“They threw out what Tribune had stood for, quality journalism and a real brand integrity, and in just a year, pushed it down into mud and bankruptcy,”.
Tribune Company - Tales of a Bankrupt Culture: '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.''“They threw out what Tribune had stood for, quality journalism and a real brand integrity, and in just a year, pushed it down into mud and bankruptcy,” said Ken Doctor, a newspaper analyst with Outsell Inc., a consulting firm. “And it’s been wallowing there for the last 20 months with no end in sight.”'But even as the company foundered, the tight circle of executives, many with longtime ties to Mr. Michaels, received tens of millions of dollars in bonuses.'
'Mr. Zell’s first innovation was the deal itself. He used debt in combination with an employee stock ownership plan, called an ESOP, to buy the company, while contributing only $315 million of his own money. Under the plan, the company’s discretionary matching contributions to the 401(k) retirement plan for nonunionized Tribune employees were diverted into an ownership stake. The structure of the deal allowed Tribune to become an S corporation, which pays no federal taxes; its shareholders are responsible for all taxes.'
'The company is now frozen in what seems to be an endless effort to emerge from bankruptcy.'
'More than the Tribune’s creditors took a haircut: the shares that about 10,000 nonunion employees received in the ESOP deal are now worthless as a result of the bankruptcy, although at the beginning of this year, the company replaced the ESOP plan with a cash incentive contribution. But if and when the Tribune exits bankruptcy, the value of the company will be worth substantially less than when Mr. Zell bought a controlling interest. Under a proposed settlement filed recently with the court, senior lenders, including the Angelo Gordon hedge fund and Oaktree Capital Management, would receive $5.5 billion, while other lenders with less priority would receive far less. The case is in mediation.
“How can anybody say that they have done a good job?” said Henry Weinstein, a former Los Angeles Times reporter who filed a lawsuit, still pending, that contends that the use of employee pensions to finance the deal was illegal.
“Anybody can make money when you are not servicing the debt and cutting people. Zell and the people he brought in had no idea what they were doing.”
And Mr. Zell? On Aug. 13, his lawyers suggested that if other junior creditors were paid, he should get his money back as well.'