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MEDIA WATCH: While Tribune editors carry out dishonest campaign against state worker pension plans, Tribune executives give themselves another 'bonus' windfall

George N. Schmidt - November 01, 2011

While the Chicago Tribune beats the drum daily on behalf of the campaign sponsored by Tribune and the Civic Committee of Chicago's Commercial Club to destroy the pension plans of public workers in Chicago and across the state, Tribune executives — the same people ordering up the "investigative" news pieces slandering retired public workers — have once again awarded themselves huge bonuses while the run the company during its bankruptcy, which is now the longest since the changes in bankruptcy laws.

Chicago billionaire Sam Zell (above) didn't lose much money when the took the Tribune Corporation into enormous debt, wiped out the pension plans of 10,000 nonunion Tribune workers (they had all been in an ESOP, which wound up with worthless Tribune stock) and continued contributing millions of dollars to teacher bashing and union-busting groups like "Stand for Children." On October 4, 2011, Crain's Chicago Business reported: "The judge in Tribune Co.'s bankruptcy approved a management incentive plan that will pay bonuses of as much as $42.5 million to 640 employees. 'I think it's entirely reasonable to order this relief in these uncertain times,' Delaware Bankruptcy Judge Kevin Carey said during a hearing on the plan Tuesday. There were no objections to the plan proposed by the Chicago-based media company, the judge noted.

Tribune corporation is the publisher of newspapers that include the Chicago Tribune, the Los Angeles Times, the Baltimore Sun, and TV outlets such as WGN-TV. The corporation been in bankruptcy since December 2008. It filed for Chapter 11 protection from creditors a year after real estate speculator Sam Zell led an $8.2-billion leveraged buyout of the company. Zell, who has been bankrolling some of the groups (such as Stand for Children) that attack Chicago teachers, bankrupted the Tribune by taking over the corporation with borrowed money.

In a ruling at the end of October, the judge overseeing the bankruptcy rejected another proposal for bringing the corporation out of bankruptcy.

Before reviewing the latest media coverage of the Tribune case, it's important for Substance readers to dwell on the hypocrisy of the Tribune's editors and managers. For the past six months, the Tribune's news columns have been filled with propaganda against the Chicago Teachers Union (and on behalf of millionaire mayor Rahm Emanuel) on the one hand, and attacking the defined benefit pension plans of state workers, on the other. In September and October 2011, hardly a day went by without either an "news story," an "investigative report," of an editorial regarding what the Tribune calls "Pension Reform." The Tribune also gives regular news and Op Ed space to local corporate leaders, most notably R. Eden Martin of the Civic Committee of the Commercial Club of Chicago, which wants to destroy all defined benefit pension plans and turn all worker pensions over to investment advisors like State Rep. Darlene Senger, who co-sponsored the infamous HB 3827 (the proposed legislation that would have abolished all of the pension boards for Chicago public workers and replaced them with boards of seven members, four of whom would be appointed by Mayor Rahm Emanuel).

The Tribune's own record as a corporation is at least consistent in this regard. From the day Sam Zell bought the Tribune (on borrowed money), Tribune has ripped off its own workers. Prior to the Sam Zell deal, Tribune workers were in an ESOP (an Employee Stock Ownership Plan) which supposedly would take care of them after they retired. Zell's deal, based on borrowed money, pushed Tribune into bankruptcy within two years after it was hailed by other corporate media. As soon as Zell took Tribune into bankruptcy, the ESOP benefits of 10,000 Tribune workers were wiped out. That is now what Tribune wants to do to all public workers in Illinois, but of course in 2011 this is called Pension Reform.

To add insult to injury, Tribune workers lost what amounted to their life's savings, but since the bankruptcy (now in its third year) began, the Tribune's bosses have received large bonuses for each year they supposedly are managing the company while it awaits the final deal to come out of bankruptcy. Those same managers — including the editors who assign the "investigative" reports on supposed pension "corruption" that run off page one of the Tribune newspaper and at the top of the hour on WGN radio and TV — are thus making bonuses while pushing the same hypocritical version of "news" that brought the Tribune into disrepute to begin with.

Tribune has also been the most important cheerleader for Rahm Emanuel's attacks on the Chicago Teachers Union, the push for the "Longer School Day," and the strategy to undermine collective bargaining for the Chicago Teachers Union.

CHICAGO SUN TIMES REPORT NOVEMBER 1 ON LATEST COURT RULING IN TRIB BANKRUPTCY

Because of a ruling issued on Halloween, Tribune Co.’s “deal from hell” lives on.

A federal bankruptcy judge Monday rejected two competing plans for the reorganization of Tribune, the Chicago-based publishing and broadcasting company that was driven into Chapter 11 by mogul Sam Zell’s ill-timed and over-leveraged buyout. Zell called the $8.2 billion sale the “deal from hell” upon its consummation in 2007.

But that was before the real fun even started. A year later, the Tribune, saddled with $13 billion in debt and with advertising in a steep, industry-wide fall, filed for bankruptcy. In the three years since then, creditors have wrestled over who gets what in a reorganized company and how to handle lawsuits against the parties who approved the original deal.

U.S. Bankruptcy Judge Kevin Carey said in a 126-page opinion that he could approve neither of the two plans presented to him. His ruling suggested that the company could be in for months of costly court proceedings and uncertainty about its fate. Many observers suspect that when creditors do get control, they will break up its properties and perhaps sell the broadcast stations, which generate the bulk of the profit.

But Carey tried to downplay any conclusion that his ruling would invite more delay. The Tribune, he wrote, “must promptly find an exit door to this Chapter 11 proceeding. The court is equally resolute that, if a viable exit strategy does not present itself with alacrity, and despite any disruption to management, as well as the added cost and delay this might inevitably occasion, the court intends to consider, on its own motion, whether a Chapter 11 trustee should be appointed.”

Tribune owns the Chicago Tribune, the Los Angeles Times, other major newspapers and more than 20 broadcasting stations, including WGN television and radio. Company spokesman Gary Weitman said late Monday, “We are reviewing the judge’s decision and will have no comment until we have finished studying it.”

Both completing plans would have left Tribune under the control of JPMorgan Chase & Co. and hedge funds Angelo, Gordon & Co. and Oaktree Capital Management, the leading unsecured creditors. But a plan advocated by other debt holders, including Aurelius Capital Management LP, seeks to recover more money in litigation. Aurelius is known for playing legal hardball.

Aurelius was emboldened by the findings of a court-appointed examiner, who ruled last year that part of the Zell buyout may have been a “fraudulent conveyance” that automatically rendered Tribune bankrupt.

Carey rejected both plans for several reasons, some technical, but spoke more favorably of the leading creditors’ proposal. He said it provides Tribune “with more certainty regarding preservation of estate value and a better foundation for revitalizing business operations.”

A hearing in the case is scheduled for Nov. 22 in Wilmington, Del.

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