junior bondholders led by Centerbridge Partners, meanwhile, never bought in. One big sticking point: how to assign value to the trust and balance it against the amount of equity the junior group would get.
Sources said senior and junior creditors also balked when Tribune Co. asked that the reorganized company be provided with unlimited indemnification for directors and officers, protecting them against potential litigation coming out of the trust. Some feared the provision would leave the company too exposed.
With a multibillionaire such as Zell on the board, plaintiffs could ask for the world in potential lawsuits. Although the probability might be low, Zell's wealth could make a windfall judgment possible, putting new financial pressures on the company were it locked into an indemnification plan.
All of this raised a broader problem. How could Tribune Co. management and the board negotiate issues involving litigation when members of both groups are potential targets of those claims?
Sources said Tribune plans to deal with that problem by setting up an independent board committee that would make decisions for the estate on issues related to the restructuring plan.
The committee would include directors with no connection to the buyout: Mark Shapiro, former chief executive of Six Flags Inc.; Maggie Wilderotter, chief executive of Frontier Communications Corp.; Jeffrey S. Berg, chairman of International Creative Management Inc., and Frank Wood, chief executive of Secret Communications and formerly chief executive of Jacor Communications, which Zell once owned.
Several sources close to the talks also expected Tribune to stick with the litigation trust idea in the new plan since it is the easiest way to keep the case from getting bogged down in litigation.
"We continue working on a restructuring plan that is fair to the interests of all parties and can be confirmed by the court," a Tribune spokesman said.
Meanwhile, Michaels tried to focus attention on other matters.
Tribune issued a press release Thursday pointing out that it had generated $100 million more in operating cash flow though July this year than it did in 2009."There's been a lot of media speculation lately regarding our Chapter 11 process — and the temptation is to let it distract us," Michaels wrote in a note to employees. "Try not to pay attention to the outside noise."
Tribune Co. has $1.6 bln in cash in bankruptcy
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A flashmob infiltrates the Westin St. Francis hotel in San Francisco and performs an adaptation of Lady Gaga's song "Bad Romance."
The event was organized to draw attention to a boycott called by the workers of the hotel who are fighting to win a fair contract and affordable healthcare.
Lesbian Gay Bisexual Transgender Queer activists put the song and dance together as a creative way to tell the hundreds of thousands of LGBTQ people from all over the country coming to San Francsico in June for Pride to stay out of the boycotted hotels.
To learn more about how to honor the boycott and support the workers visit:
This event was organized by:San Francsico Pride at Work / HAVOQ http://www.sfprideatwork.org
One Struggle One Fight http://tinyurl.com/OSOFfbpage
The Brass Liberation Orchestra http://brassliberation.org
Filmed by... more
Al Stiney, a tech staff supervisor for the CBS Evening News weekday and weekend editions, passed away Friday at age 62. His widow Rena says Stiney died of heart failure after a short illness.
Prince notes that the death of Stiney — an Emmy and Peabody award winner thought to be the first African American to hold a supervisory technical position at CBS — came one day before the passing of CBS colleague Harold Dow, another pioneering African American in television. Also coincidentally, Dow and Stiney were born exactly one week apart.
"On a personal level I can tell you that Al was one of those guys who was clearly proud that more African Americans were working at places like CBS News compared to when he started 40-years ago," says CBS Evening News Sunday edition anchor Russ Mitchell. "When you'd see him in the hall he'd always give a wink and say 'great job'."
Broadcast Union News: Al had a smile that would light up the darkest day. He could always be counted on to be there to lend a helping hand and offer a kind word. A good man, Al will be missed. - Bob D
United Federation of Teachers
As Steve Greenhouse tells the story of the months-long strike in the New York Times, the Dr. Pepper Snapple conglomerate that owns Mott’s Apple Juice is seeking a $1.50 cut in the hourly wage rate (which would slash annual income by approximately $3000), a pension freeze, increased worker contributions for health care insurance, and a host of other concessions.
Dr. Pepper Snapple makes no pretense that their bargaining stance is based on economic necessity, on hard times for the company. Corporate sales in 2009 totaled $5.5 billion, with a rather handsome net profit of $555 million. Rather, Dr. Pepper Snapple is demanding concessions simply because it can.
The local blue-collar economy is depressed after years of layoffs by its two biggest employers, Kodak and Xerox. Many nonunion local workers earn less, with inferior benefits, than the Mott’s workforce. Dr. Pepper Snapple wants to drive its Mott’s workers down to the lower local standards not because it needs to do so, but because it wants to do so.
“Corporate America is making tons of money—this company is a good example of that,” local union president Mike LeBerth told the Times. “So why do they want to drive down our wages and hurt our community? This whole economy is driven by consumer spending, so how are we supposed to keep the economy going when they take away money from the people who are doing the spending?”
There is, unfortunately, nothing new about the “race to the bottom.” It has been a feature of the American economy since the late 1970s, when corporate-driven globalization first took hold and corporations began to move their operations to countries such as China. There the power of an authoritarian state kept workers from organizing into real unions, keeping their wages artificially low to attract corporate investment.
The end product of decades of this “race to the bottom” has been the evisceration of once powerful industrial unions in basic industries such as steel and auto and the general decline of the American labor movement. This led, in turn, to the decline of the American middle class that arose as a result of trade union expansion in the New Deal era.
In his book The Big Squeeze: Tough Times for American Labor, Steve Greenhouse notes that between 1979 and 2007, the real hourly earnings of private sector workers, who make up 80 percent of the American workforce, rose just 1 percent.
Over the same time period, the productivity of those same workers rose a remarkable 60 percent.
If the wages of the American worker had kept pace with his increased productivity, the average full-time worker would have been earning an average of $58,000 by 2007.
Instead, the average wage was $36,000.The productivity gains, which never found their way into worker salaries, have been pocketed by the American corporate elite: in 1978, the average CEO salary was thirty-five times greater than the average worker salary; in 2007, the average CEO salary had mushroomed to 344 times greater than the average worker salary. [Executive Excess Reports].
“There’s class warfare, all right,” billionaire investor Warren Buffet said in an unguarded moment, “but it’s my class, the rich class, that’s making the war, and we’re winning.”
While unionized public sector workers once thought that the “race to the bottom” would not affect them, events in the wake of the 2007 financial crisis have demonstrated that this was a foolish illusion. Having deflated salaries, eliminated defined benefit pensions, and diminished health care for private sector workers, American corporate interests have now set their sights on completing the “race to the bottom” by targeting public sector salaries, pensions, and health care.
Newspapers and televisions are full of accounts of bloated salaries, exorbitant pensions, and costly health care, with the goal of creating resentment among private sector workers who have seen their standard of living decline. The denizens of Wall Street who brought the financial crisis are now leading the charge against public sector unions, and most especially teacher unions—the only American unions which still have their sector of the American economy organized.
One of the major players in this effort is none other than the virulently anti-union Wal-Mart Walton Family Foundation, which sees teacher unions as the strongest sectors of a weakened labor movement: destroy teacher unions as an effective political and economic force, and you are well on your way to relegating the American labor movement to a chapter of the past in history books.
What’s remarkable is the response of an “inside the beltway” wing of liberalism to this one-sided “class warfare.” A particularly salient example in this regard is Matt Yglesias, a fellow at the Center for American Progress and an increasingly prominent liberal pundit on political talk shows and op-ed pages. Yglesias writes a widely read and influential blog at Think Progress. On the hot issues of the day, from the smearing of Shirley Sherrod to the mosque near the World Trade Center site, Yglesias is a consistent and reasonable voice on behalf of progressive values, opposing irrational prejudice and discrimination and supporting pluralism and toleration.
Yet when it comes to the plight of working people, Yglesias seems to lose the very capacity to empathize and understand. He crowned his recent post on the Mott’s strike with the extraordinary title, Nominal Wage Cuts.
Note that 70 percent of Mott’s unionized workers earn an hourly wage of no more than $19, which translates to an annual salary of $36,000, the average for private sector workers cited above. Cut that wage by $1.50 an hour, as Dr. Pepper Snapple wants, and you have cut it by just under 8 percent, or approximately $3000 off the annual salary of $36,000. Does one have to actually live on a modest salary of $36,000, struggling to make ends meet for your family, to understand how the loss of $3000 to a Mott’s worker is anything but “nominal?”
The title of Yglesias’ post on the Mott’s strike is matched by its language: it is the cold, detached rhetoric of neo-classical economic analyses, with a dense discussion of the fine points of monetary policy that only the wonkiest of wonks will have the will to deconstruct, assuming they possess a great deal of background in the esoterica of the dismal science.
But Yglesias’ conclusion is plain enough. The corporate stance must be justified: “exactly as Dr. Pepper Snapple says, the full employment wage for the area has gone down and thus in some sense wages at the plant ‘should’ decline.”
Would that the Yglesias post on the Mott’s strike was an aberration. Even in the last few months, there is ample evidence that it is reflective of an underlying world view that always finds a reason to side with corporate power in its pursuit of one-sided class warfare against working people. “Talk of wage stagnation since 1970,” he writes with reference to the fact that real wages for private sector American workers have increased all of 1 percent over the last three decades, “obscures some major improvements in quality of life driven by technological progress and new goods.”
What might those improvements be? All that Yglesias offers by ways of particulars of these improvements is a quote from another author that cites air-conditioning and access to the internet. Yet they provide the basis for his conclusion that “one striking thing about the anxious American middle class is that in many respects it’s so comfortable.” In his eyes, the real problem for working people is the cost of public services, especially health care and education.
In a similar vein, Yglesias discusses the literature on the crisis of the American middle class without even a passing mention of the role of the declining density and power of the private sector American labor movement. No, it is all about the level of education in the work force, even for those many blue collar jobs which do not demand post-secondary education.
On the corporate “race to the bottom,” none are so blind as those who have eyes, but refuse to see.
Wednesday, August 25, 2010
Former Walt Disney Co. Chief Executive Michael D. Eisner is in discussions that could lead to his return to the media spotlight — as chairman of troubled Tribune Co.
The media company's largest creditors are having preliminary conversations with prospective candidates who could operate Tribune once it emerges from bankruptcy protection, according to several people with knowledge of the situation.
Eisner, who has been dabbling in the digital world as an investor since stepping down from Disney in 2005, is among the candidates under consideration to replace Chicago real estate magnate Sam Zell as chairman of the reorganized company.
Discussions about new management at Tribune are still exploratory, people close to one of the creditors cautioned. Senior creditors can't make changes until a plan is in place allowing the company to emerge from its nearly two-year legal morass.
Tribune owns the Los Angeles Times, the Chicago Tribune, KTLA-TV Channel 5 and other television, publishing and media properties.
Under one scenario being discussed by the senior creditors, Eisner, 68, would be joined by Jeff Shell, a former News Corp. cable executive who is now in top management at Comcast Corp., according to four people with knowledge of the talks. Shell would become chief executive of Tribune, replacing Randy Michaels.
Eisner was unavailable for comment, according to his spokeswoman. But he told entertainment publication Variety in a wide-ranging interview Monday that he had been accumulating Tribune debt.
"You are talking to somebody who is buying debt in the Tribune Co. The salvation of the newspaper is some kind of pay arrangement [online], which will evolve into something significant," Eisner said in the interview.
Shell, 44, a Los Angeles native who runs Comcast's cable channels group from the company's headquarters in Philadelphia, declined to comment. Earlier in his career, Shell worked on the strategic planning staff of Disney when Eisner ran the company.
Tribune and its creditors are still struggling to settle a claim that Zell's 2007 leveraged buyout involved a fraudulent conveyance, which rendered the company insolvent from the start. That settlement would serve as the basis for a plan of reorganization, but depending on how negotiations go, it could be months in coming or the case could easily devolve into litigation.
Nobody in the case doubts that senior creditors led by money-center bank JPMorgan Chase and two hedge funds, Angelo, Gordon & Co. and Oaktree Capital Management, will end up owning Tribune by virtue of their $8.6 billion in claims.
But just last week, the latest round of negotiations collapsed, people familiar with the situation said, when junior creditors balked at a new reorganization proposal and creditors generally were unsettled by Tribune management's request to indemnify its directors and officers, including Zell, from potential legal action related to the buyout.
Tribune executives are still talking to creditors, and the company is expected to file a plan Friday laying out its vision of what would be a fair settlement, hoping enough creditors will get on board to get a plan confirmed by the court.
Creditors have threatened to file their own plans but have yet to do so, the people said, as they wait to see what management proposes.
All this uncertainty complicates discussions with potential management candidates. One person close to the creditors noted that when the time comes, the creditors would probably follow normal corporate practice: Choose a new board and chairman, institute a formal search for a chief executive (which is likely to include Michaels, the current CEO) and then make a final choice.
The senior group wants to find the best management it can to enhance the value of the equity the banks and hedge funds would end up owning in the company.
JPMorgan Chase declined to comment, as did Oaktree. Angelo Gordon did not immediately respond to a request for comment. Tribune also declined to comment.
According to people familiar with the matter, other executives who have been approached by one or more of the creditors about playing a role in Tribune, post-bankruptcy, include Fred Reynolds, retired chief financial officer of CBS Corp.; Mel Karmazin, CEO of Sirius XM Radio Inc.; Terry S. Semel, former chairman and co-CEO of Warner Bros.; and Robert Pittman, former chief operating officer of AOL Time Warner Inc.
Eisner was first approached about becoming a member of a reconfigured Tribune board by John Angelo, CEO of the investment firm he co-founded with Michael Gordon, according to people with knowledge of the situation who requested anonymity because they were not authorized to speak.
Angelo is a childhood friend of Eisner's. Those conversations led to discussion of a potentially larger role for Eisner, who, after making his mark in television programming at ABC, ran Paramount Pictures with Barry Diller in the 1970s and then Disney.
Eisner is credited with reviving Disney in the late 1980s, but his later tenure with the company was marred by an acrimonious battle with former directors Roy E. Disney and Stanley P. Gold.
After leaving Disney in 2005, Eisner started Tornante Co., a firm that invests in the media and entertainment business. The company's new-media studio, Vuguru, develops and finances stories for digital distribution.
In 2007, Eisner also acquired Topps, maker of baseball trading cards and Bazooka bubble gum, in partnership with Chicago private equity firm Madison Dearborn Partners.
Eisner devoted a chapter to Angelo and Gordon in his forthcoming book "Working Together: Why Great Partnerships Succeed." Eisner describes Angelo as his oldest friend and someone whom "I know as well as perhaps anyone, aside from my own wife and children."
Angelo Gordon has accumulated stakes in several newspapers in the last year as their parent companies emerged from bankruptcy. As a result, the firm has interests in the Philadelphia Inquirer, the Orange County Register and the Minneapolis Star Tribune.
Media are also essential to our democracy. We depend upon media to know what’s happening in our communities, to play our part as citizens, and to serve as a vital check on government and corporate power.
Media owners influence:
What news and information communities receive
What voices are heard – or silenced
Whether important issues get covered accurately – or covered at all
Who gets hired to report and produce the news
What music and which artists get airplay
How women and people of color are portrayed in the media
So who owns your media? Is it someone from your community delivering your news? Or even someone who shares your issues and concerns? Probably not.
Over the past three decades, the number of companies that control most of what we watch, hear and read every day has shrunk from more than 50 to just a few media giants. Click here to see who owns the media.
What Media Consolidation Means
Media consolidation means that the few huge corporations that own most of our media are getting even bigger by taking over more and more of our local media outlets.
But these massive conglomerates – like General Electric, Time Warner and News Corp. – only care about the bottom line, not serving the public interest. And allowing these few firms too much control over the flow of news and information is dangerous for our democracy.
When Big Media get too big, local, independent and minority owners are pushed out of the market and off the airwaves.
Media consolidation means:
Fewer voices and viewpoints
Less diversity in ownership and programming
Less coverage of local issues that matter to communities
Less of the unbiased, independent, critical journalism we need to prevent abuses of power
Put it all together and Big Media spells bad news – for average Americans and for our democracy.
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Friday, August 20, 2010
The media conglomerate had planned to file amendments to its bankruptcy plan, which could have potentially satisfied the complaints of several of its creditors, but couldn't come to an agreement.
Two of the company's largest creditors - JPMorgan and Angelo, Gordon and Co. - have backed out of the settlement, rendering it irreparable, according to a report in the Los Angeles Times.
Tribune Co.'s lead attorney said that the company may take its bankruptcy case into extended litigation if an agreement between it and its lenders can't come to an agreement soon.
The Times, which is owned by the media giant, said that what happens next is up to Tribune Co., making the case's future uncertain at best.
According to an article by JEREMY W. PETERS in the Friday, August 20, 2010 New York Times, Two creditors, JPMorgan Chase and the investment firm Angelo, Gordon & Company dropped out of the agreement, which would have made them part owners of the reorganized company. At a hearing in Delaware on Friday, James Conlan, Tribune’s attorney, said the company “had tried mightily to bring the parties together.” But he said those efforts failed.
For now, Tribune will go it alone developing a plan, which it will submit to the court by Friday, August 27, 2010. Creditors will eventually vote on whether to accept the settlements the company proposes and could put forth plans of their own.
“This process is moving more slowly and has become noisier than we had hoped,” Randy Michaels, Tribune’s chief executive, and Gerald A. Spector, the company’s chief operating officer, said in an e-mail to employees on Friday that sought to reassure them of the company’s stability. “Next week, we’ll file our monthly operating report for July and once again, our financial results will be strong. All of our media businesses are profitable, and our creditors recognize how well we are performing.”
Adding another twist, a lawyer for a group of creditors told the judge on Friday that his clients were prepared to move forward with a lawsuit claiming the sale of Tribune to the real estate mogul Samuel Zell was a fraud because it saddled the company with too much debt.
A Businessweek report said that Tribune Co. will rewrite its reorganization plan for submission on August 27, 2010. The revision is expoected to further divide the company among creditors to better satisfy their demands. The case has already seen several deadlines for an agreement to be reached delayed.
The media company's revised plan could foreshadow trouble for top-ranking lenders tied to the 2007 leveraged buyout that pushed Tribune into financial trouble. Mr. Conlan, of law firm Sidley Austin LLP, said if no accord is reached on the amended restructuring plan, Tribune will consider suing over the LBO.
The most likely targets of a lawsuit are lenders who, until recently, supported Tribune's Chapter 11 plan and were in line to take over the company, had the plan gone through. That includes J.P. Morgan Chase & Co., which yanked its support from Tribune's plan this week.
Wall Street Journal reporter Peg Brickley wrote that a bankruptcy probe found $3.6 billion of Tribune's top-ranking debt was likely tainted with fraud, which touched off a frenzy of shifting alliances in a bankruptcy case that has long been contentious. Tribune's Chapter 11 plan was designed to shield J.P. Morgan, Sam Zell, Tribune executives, and others connected to the LBO from damage claims.
Now Tribune is in one camp, leading negotiations with creditors who have been trying to get the company to sue over the LBO. Former plan supporters J.P. Morgan and the official committee of unsecured creditors, however, are pondering the prospect of filing a Chapter 11 reorganization plan of their own without the company's official backing, they said.
On Friday, U.S. Bankruptcy Judge Kevin Carey formally ended the appointment of Kenneth Klee, the investigator who conducted the probe that shook up Tribune's bankruptcy. His report gave some creditors ammunition to push for better financial recovery than they had been offered under Tribune's original plan of reorganization.
Mr. Klee wanted a formal end to his role, which began when the judge asked for help in evaluating whether Tribune's plan embodied a reasonable settlement of legal claims over the ill-fated LBO.
"He doesn't want to be your piñata," Judge Carey told attorneys for the company.
Sources close to the situation told Los Angeles Times reporter Michael Oneal that despite the discord and shifting alliances, there are signs that the new negotiations among creditors may be showing some promise.
The most powerful holdout to the original settlement was a large group of senior creditors led by Oaktree Capital Management. The Credit Agreement Lenders, as they dubbed themselves, have argued that while they have little exposure to the leveraged buyout claims, they are being asked by JPMorgan and other parties who do have exposure to help pay the $450 million it took to appease junior creditors.
Long before Tribune lost its exclusive right to file a reorganization plan, Oaktree asked Carey for permission to file a competing plan that would largely ignore the junior claims. Now that Oaktree is free to file a plan, it hasn't — at least so far. The sources said that might indicate that for now it was willing to listen to other arguments.
Tribune Co. Bankruptcy Plan Hits New Snag
New York Times - Jeremy W. Peters - 43 minutes ago
The troubled saga that has become the Tribune Company bankruptcy unraveled further on Friday as a lawyer for the publishing giant said ...
Tribune Co.'s proposed bankruptcy settlement falls apart
Los Angeles Times - Michael Oneal - 2 hours ago
The lead attorney for the media conglomerate, which owns the LA Times and Chicago Tribune, threatened to subject the reorganization case to extended ...
Tribune to Amend Reorganization Plan
Wall Street Journal - Peg Brickley - 4 hours ago
WILMINGTON, Del.—Tribune Co. will recraft its Chapter 11 reorganization plan in an effort to broker peace among creditors, company attorney ...
Tribune Bankruptcy Unravels as Talks Fail
ABC News - Tom Hals - 5 hours ago
WILMINGTON, Delaware (Reuters) - Tribune Co's plan to end its 20-month bankruptcy appeared to unravel on Friday with threats that the parties ...
Tribune Co. says negotiations have failed
The Associated Press - Randall Chase - 5 hours ago
WILMINGTON, Del. — The Tribune Co.'s plan to emerge from bankruptcy has unraveled in the wake of an independent report concluding that talks leading up to ...
Tribune Co. says negotiations have failed
The Associated Press - Randall Chase - 6 hours ago
WILMINGTON, Del. — The Tribune Co.'s plan to emerge from bankruptcy has blown up after the failure of negotiations with creditors on a consensual ...
Tribune judge releases independent examiner
The Associated Press - Randall Chase - 8 hours ago
WILMINGTON, Del. — A Delaware bankruptcy judge has agreed with the independent examiner who probed the Tribune Co.'s 2007 leveraged buyout and potential ...
Tribune Reorg Plan Falls Through
Radio Ink - 1 hour ago
August 20, 2010: Tribune's long-running Chapter 11 proceedings will run even longer, now that JPMorgan Chase and Angelo, Gordon & Co. have withdrawn their ...
Tribune bankruptcy gets messier
LA Observed (blog) - 1 hour ago
There's no telling what happens to the media giant at this point. A proposed settlement that had been nursed along by Tribune (parent of the LAT and KTLA) ...
Tribune Co.'s Bankruptcy Plan in Doubt
TheWrap - Dylan Stableford - 1 hour ago
In the wake of a damaging independent report, the Tribune Company's proposed plan to pull itself out of bankruptcy is in serious doubt ...
Tribune bankruptcy settlement collapses
Bankruptcy Home - Kristen MacBeth - 3 hours ago
A settlement that was crucial to the proposed reorganization plan of Tribune Co. has crumbled. The media conglomerate had planned to file ...
Tribune Reorganization Plan Deal Falls Apart
All Access Music Group - 3 hours ago
It's back to the drawing board for TRIBUNE CO., which told US. Bankruptcy Court TODAY that the key lenders who supported its proposed reorganization plan ...
Tribune Bankruptcy Settlement Falls Apart
Chicago Public Radio - 3 hours ago
A proposed reorganization plan to pull the Tribune Company out of bankruptcy appears to have fallen apart. Negotiations have failed between the Tribune ...
Tribune Bankruptcy Plan Forced Back To Square One
paidContent.org - 6 hours ago
The dispute among The Tribune Company and its various lenders over its plan to emerge from bankruptcy has reached an impasse and the newspaper publisher ...
Tribune bankruptcy unravels as talks fail
Economic Times - 4 hours ago
WILMINGTON: Tribune Co's plan to end its 20-month bankruptcy appeared to unravel on Friday with threats that the parties must accept a new plan or face ...
Tribune to Rewrite Reorganization; Lender Deal Fails
BusinessWeek - Steven Church - 6 hours ago
Aug. 20 (Bloomberg) -- Tribune Co. said it must rewrite its plan to exit bankruptcy after a deal to divide ownership of the publisher among ...
Tribune Co. left out of bankruptcy settlement talks
Chicago Breaking News - Tribune - 8 hours ago
Tribune Co.'s creditors are attempting to negotiate a settlement to the company's Chapter 11 bankruptcy case in sessions that don't involve the company. ...
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Thursday, August 19, 2010
CBS and Reliance Anil Dhirubhai Ambani Group's Broadcast Network Ltd will each have a 50 percent equity stake in the new media company called BIG CBS Networks.
BIG CBS will tap shows from CBS's program library, which holds series such as "Melrose Place" and "Star Trek: The Next Generation," as well as acquire content from other parties.
The venture will launch with three new English-language television channels that will broadcast across the Indian subcontinent later this year.
(Reporting by Jennifer Saba, editing by Gerald E. McCormick)
Tuesday, August 17, 2010
U.S. Bankruptcy Judge Kevin J. Carey in Wilmington, Delaware, scheduled a hearing for Aug. 20 to set court dates that may affect the company’s plan to exit bankruptcy this year.
James Conlan, a Tribune attorney, said company officials are talking with creditors who oppose the plan to give more than 90 percent of Tribune to the lenders who financed a 2007 buyout. Lower-ranking creditors who hold $1.2 billion in pre-buyout debt would get nothing under the plan.
“I don’t want to imply pessimism or optimism,” Conlan told Carey about the talks.
Creditors have been reviewing a report by a court-appointed examiner who found evidence of a fraudulent transfer involving part of the deal that real-estate billionaire Sam Zell used to take over Tribune. Creditors are “somewhat likely” to win a lawsuit based on the smaller piece of the $8.3 billion transaction, the examiner said.
Some creditors have said the report will help them decide how to vote on Tribune’s reorganization plan. Carey will take those votes into consideration when he decides whether to approve the plan at a hearing scheduled to start in October.
Depending on how negotiations go this week, that date, along with other related deadlines, may change, Conlan said.
Tribune owns the Los Angeles Times, the Chicago Tribune and television and radio stations. It filed for bankruptcy in December 2008, about a year after the buyout was completed.
The case is In re Tribune Co., 08-13141, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Friday, August 13, 2010
(Crain's) — Tribune Chairman Sam Zell is demanding his share of repayment in the media company's bankruptcy if lower-priority creditors, emboldened by a recently released examiner’s report, get anything.
By: Lynne Marek
EGI-TRB LLC, the company that the real estate mogul created to invest $315 million in debt and equity in the 2007 Tribune leveraged buyout, filed a conditional objection to the current plan of reorganization this week, saying it expects its debt claims to be repaid if creditors whose trustee is Wilmington Trust Co. get any payment.
The Wilmington creditors have about $1 billion in claims known as the "phones" notes.
EGI-TRB is slated to get nothing under the proposed reorganization plan currently on file in the Delaware Bankruptcy Court.
But that plan is now in flux in the wake of a bankruptcy examiner’s report buttressing Wilmington creditors' allegations against Tribune lenders that Mr. Zell’s deal left the company insolvent. Tribune attorneys have said that changes to the plan are likely.
“If the plan provides or is amended to provide any recoveries for the holders of the phones securities, then EGI-TRB’s claims must be paid in full,” attorneys for Mr. Zell said in the Aug. 11 filing.
The Wilmington creditors sued the lenders to the leveraged buyout in March, arguing that there was a “fraudulent conveyance” in the deal because debt assumed to finance it made the company insolvent. The creditors called on the court to appoint an examiner to review their allegations.
When Judge Kevin Carey appointed the examiner, he also bowed to other creditor demands that the Wilmington creditors be probed on whether their March lawsuit infringed on a court order to limit litigation and whether they made an improper disclosure of confidential information.
The examiner, attorney Kenneth Klee, concluded that a court would be “somewhat likely” to find that part of the leveraged buyout “constituted intentional fraudulent transfers” and that it was “highly likely” that a court would find that Tribune was “rendered insolvent and left without adequate capital.”
Mr. Klee also found that a court would be “reasonably likely” to find that the Wilmington creditors’ lawsuit didn’t violate the order. He also said that while Wilmington's disclosure didn’t comply with requirements, it wasn’t “intentional or reckless.”
Attorneys for Mr. Zell and Wilmington Trust declined to comment.
Broadcast Union News: Sam Zell reminds me of the fellow who, having been convicted of the brutal murder of his parents, throws himself on the mercy of the court because he is an orphan.
Wednesday, August 11, 2010
Aug. 10 (Bloomberg) -- Sam Zell can’t be made to pay for Tribune Co. retirement fund losses, a judge ruled, rebuffing workers who claim the billionaire caused the company’s employee stock ownership plan to lose value.
The workers sued Zell and his closely held company, EGI-TRB LLC, in 2008 after he took the Chicago-based newspaper publisher private in an $8.3 billion transaction. They alleged Zell used their plan to buy back shares, burdening it with unsustainable debt.
While the workers sought disgorgement of payments made to Zell and EGI-TRB by Tribune in the acquisition, U.S. District Judge Rebecca Pallmeyer in Chicago ruled yesterday they can’t because Tribune isn’t directly involved in the lawsuit.
“Tribune is not a party to this case, so the court cannot order relief that would involve repayment of funds that originated with Tribune,” and not the employees’ stock ownership plan, the judge said. The workers say Zell is a fiduciary for the plan.
The publisher filed for bankruptcy court protection in Wilmington, Delaware, less than one year after going private. Some creditors have alleged the buyout was a fraudulent transfer because it added more than $8 billion in debt to the company while benefiting only Zell and his investors.
Creditors have won a delay in reorganization of the company while they review evidence supporting a court-appointed examiner’s report on the buyout.
Zell and EGI, in a statement e-mailed by spokeswoman Terry Holt, said they were “pleased that collectively the federal court opinion and the examiner’s report reflect that Sam Zell and EGI acted in good faith.”
“Both the report and opinion recognize that Sam Zell and EGI-TRB are not financially liable for Tribune losses,” according to the statement. “Further the examiner’s report recognized that EGI also ‘lost a lot of money.”
Dan Neil and Eric Bailey, who were reporters for Tribune’s Los Angeles Times newspaper, filed the case before Pallmeyer as a group lawsuit seeking to represent themselves and any other participant or beneficiary in the stock ownership plan.
In addition to the money damages, they also seek a court order barring Zell and EGI-TRB from their fiduciary positions.
Pallmeyer, in her ruling, said the plaintiffs could continue to pursue that relief, adding that it may be mooted by developments in the bankruptcy case. The judge last year denied Zell’s request to dismiss the suit, while eliminating several Tribune board members from the case.
“Our clients and the other Tribune ESOP participants have been the main victims of this fiasco,” Daniel Feinberg, a lawyer for the plaintiffs with Oakland, California-based Lewis, Feinberg, Lee, Renaker & Jackson PC, said in a phone interview.
Tribune’s bankruptcy and the statutory limits of the federal Employee Retirement Income Security Act, or ERISA, under which the case was brought, narrow the workers’ options with respect to Zell, Feinberg said.
The employees will continue to press their claim against the plan’s trustee and principal fiduciary, Greatbanc Trust Co. of Lisle, Illinois, he said.
“The ESOP owns worthless stock,” Feinberg said. “This was supposed to be part of their retirement.”
The case is Neil v. Zell, 08cv6833, U.S. District Court, Northern District of Illinois (Chicago).
--With assistance from Steven Church in Wilmington. Editors: Fred Strasser, Stephen Farr
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