Death by Gouging, continued: We suppose you've heard that the Tribune Company has declared Chapter 11, prompting yet another round of "Taps" for the newspaper business.
It's true that newspapers have deep and perhaps unfixable problems in the current marketplace, and it's also true that many have been slow to adapt to rapidly changing circumstances. But that's only part of the story. The rest involves greed and a contempt for the business by so many of the people who own it.
Here are some salient details about Tribune's bankruptcy. From the The NYT's Andrew Ross Sorkin:
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 before hand 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.
More from our friend Harold Meyerson, here:
Sam Zell never really had much proverbial skin in the game. Last year, when he purchased the Tribune Company, which filed for bankruptcy today, he put up $315 million of his own money and paid the balance of the purchase price, $8.2 billion, with the employee stock ownership plan -- a move in which Tribune employees had no say whatever. But that actually overstates the amount of Zell's investment. Of the $315 million he sunk into the company, it turns out that $225 million was simply a promissory note. Due to the vagaries of bankruptcy law, writes business analyst Mark Lacter on laobserved.com, that means that Zell has better protection for his stake than all his employees. Trib's ESOP holds 100 percent of the company common equity -- and it's the holders of common stock who usually take a bath, or get wiped out altogether, in the debt restructuring that goes on under Chapter 11.
And a current Tribune employee, writing into TPM and summing it all up:
You are right on the money, this filing goes directly to insanely bad business decisions, not the secular decline in newspapers. The amazing thing that is happening right now is that all of the company's assets are in the black. All of them. Every television station and newspaper is making money. Now lets not kid ourselves -- many are in a fast downhill spiral, revenues are declining, etc. But what has killed this company is the insane amount of debt Zell has placed upon it.
That debt was not incurred to invest in the company's product, or even physical plant. It was incurred solely to buy out Tribune Corp's shareholders at an inflated share price and let Zell have his toy. It was the epitome of the bubble. And now it's caught up with Zell. He'll be fine. The employees are the ones who will suffer, as always. Basically, Zell has destroyed several great newspapers as part of an unwitting wealth transfer to various large Tribune shareholders.
Discussions about the future of newspapers are needed and welcome. But so, too, are discussions about the larger role of media institutions in the democracy.
George Zornick writes: Chris Matthews is reportedly ending his Pennsylvania Senate run before it began, and re-signing with MSNBC. That's probably a wise career move, since it appears Matthews has a very odd understanding of electoral politics. Yesterday on Hardball, Matthews said, "in an average election, just showing up out of duty or habit or ritual -- patriotism, if you will -- Republicans are better at voting. More of them show up."
That kind of thinking surely would have played well in the Democratic primary, don't you think? Anyhow, because of his amazingly short attention span, Matthews was basing his analysis not on the recent presidential election, which saw a dramatic increase in Democratic voter turnout and a depression in Republican turnout, but rather last week's congressional special elections in Georgia and Louisiana, which produced Republican victories.
This is the same line of thinking embraced by Jeanne Cummings in a Politico column, where she looks at the results in those races and asks: "Did the Democrats' exile end too soon?... the Georgia runoff election last Tuesday exposed some remaining weakness. And it's unclear if, in these heady times and at this point of transition, the party will focus on it or look past it."
So until the Democrats produce large margins in all 50 states, even the reddest ones, they shall be weak and perhaps ready for further "exile." I hope that's not an unfair assessment, but what else are Cummings and Matthews trying to say, and why can't they focus on something besides the most recent news event?
In our most recent Think Again column, about the Bush administration's deliberate propaganda efforts, we noted the case of Armstrong Williams, the columnist who was paid hundreds of thousands of dollars by the administration to promote the No Child Left Behind Act.
Demonstrating how lightly many in the mainstream press take such flagrant assaults on their profession, Williams is actually still employed and writing opinion columns for major publications. (OK, it's The Washington Times, but still.)
Also, in his most recent column, Williams writes that Sen. Hillary Clinton's "antics and brokering of deals on how many times she gets to stand with Mr. Obama have signaled the beginnings of a rogue element." Takes one to know one, bub.
Quote of the Day: CNN's Bill Schneider, on Barack Obama's 79/18 approval/disapproval rating: "That's the sort of rating you see when the public rallies around a leader after a national disaster. To many Americans, the Bush administration was a national disaster."
We recently debunked, as did many others, the bogus charges that Fannie Mae and Freddie Mac, and by extension the Democratic Party, were responsible for the financial crisis.
What makes the charges so ridiculous is not only the minimal role played by Fannie and Freddie in the crisis, but the hypocrisy of anti-regulation Republicans leveling such charges. Today, we find out that not only did Newt Gingrich, one of the chief Fannie and Freddie accusers, work for the company -- but his job was to help fight off potential regulation.
Glenn Greenwald is terrific, here.
Road Shows: Vol. 1 by Sonny Rollins
This is the first in a planned series of live releases from the great Sonny Rollins from the past 30 years. There's only seven tracks on this album, but it includes performances from all over the globe -- the U.S., Canada, Poland, Japan, France, and Sweden. (One of the U.S. tracks is his 50th anniversary performance at Carnegie Hall, with the Roy Haynes trio). Also appearing throughout the live tracks are sidekicks Al Foster, Mark Soskin, Clifton Anderson, Bob Cranshaw, and Stephen Scott. The album is out on Emarcy, and more information is here.
Sonny Rollins in Vienna -- DVD
Another option for experiencing Sonny Rollins live is to buy his concert in Vienna, which is also out on Emarcy. In June 2006, Rollins played to a crowd of 7,000 in Vienna's "Théâtre Antique de Vienne," with the cameras rolling. It was shot in high-definition, and the DVD is mastered in Surround Sound. The 76-minute performance included notable tracks "They Say It's Wonderful," "Don't Stop the Carnival," and "I See Your Face Before Me." More information is here.
Something about Airplanes -- Death Cab for Cutie
Death Cab's first effort is being re-released on Barsuk, on the 10-year anniversary of the initial release, but so many Death Cab fans are unfamiliar with the group's first studio album it feels pretty new. The first disc is that debut album, and the second is the group's first Seattle live show. More info is here.
Name: Bill Strachan
Hometown: Enfield, CT
As a long time subscriber to The Hartford Courant, I, along with a great number of my friends who also subscribe, are not really surprised that the Tribune Company has now filed for the next to last refuge of scoundrels, Chapter 11.
We have watched the new ownership dismember the news room (over 26 laid off), maim the masthead and layout, disembowel the sports section, dumb down even AP reports, and become nothing more than a circular for the largest local department store chains.
As has been commented on in these posts, the new owners arrived with an inbred contempt for newspapers so they have accomplished their mission (not unlike the current administration with its contempt for government).
I addition to the demise of two other CT papers recently, the potential loss of The Courant will leave us with an alternative paper that is something akin to a combo of the Missing Link and the NY Daily News. I guess I will have to update my prescription glasses to handle ALL my news online, and I will now have to rely on the local rumor mill for local news. Sad, very sad.
That's no way to run a newspaper. The Tribune Company files for Chapter 13. It's confirmed, Sam Zell is no Charles Foster Kane. Here's the key bits from YouTube link: "I am the publisher of the Inquirer! As such, it is my duty -- and I'll let you in on a little secret, it's also my pleasure -- to see to it that the decent, hard-working people in this community aren't robbed blind by a pack of money-mad pirates just because they haven't anybody to look after their interests . . . You're right, Mr. Thatcher. I did lose a million dollars last year. I expect to lose a million dollars this year. I expect to lose a million dollars next year. You know, Mr. Thatcher, at the rate of a million dollars a year, I'll have to close this place ... in sixty years."
Of course, in this same scene, Kane also responded to one his correspondents who claimed there was no war in Cuba: "You provide the prose poems, I'll provide the war." I think Roger Ailes has that line emblazoned on his Go Cup.
Wasn't the aforementioned Mr. Gregory part of the Washington Press Corps before he was given the gig hosting Meet the Press?
Was he or was he not part of the "high school cafeteria" (and please include that link of him dancing backup to Karl Rove in your answer)?
George Zornick replies: Yes.
Name: Kurt Helf
Hometown: Bowling Green, KY
Just as I was beginning to stuff the images that accursed footage down into my subconscious, you bring them up again! I don't know which is worse: that pisher Rove's rapping or Gregory's gleeful dancing. I would really like to know why media people participate in this ritual. I'll never be able to look at David Gregory without thinking of that idiotic tableau.
Car Czar? Please! He (or she) should be called the "Autocrat."