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The [Wednesday] Papers

A news organization's business side is (theoretically) separate from its editorial side, but when the business side doesn't conform to the editorial side's values - which in large part establish a media company's brand - the organization loses its moral authority.

For example, it's hard to take the Tribune's carping - as agreeable as I am to the rationale - about Pat Quinn giving raises to his staff during a time of great financial distress (see "Clueless in Illinois") when the Tribune Company wants to hand out exorbitant bonuses as well as golden parachutes to its top executives even as it languishes in bankruptcy court.

Yes, there is a difference between public money and private. But greed, self-dealing and financial mismanagement stinks no matter who is perpetrating it, and a news organization opens itself up to charges of hypocrisy as well as simply damaging its own credibility.

When a U.S. bankruptcy trustee says the Tribune Company doesn't understand "shared sacrifice," it sounds like a phrase ripped from a Tribune editorial pointing a finger at everyone but themselves. Breathless reporting, however justified, about shenanigans in corporate suites rings hollow when reporters seem oblivious to what is going on in their own.

For years, Mayor Richard M. Daley has used not only the financial problems of the Tribune and Sun-Times against them in deflecting questions about his own fiscal management, but has often snidely pointed to felons Conrad Black and David Radler as evidence that corruption flourishes everywhere, not just right under his nose (and to his benefit) at City Hall.

For a news organization to retain credibility, its business operations must be as pristine as its editorial. Obviously both of our major newspapers (as well as our broadcast operations here, but they are way long gone) have failed those tests.

"Two top executives at Tribune Co. engaged in 'intentional fraud' in late 2007 when working to finish the $8.2 billion sale of the company to Sam Zell, an examiner said in a 1,500-page inquest into its bankruptcy," David Roeder reports for the Sun-Times.

"Chandler Bigelow, a company treasurer who was promoted to chief financial officer after Zell took over, and former Senior Vice President of Finance Donald Grenesko falsely assured the deal's financiers that the company had an opinion from Morgan Stanley that it could refinance debt in 2014, the examiner said. The assurance, which Morgan Stanley told the examiner it never gave, was essential for Zell to complete his debt-loaded takeover."

So the deal was rotten on both ends; it's become obvious that those of us who warned that Zell was saddling the company with too much debt - at little risk to himself or his own financial position - were correct. It turns out, though, that it was even worse than that. It always is.

"The Klee report casts a harsh light on Bigelow and Grenesko as the two who worked to close the last stage of the deal, called Step Two. It called for $3.6 billion in financing to, among other things, pay Tribune stockholders $34 a share. Both men, Klee noted, were in line for financial gain in closing the deal; each was entitled to a $400,000 bonus, while Grenesko received $4.47 million for selling his shares.

"Klee does not blame Zell or aides for involvement in any fraud. But he notes the pressure they applied to complete the sale and suggests Bigelow cooperated because he expected Zell would retain him at Tribune. Klee has a memo from Zell associate Nils Larsen, now a Tribune executive vice president, that listed Bigelow as one of three Tribune insiders who could be trusted to 'drink the Kool-Aid.'"

That's not all. On Tuesday the Wall Street Journal got a jump on the release of the bankruptcy examiner's report when it reported that a Los Angeles-based bank refused to give the deal the "solvency opinion" that Tribune and Zell sought because they thought it was "going to fail" and "DOA."

(The bank then "got an angry call from Zell asking why it was holding up his deal," the Tribune reports.)

Instead, Tribune turned to a smaller valuation company to get its solvency opinion - which a court examiner found was reached through faulty methodology.

Members of the Tribune editorial page may not have been able to know that when they wrote this self-serving stew of self-congratulations in December 2007:

"We hope the Chicago Tribune's prospects are as promising as this infusion of new leaders and new energies feels to us today. During a whip through Tribune Tower on Thursday, our company's new chairman and CEO, Sam Zell, projected excitement for what we do and why we do it. That excitement is infectious. And it only enhances our belief in the point this page made in April:

"The men and women whose work brings you each day's Tribune are but temporary stewards of journalistic traditions and values that we trust will endure for another 60,000 mornings. And for 60,000 mornings after that."

But they and the reporting and editing staff should have applied a little journalistic scrutiny to the new world they were about to enter; instead there was a fair amount of delusion because Bob Dylan quotes began appearing in Tribune Tower about, you know, the times changin'.

As I've written before, these deals aren't made for some sort of public benefit no matter how they are framed; not even to strengthen a company. They are made because the people who make them profit so handsomely by doing so. It's legalized looting, and often a transfer of money upward. Besides that, the pathological greedy egotists who fill most corporate suites would be bored silly simply running a company every day; they want to do something; deal-making is exciting. Think of the endorphin rush.

But in the end, a lot of people get hurt - far more so in many cases than are hurt by fingers in the public till. That's a distinction that isn't always as important to make as lazy journalists would have you believe. It's all corruption, and the people on the bottom of the pyramid are always the ones left holding the empty bag.

Scrubs
I haven't read through the report myself yet so I can't tell you who Tom Ricketts turned to for a valuation of the Cubs roster when he bought the team from Zell. I'm thinking Chandler Bigelow.

Our Crusade Continues
We Hate My Boys Too.

On the other hand, it's probably Chandler Bigelow's favorite show.

Ted Lilly vs. Ryan Theriot
One's fortunes ought to rise; the other's will fall. Which is which? Find out in Fantasy Fix: Trade Factors.

And beware making a trade with Chandler Bigelow.

Working The Door
No public restrooms - not on Danny Fender's shift.

Especially if your name is Chandler Bigelow.

You Just Like Saying Chandler Bigelow
Guilty.

It's Not His Fault His Parents Named Him Chandler
No, but if they wanted to spare him, they should have named him Wally. Wally Bigelow. He probably would have led a more honest, if less affluent, life.

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The Beachwood Tip Line: Set yourself free.




Permalink

Posted on August 4, 2010


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