Other Departures at Tribune Company in Wake of Randy Michaels Resignation

By DAVID CARR
The New York Times

When Randy Michaels, the embattled chief executive of Tribune Company, resigned on Oct. 22, many employees wondered what would become of many longtime associates he brought in from his days in radio at Clear Channel. That question was answered, at least in part, on Monday when several executives with ties to Mr. Michaels announced that they would be leaving as well.

The Chicago Tribune posted the news:

Tribune Interactive President Marc Chase, Senior Vice President and Chief Operating Officer Jeff Kapugi and Executive Vice President Carolyn Gilbert — longtime associates of Randy Michaels, who resigned as Tribune Co. chief executive last month — are leaving the company, sources said.

The Tribune also reported that John Phillips, the building manager who posted pictures on Facebook of an infamous poker party, would also be leaving soon, along with his wife, Betsy Phillips.

Denise M. Brown, who worked just steps away from Mr. Michaels and was interviewed at the time of his resignation, said a tight-knit group, many of the friends of Mr. Michaels or related to one another, moved in soon after Mr. Michaels began running the company, which owns 23 television stations and publishes The Chicago Tribune and The Los Angeles Times, along with several other newspapers. She said certain positions were reserved for what was known as “friends and family.”

“Carolyn Gilbert sat across from her son Russ Gilbert, and Russ’s fiancé, Kim Johnson, was there as well, and they were all from radio,” said Ms. Brown. “Russ’s sister came to work for us as well, and his father provided video for the interactive site. After a while, it was clear to us that having worked with Randy at Clear Channel was the only credential that mattered.”

That credential has lost salience now that Mr. Michaels is gone — along with the chief innovation officer, Lee Abrams — and a four-person team was brought in to run the media company on an interim basis.

Meanwhile, conflict and chaos deepened in the bankruptcy case which will decide who eventually controls the troubled media company.

According to Reuters, a group of unsecured creditors filed two separate lawsuits on Monday that accused the board of the company and Sam Zell, who bought the company in 2007 in an $8.3 billion deal, of defrauding investors by executing a deal for the sale of the company that they knew or should have known would leave the media company insolvent.

“This L.B.O. Transaction is among the worst in American corporate history,” the complaint said. “The L.B.O. was designed to cash out the large shareholders of Tribune and to line the pockets of defendant Samuel Zell and Tribune’s directors and officers.”

The committee of unsecured creditors is seeing billions of dollars from shareholders who sold to Mr. Zell, banks who helped finance the deal, the Tribune board and management during the time of the buyout. The suits also names Morgan Stanley, which advised the board at the time of the sale, accusing it of professional malpractice and insider trading.

The mess in the Delaware federal bankruptcy court is no longer Randy Michaels’s problem and he is on to other things. Speaking to The Wall Street Journal, Mr. Michaels said that in the wake of his resignation: “My phone’s been ringing. There are a lot of people who look past noise and emotions and look at results.”

Mr. Michaels denied reports, in The New York Times and elsewhere, that the Tribune Company was an unpleasant, hostile place for some of the people who worked there.

“The environment at Tribune was inclusive, tolerant, fun, creative and sometimes irreverent, but with a purpose,” Mr. Michaels said, adding, “The fact is I decided to resign because I thought this had become an issue that was distracting, that my ability to continue to lead the company was in serious question.”

Broadcast Union News: Now the rats begin the rush to leave the sinking ship, or perhaps this is more like a swarm of locusts, having devoured the last bit of meat and sucked the very marrow from the bones of this once great company, abandons the carcass to seek new prey. - BD