From hell

James O'Shea, who was fired in January 2008 as editor of the Los Angeles Times, has a new book out later this month called "The Deal From Hell: How Moguls and Wall Street Plundered Great American Newspapers." A companion website is coming soon.

The book is a retelling of the history that led to a disastrous merger between the Chicago Tribune and the Los Angeles Times and the layoffs and bankruptcy that followed. I have a copy on my desk - it was delivered late Friday - but I haven't read it yet. The chapter titles give one a good sense of what's inside, as "Otis Chandler's Legacy" gets tarnished by "Market-Driven Journalism" and the inevitable march to "Zell Hell" begins.

"It would be easy to condemn the people who caused this modern tragedy as venal and evil," O'Shea writes in the preface. "Thousands of friends and colleagues the world over have lost jobs because of the way the industry has been managed. Some were venal, all right. But most of the people who led newspapers to this point in history were smart and thoughtful. They thought they were doing the right thing, and that's what makes the story of what happened so terrifying. It shows disaster could happen to anyone in any industry."

The book will be out June 28.

Times media critic talks about possible SoCal media mergers

Los Angeles Times media critic James Rainey looks at the various merger options before the owners of Southern California's newspapers, as the currently bankrupt and recently bankrupt look for ways to hook up to save money.

The chase seems to center on Freedom Communications, owner of the Orange County Register, which has put itself on the market. Most of the hedge-fund money is on the Register merging with MediaNews Group, also recently bankrupt and owner of the nine LANG newspapers. The same group of investors, led by Alden Capital Group, already own major stakes in the two companies.

Alden also owns a piece of the Times, and Rainey reports that the currently bankrupt Tribune Co. has kicked Freedom's tires. But Tribune's internal troubles and potential anti-competition complaints would seem to make this wedding a little more difficult.

Another Tribune Co. exec bails out

Tribune Co. COO Gerry Spector announced he is leaving after three years on the job, the Chicago Tribune's Tower Ticker blog reports. Spector's departure appears to be part of the de-Zellification of Tribune, as part of a deal to dig the company out of bankruptcy.

From the Tower Ticker:

Spector's decision to leave at the end of the year was announced Tuesday by the four-man executive council  to whom he has been reporting since October's resignation of Randy Michaels as chief executive of the parent of the Chicago Tribune and other media properties.

 -snip-

Spector, 63, who first allied with [Sam] Zell as a 25-year-old accountant, held senior management roles in a number of Zell's ventures and played a critical role in building his property management company from scratch.  He first became an officer of Equity Financial and Management in 1973.

Like his boss, Spector is a motorcycle enthusiast who traveled the globe as a member of Zell's Angels. A graduate of Roosevelt University and Senn High School, Spector spurned suits and ties for a colorful collection of sweaters but generally maintained a much lower profile than either Zell or Michaels.

(found via FishbowlLA)

Freedom for sale

Freedom Communications, owner of the Orange County Register, is up for sale; the company emerged from bankruptcy just eight months ago. Freedom reportedly plans to sell itself in a chunk, rather thank breaking pieces off. So who wants to buy a medium-size media company? A merger with MediaNews Group wouldn't be out of the question...

Feds probe Tribune Co. deal

The Labor Department has opened an investigation into Sam Zell's leveraged buyout of the Tribune Co., the Chicago Tribune reports.

From the story:

The U.S. Labor Department is investigating Tribune Co.'s employee stock ownership plan, as well as Lisle-based GreatBanc Trust Co., hired by Tribune Co. to serve as plan trustee and represent employee interests in the $8 billion deal, according to Tribune Co. bankruptcy filings.

Court filings show that the Internal Revenue Service also has audited the ESOP, which Zell employed in the novel transaction to shield Tribune Co. from sizeable tax obligations once it went private.

Zell to go

The news was forecast more than a year ago: Sam Zell will leave Tribune Co. once it emerges from bankruptcy proceedings. The Wall Street Journal reports that Zell told CNBC, "I think when we're done with the bankruptcy process I will turn it over to whoever the creditors decide they want to run it, and wish them a lot of good luck."

That Zell is leaving on his own volition is one way of looking at it. Another way is that the creditors are going to strip him of his financial stake in the company, which is what gave him control over Tribune, and send him on his way.

National Enquirer bankrupcty proves even gossip doesn't pay*

The owner of the National Enquirer plans to file a pre-packaged bankruptcy in two weeks to shed debt and reorganize management. The process sounds similar to what MediaNews Group did  earlier this year to unload about $765 million worth of debt.

From AP:

American Media said it will file a prepackaged plan, which the company said should allow it to emerge from bankruptcy less than 60 days after the filing. The company said 80% of bondholders support a plan that calls for them forgiving debt in exchange for ownership.

The company, which also publishes Men's Fitness, Shape and Star magazines, said all its operations will continue as usual, and the reorganization won't affect its business or its staff.

* Update: Oh, and in case you don't care about gossip mags, American Media also publishes Playboy.

Randy Michaels not gone yet*

The Wall Street Journal confirms that the Tribune Co. board is debating whether to dump CEO Randy Michaels, but the paper reports that it remains unclear whether a decision will be made today.

*Update: The New York Times, which first reported Tribune Co. wanted Michaels gone, says that the board told Michaels he should resign but stopped short of demanding his resignation. Perhaps they think the company will look more stable if Michaels departs as part of some bankruptcy deal or something.

Tribune CEO Randy Michaels could be out of a job tomorrow

The firestorm surrounding Tribune Co. CEO Randy Michaels in recent days is what happens when your days are numbered and your supposed friends and colleagues become sources for a piece like this.

Whatever one thinks of the New York Times story that portrayed the Tribune executive suite as a low-rent frat house full of aging radio execs who think locker room chat is a form of creative enterprise, it should come as no surprise that Michaels would soon be shown the door. After all, little of the information in the story was new - its just that no insiders had felt the need to help the Times connect the dots. Until now.

And so the other shoe drops:

The board of directors of the Tribune Company is expected to ask Tuesday for the resignation of Randy Michaels, the controversial chief executive of the company, according to a person directly involved in the matter.

The individual, who spoke on the condition of not being identified, said the board had lost confidence in the ability of Mr. Michaels to lead the troubled company. 

Mr. Michael’s resignation would follow by days the exit of another top executive at the media company, Lee Abrams, Tribune’s chief innovation officer, who resigned on Friday after sending a sexually explicit memo to the entire company. 

All of this comes ahead of Tribune's expected emergence from nearly two years of often contentious bankruptcy proceedings. Michaels, who was brought in by company owner Sam Zell, would likely be out of a job even if it weren't for the bad press; especially since Zell himself will probably lose his stake in the company as part of the bankruptcy deal. The bad press about Michaels just adds momentum.

Tribune might soon emerge from bankruptcy

Bankruptcy proceeding rarely lend themselves to gripping narrative; and so it goes with the Tribune Co. bankruptcy case, as the media conglomerate slouches toward the exit door with senior and unsecured creditors, but not junior creditor groups, in tow. From the LA Times:

Tribune Co. and several of its most important creditor groups announced a broad new settlement Tuesday that brings the company closer to resolving its nearly 2-year-old bankruptcy case.

-snip-

Still absent from the settlement, however, are several key junior creditor groups, including major bondholder Aurelius Capital Management, a litigious New York hedge fund known for disrupting large bankruptcy cases. Sources close to Aurelius have said the fund plans to file its own plan by the court-imposed Oct. 15 deadline.

So we'll have a clearer picture by late Friday as to how this drama is going to end.

Randy Michaels denies Tribune-turned-frat house story

David Carr at the New York Times writes about a "rugged ride" at the bankrupted Tribune Co. under the management of owner Sam Zell and chief executive Randy Michaels. The story describes a frat-house executive suite that reined over a crumbling empire.

From the NYT story:

Mr. Zell and Mr. Michaels, who was promoted to chief executive of the Tribune Company in December 2009, arrived with much fanfare, suggesting they were going to breathe innovation and reinvention into the conservative company. 

By all accounts, the reinvention did not go well. At a time when the media industry has struggled, the debt-ridden Tribune Company has done even worse. Less than a year after Mr. Zell bought the company, it tipped into bankruptcy, listing $7.6 billion in assets against a debt of $13 billion, making it the largest bankruptcy in the history of the American media industry. More than 4,200 people have lost jobs since the purchase, while resources for the Tribune newspapers and television stations have been slashed. 

The new management did transform the work culture, however. Based on interviews with more than 20 employees and former employees of Tribune, Mr. Michaels’s and his executives’ use of sexual innuendo, poisonous workplace banter and profane invective shocked and offended people throughout the company. Tribune Tower, the architectural symbol of the staid company, came to resemble a frat house, complete with poker parties, juke boxes and pervasive sex talk.

Michaels has pushed back against the story. In a memo posted by LA Observe, he says Carr dug up old, discredited allegations and describes the company culture as "creative" and "fun." From the Michaels memo:

Mr. Carr has made clear that he is digging up these old allegations because he believes that decisions about the company’s management are about to be made, and he wants to influence those decisions. Mr. Carr knows that an outside firm investigated the most substantial of these allegations, and that they were found to be without substance. Mr. Carr intends to use them anyway.

(Found via LA Observed)

Private enterprise more important than free press, Philly judge rules

A district court judge in Philadelphia has banned "the media" from covering next week's auction of the Philadelphia Daily News and the Philadelphia Inquirer. The auction is taking place in open court, meaning open to the public, but the judge said having reporters there would just be too disruptive - and the papers' creditors happily agreed.

The many ironies and contradictions are enough to buckle a rational mind: A free press being banned from an open court hearing, for starters. A free press being banned from covering a public event in a public facility that concerns the future of the free press, for another.

Want more?

A federal judge blithely employing prior restraint against a constitutionally protected practice. A federal judge choosing to limit a constitutionally protected practice in order to promote a business deal. A federal judge choosing the interests of private business over the public's right to know in a case when two entities established to maintain the public's right to know (the very thing that gives them value) are on the chopping block.

One further complication: The creditors' committee includes the Newspaper Guild, a union representing the news reporters. That puts a reporter in the courtroom. To ensure he maintains control, the judge said the reporter would have to forsake his identity and act only as a representative of the creditors.

Unless a smart attorney or First Amendment group gets Judge Stephen Raslavich to come to his senses, the story of what happens to these two newspapers will be told by wealthy businessmen.

Everyone wants a piece of Sam

Tribune Co.'s unsecured creditors want to sue Sam Zell and the company's board of directors over the 2007 deal that gave Zell ownership of the company - and later landed Tribune in bankruptcy court. AP

Four in the morning

1. The judge in the Tribune Co. bankruptcy case has appointed a mediator to work through the impasse. LAT

2. Media critic Jack Shafer says hostage situations should not be covered as de facto breaking news. Slate

3. Press freedoms in Latin America are being chipped away despite the democratic reforms. Newsweek

4. The Associated Press has released new guidelines for giving credit to news organizations that originally reported information that's been assimilated into AP stories. AP

Clock ticking for Tribune Co. execs

As bankruptcy proceedings drag, time is running out for Tribune Co. bosses to maintain control of their destiny, the Chicago Tribune reports.

News Corp-ification of the L.A. Times?

I was tempted to say the "Disney-fication" of the Times because Tribune Co. creditors want former Disney CEO Michael Eisner to lead the company when it emerges from bankruptcy. But it would be Jeff Shell, former News Corp. executive and now Comcast big wig, who would have the more hands on role of chief executive, taking over from Randy Michaels.

All of this is informed speculation, given the uncertainties of the bankruptcy proceedings. But Eisner confirmed he's buying up Tribune debt. From the LA Times:

Eisner was unavailable for comment, according to his spokeswoman. But he told Variety in a wide-ranging interview Monday that he has 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 for Disney on the strategic planning staff when Eisner ran the company.

Tribune owns six newspapers, including the LA Times and Chicago Tribune, and 23 television stations.

Possible fraud in Tribune takeover, court examiner says

A court-appointed examiner in the Tribune Co. bankruptcy case has concluded that "the company's 2007 leveraged buyout was 'marred' by the 'dishonesty and lack of candor' of its then-senior management and that the deal rendered the media conglomerate insolvent from the moment the two-step transaction closed," the Chicago Tribune reports.

In response, Tribune Co. CEO Randy Michaels issued a memo that asks all company employees to "stay focused" and to "try not to be distracted by the media attention it may receive."

The anchorless newscast and other imagineering

Tribune Co. CEO Randy Michaels has a vision for his bankrupt newspaper and television empire, and it looks a lot like the empires of MediaNews Group and Gannett - meaning a constant focus on findings ways to cut staff (centralizing and shrinking copy and news desks, sharing stories to fill pages or on-air time) and a nearly erotic attachment to the idea of consolidation.

Here are some key quotes from an interview Michaels did with the Wall Street Journal:

"Stories [are] laid out in modules — standard sizes with collections of headlines, content, images [reducing the need for layout and copy editors]. If you pick up the Allentown [Pa.] Morning Call, the foreign news was written in Los Angeles and the national news was written in either Chicago or Washington. It's probably higher quality journalism than a local paper that size is going to be able to afford."

"We are about to launch a TV newscast in Houston that has no anchors, that has great pictures and great writing, but doesn't involve a set or a desk or anyone standing in the way of the picture. Now is it going to work? We're going to find out."


"On the TV side, this is an industry ready to consolidate. I believe my experience in helping people look rationally at opportunities to grow their business by intelligently consolidating regionally will be very helpful."

Can he say "f*&k you" in a deposition?

Sam Zell is scheduled to be deposed on June 28 in the Tribune Co.'s never-ending bankruptcy case, the blog ProtectConsumerJustice.org reports.

Noted: Eric Bailey Scott Martelle, who was cut from the Los Angeles Times just months before Tribune filed for bankruptcy, authored the post.

To get out of bankruptcy, ignore how you got in

Charges that Sam Zell knew his highly leveraged deal to takeover of Tribune Co. would force the company into bankruptcy, known as a "fraudulent conveyance," could be wiped clean by another deal to get the company out of bankruptcy.

From Bloomberg:

Tribune Co. will ask creditors to vote to settle allegations Chairman Sam Zell and company lenders violated bankruptcy law and left it insolvent when they organized a 2007 buyout that took the publisher private.

As part of its effort to exit bankruptcy, Tribune will send its reorganization proposal to creditors for a vote. The reorganization is built on a proposal to settle claims by lower- ranking creditors that the buyout was a fraudulent transfer because it increased Tribune’s debt by about $8.3 billion and only benefitted Zell and company shareholders.

“We feel pretty good about what will happen at the ballot box,” Tribune attorney James Conlan said in court today.

The rest of the story is here.