Tribune Troubles

The headlines say “A Zell of a Deal,” “Over-Zell-ous?” “Zell to Pay.” That last one isn’t exactly accurate because it’s the employees who have paid and will continue to pay. When Sam Zell bought the Tribune Company, he used employee pension funds (along with a bit of his own money) to buy Trib stock so he could take the company private. With yesterday’s filing for bankruptcy, that stock is now probably worthless.

So who will get paid? The names are familiar because they just received big welfare checks from their Uncle Sam, among them Bank of America, Citigroup, and Merrill Lynch, which is now part of Bank of America. (I won’t go into the tangled web that involves the governor of Illinois who wanted to suspend state business with BofA for taking bailout money and refusing loans just before he was indicted on federal corruption charges for supposedly seeking a quid pro quo for appointing Obama’s replacement.)

Since Tribune has filed for bankruptcy under Chapter 11, the companies it owns will continue to function – papers will publish and TV and radio stations will broadcast. However I cannot fathom the morale in a workplace where the workers know their boss gambled with their retirement money and lost. And there’s nothing they can do about it.

I am glad that many of my friends and former colleagues at the Trib’s local paper, the Hartford Courant, took buyouts. But I hope they took lump sums because the bankruptcy puts an end to everything else, according to a memo posted on a Trib website and quoted in Monday’s New York Times. “All ongoing severance payments, deferred compensation and other payments to former employees have been discontinued.”

Chicago Tribune columnist Steve Chapman wrote on Monday that he’s not really worried and says he’s thrilled that no one in the industry has asked for a government bailout. That move would create some serious questions about free press. But I would direct Mr. Chapman’s attention to a proposal by Connecticut lawmakers that the state rescue two local newspapers, the Bristol Press and the New Britain Herald. Owner Journal Register Company plans to close the papers next month if buyers can’t be found. State intervention makes me nervous, even if the alternative is no paper for a substantial portion of the state.

And in the misery loves company vein, Trib seems to be making life grim for others outside its immediate sphere of influence. The NY Times reported today that after Trib’s announcement, shares in media conglomerate McClatchy Company nosedived.

Many people questioned Zell’s purchase of the company last year, and many more questioned the wisdom of taking on so much debt when Trib went private. The biggest problem involved the nature of the industry. Papers have been struggling for years, but it seemed that the folks who were most successful (the Times, Murdoch, et al.) have a history with the business. Not one of the managers Zell brought to Trib had any journalism experience. Not just in newspapers – no TV, and only the business side of radio. Worst of all, no one had any Internet experience, which is where all the news gathering and disseminating is headed in the next few years. Regardless of the platform, people in the business have to be able to express themselves effectively. Apparently the Zell-ots can’t even do that. Roger Ebert, who writes for Chicago Tribune rival the Chicago Sun Times, charged that one of Zell’s hires writes such bad memos that the employees pass them around for laughs. Ebert acknowledges that his former bosses engaged in greater rip-offs than Zell has and are now doing time for it. But at least they could write!

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