Illinois Public Media News
A two-week hearing begins Monday to determine the fate of Tribune Co. more than two years after an ill-advised $8.2 billion buyout drove one of the oldest U.S. media companies into bankruptcy protection.
The proceedings follow four years of tumult and intrigue at Tribune Co. The company has been through the disgrace of a bankruptcy case that has lasted far longer than planned, a CEO departure triggered by complaints about management's raunchiness and the whiff of a financial scandal fanned by a court-appointed examiner's conclusion that parts of the 2007 buyout had bordered on fraud.
The hearing in U.S. Bankruptcy Court in Wilmington, Del., will affect the ownership of the Los Angeles Times, the Chicago Tribune, The Sun of Baltimore, other daily newspapers and 23 television stations. The TV stations include Chicago-based WGN, which reaches more than 70 million homes nationwide, mostly through cable and satellite systems.
The hearing edges Tribune Co. closer toward shedding most of the roughly $13 billion that it carried into bankruptcy protection. If it can unload the debt, the company believes it can make money while it tries to adapt to a marketing shift to the Internet.
Judge Kevin Carey is being asked to choose between two competing reorganization plans. The plans differ in their appraisals of Tribune Co.'s current value and their limitations on which participants in the troublesome buyout can be sued for saddling the company with too much debt.
Either way, the outcome is likely to leave Tribune Co. controlled by its creditors. The new owners are expected to replace the patchwork management team that has been running the Chicago-based company since the previous CEO, Randy Michaels, resigned in October amid complaints about risque conduct.
Tribune Co., founded in 1847, filed for bankruptcy protection in December 2008, making it the first major U.S. newspaper publisher to do so during the Great Recession. The deep downturn magnified the challenges facing newspaper publishers as readers and advertisers moved from print to digital alternatives.
The slump prompted more than a dozen other newspaper publishers to follow Tribune Co. into bankruptcy protection. Like Tribune Co., several of them were saddled with billions of debt taken on during better times. Most of them have emerged from bankruptcy protection already.
The complex 2007 buyout engineered by real estate mogul Sam Zell complicated Tribune Co.'s effort to return to normal business operations. The allegations of financial conduct made many creditors less inclined to make concessions during negotiations on a reorganization plan. The independent examiner's report last summer prompted the company to back off one proposal.
This month's hearing makes it more likely that Tribune Co. will finally emerge from bankruptcy court this year. The legal fallout could last for years, however. Both plans envision creditors pursuing lawsuits in an attempt to recover more of their losses, and there could be an appeal of Carey's decision in the case.
The stakes riding on the resolution of the convoluted saga are expected to attract a crowd. Carey is setting up a video feed in an overflow room to accommodate up to 100 more people beyond the 175 spectators that can cram into his courtroom. The judge also is clearing space in the courtroom for more than 2,000 exhibits expected to be submitted during the hearing.
"It will take some time and involve some tedium," Carey said during a housekeeping hearing last week.
The hearings also could shed more light on Tribune Co.'s operations and the behind-the-scenes maneuvering that led to the Zell buyout, which took the company private and turned employees into part-owners.
Reams of documents in the case have been kept under wraps to protect what has been described as confidential business information. Carey so far has rejected requests to unseal the documents, but he has warned that some of the information could come out during the hearing because he doesn't plan to close the courtroom.
Tribune Co. favors a plan that would turn over ownership to the company's major creditors, including some that had helped line up the ruinous financing, which already has triggered lawsuits. It would shield the lenders involved in the buyout from lawsuits after the company emerges from Chapter 11. Opponents of the plan contend it would also block attempts to sue former Tribune Co. shareholders who received $4.3 billion in the buyout's first phase.
This proposal has the backing of Tribune's Co.'s proposed new owners - a group led by banker JPMorgan Chase & Co., distressed debt specialist Angelo, Gordon & Co. and hedge fund Oaktree Capital Management. It's also supported by Tribune Co.'s committee for unsecured creditors.
A group of creditors that owns Tribune Co. debt issued before the Zell buyout has proposed an alternative plan primarily because they want fewer limits on which parties can be sued for alleged fraud. The plan also contends these note holders, led by hedge fund Aurelius Capital, are entitled to be paid bankruptcy claims totaling $1.2 billion instead of $761 million offered in the proposal backed by Tribune Co.
Zell, still Tribune Co.'s chairman, has filed objections to both plans because he and a business arm, Equity Group Investments, would remain exposed to lawsuits alleging fraud.
The competing reorganization plans also came up with dramatically different estimates on Tribune Co.'s business value. The company-backed plan pegs it at $6.7 billion, compared with $8.3 billion in the Aurelius-led proposal.
Tribune Co. has been gradually recovering from the recession, primarily because of an industry-wide revival in television advertising. The company's revenue last year totaled $3.1 billion, 2 percent below 2009, based on court documents.
But the company still gets more of its revenue from newspapers and other publishing sources. Tribune Co. has predicted its revenue this year will decline 4 percent, dip another 2 percent in 2012 and slip 3 percent in 2013.
Those forecasts assume the new owners won't break the company apart by selling some of the newspapers and TV stations.
Union groups plan to continue rallying at the Indiana Statehouse to protest several bills supported by Republicans.
The Indiana AFL-CIO says it expects thousands to attend a "We Are Indiana" rally Thursday from 11 a.m. to 2 p.m. on the west side of the Statehouse. Tuesday, unions are planned to mourn the "death of the middle class" with a New Orleans-style funeral procession.
Members of the AFL-CIO and other unions have been gathering at the Statehouse to protest what they consider anti-union legislation backed by Republicans who control the House and Senate. House Democrats are boycotting that chamber in an effort to derail some of the proposals.
Democrats say they won't come back until Republicans negotiate, but Republican House leaders refuse, saying they won't be bullied into dropping bills.
The Indiana House of Representatives could consider abortion legislation this week. The Indiana Senate approved two bills dealing with reproductive issues. Now, the House could take them up.
One bill would prohibit the state from making contracts or grants with organizations that provide abortions. Hospitals would be exempt.
Another bill would require a doctor to tell any woman who is seeking an abortion that life begins at conception, and that her fetus might feel pain. Planned Parenthood of Indiana says the bills amount to a legislative assault on women. The group's planning a rally at the statehouse Tuesday that's meant to kill the proposals.
It's not clear whether there will be debate, though. Indiana Democrats are in a legislative boycott related to labor unions.
About 80 Champaign employees, most of them in public works, are being asked to begin scheduling furlough days to reduce the impact of salary increases that went into effect last July.
City human resources director Chris Bezruki said the AFSCME union workers are being asked to take six furlough days between now and the end of August. He said the salaries of non-union city employees were frozen this fiscal year, but AFSCME received a 3-and a quarter percent raises. The union has responded to the furlough mandate by filing an unfair labor practice charge against the city of Champaign, alleging leaders negotiated in bad faith. Their complaint will go before the Illinois Labor Relations Board.
City negotiations with AFSCME Council 31 started in December. Bezruki said the two sides started to discuss the impact of furlough days.
"How many we need to take, and how we're going to do that?" Bezruki said. "How we're going to schedule it? What employee input should there be? Should they schedule a furlough day next to a holiday if they want, or things like that? They refused to make a counterproposal at all, and so we had declare an impasse just last month. And so now we're proceeding with implementing this process."
Michael Wilmore, a Staff Representative with the AFSCME union, said the city chose to ignore a number of other cost saving options, including a pay freeze, removing the cap on overtime pay to comp time, and starting a four 10-hour day schedule for public works. He contends the moves could have saved more than $200,000 additional dollars.
Bezruki said the complaint filed by AFSCME means the Labor Relations Board will request information on negotiations between the two sides, the proposals that were exchanged, and whether a hearing will take place. He said that process can be drawn out as long as six months.
A leader of University of Illinois graduate workers said the Urbana campus is actively working to soften the blow on those affected by a computer problem that meant taxes weren't withheld for seven years.
The payroll glitch on tuition waivers means 17 graduate employees will not see a paycheck for three months as the U of I owes thousands in back taxes. More than 250 other graduate assistants will be taxed for part of their tuition waivers starting this month, which could mean more than half of their pay.
Graduate Employees Organization co-president Stephanie Seawell said the U of I is actively meeting with the union to find solutions, but the two sides have yet to come up with a concrete plan.
"Hopefully we can find some sort of solution where they could spread out how they have to pay it," Seawell said. "Or in some cases, if they do a lot of teaching work, they might be able to be teaching assistants instead of the classifications that generate these sort of taxes."
The GEO said the deepest impact may be felt on international students, some of who have spouses who aren't eligible to work in the U.S. U of I spokesman Tom Hardy said the only apparent solution now for the graduate workers is taking out a loan.
"We are obliged to make these withholdings," Hardy said. "And we greatly appreciate the patience and cooperation on the part of these graduate students."
Hardy said graduate assignment classifications for many of the students vary on the Urbana campus, making it difficult to find a uniform solution. The U of I's change to the Banner computer system was only made in Urbana, and graduate workers in Chicago and Springfield were not affected.
Your old TV sets, tape decks, VCR's and computers are all welcome at Saturday's electronics recycling event on the north side of Champaign. It's one of four recycling collections held each year in Champaign County.
Bart Hagston is the environmental sustainability manager for the city of Urbana, which co-sponsors the event. He said he hopes that people will get into the habit of recycling their old electronic gear. He cautions that next year, simply throwing the items into the trash will not be an option. Starting Jan. 1, 2012, computers, computer monitors, printers and televisions will be banned from Illinois landfills.
"People will no longer be able to set those out with the regular trash," Hagston said. "So we're trying to help people get rid of any backlog of these items that they have in their home."
Hagston said the contractor they've hired to perform the recycling follows all state regulations on data security, to ensure that no data is stolen from the old computer hard drives that are dropped off at the event.
If it's a reusable computer hard drive, they have software approved by the Department of Defense to erase that, and then they can reuse it," Hagston said. "Or of it's not a working drive, or it's an older drive that's not going to get reused, they will shred it and then recycle the metals."
Besides computers, computer accessories and TV's, the electronic recycling event will takes fax machines, mobile phones DVD and VCR players, MP3 players, PDA's and video game consoles. No more than ten items per resident will be accepted.
The electronic recycling event runs Saturday, March 5th, from 8 AM until noon at the News-Gazette Distribution Center on Apollo Drive, just off North Market Street in Champaign. To keep the traffic flowing smoothly, Hagston said motorists should approach the site on Market Street from the south ...and follow the signs.
The Champaign County Regional Planning Authority is the main sponsor for Saturday's electronic recycling event. For more information, call 384-2302
Students, instructors, and graduates of the University of Illinois' Institute of Aviation say administrators want to close a valuable program at a time when it's needed most.
About 80 of them Thursday discussed an industry that stands to lose about 37,000 pilots in the U.S. alone over the next 10 years. U of I Graduate Nathan Butcher is now a Delta pilot. He said there's a decline in training overall, and many pilots are nearing their mandatory retirement age. Butcher said administrators have a very narrow view of the Institute, which is turning out more than pilots.
"The Institute of Aviation is a long standing center for excellence in the field of professional pilot training, aviation research, and aviation safety advancements," he said. "Unfortunately, the university's administration defines the Institute of Aviation's role as being very technical and only worth of trade school status. Nothing could be further from the truth."
Willard Airport Tower Air Traffic Controller Kevin Gnagey said two thirds of his workforce is nearing retirement age, and that the Institute generates 85% of the traffic they direct at Willard. Gnagey contends the U of I is also throwing away the chance for future research on airport grounds.
"I would also be so bold as to assert that losing the Institute of Aviation could pose a large loss to the University of Illinois," he said. "This loss may not be immediately evident, but as the FAA is investing billions of dollars into research and development in new technology for the next generation of the national airspace system, opportunities would be lost."
Instructor and U of I graduate Joseph McElwee said while no decision has been made, he says administrators are trying to make closing the institute easier by moving remaining faculty to other academic units, and denying Fall 2011 admission to new applicants.
"They say that no decision has been made, so we don't have to bargain with your VAP's (Vistiing Academic Professionals)," McElwee said. "But at the same time, if you think about this, it's just an academic institution. And so the backbone of this is the students. And if we don't have students, there's no one to teach."
U of I spokeswoman Robin Kaler said the recommendation to close the facility came after evaluating competing interests of students, faculty, and the public, and determining that closing the Institute and discontinuing degree programs were in the best interests of the Urbana campus. She also cites declining enrollment at the Institute in the past decade, noting it had 176 applicants in 2002, admitting 119, and 65 freshman enrolled. In 2010, the Institute had 112 applicants, admitting 65 and 34 enrolled.
A hearing on the Institute's future will be held Tuesday before Urbana campus Senate. The plan must also go before the U of I's Board of Trustees and the State Board of Higher Education.
Republicans in the U.S, House of Representatives say if the federal government shuts down over a budget impasse, it won't be their fault.
15th district congressman Tim Johnson returned to Champaign-Urbana Thursday with an additional two weeks remaining until the federal government would have to shut down without a spending plan in place for the rest of the fiscal year.
But Johnson said Democrats in the Senate and White House need to make the next move.
"We've done our job," Johnson told reporters at Willard Airport. "We'll see what they come back with. But I don't want to have this mantra that we faced from 1995 where (Democrats said) 'It's the Republicans who are shutting down government.' It's not the Republicans shutting down government. We have acted. They didn't act. They controlled the whole process for upwards of half the fiscal year and did nothing."
On Thursday the Obama administration proposed another $6.5 billion in cuts, but Johnson said that pales in comparison to the $100 billion cut the GOP has promised, and he doesn't see the spirit of compromise in the President's offer.
Johnson also defended a provision in the Republicans' plan that zeroes out funding for the Corporation for Public Broadcasting. Johnson - who has been a member of the House Public Broadcasting Caucus - said the budget had to be passed, even with the severe cut.
"You can't fail to act on the budget simply because there are certain items within the budget that you'd rather see reenacted," he said. "Certainly that's of concern; there are a number of areas of concern to me. But the overwhelming concern is that we're in debt, we're broke and we have to do something about it.
(Additional reporting from the Associated Press and Illinois Public Radio)
Indiana House members who remain absent from the state capitol might soon face daily fines for every day they stay away. House Republicans on Thursday approved fines against the Democrats for every day they stay away from the House floor.
State Representative Jerry Torr (R-Carmel) said the fines could go as high as $250 a day.
"We wanted an amount that would make the members think about whether or not they need to be here," Torr said. "Furthermore, every citizen in Indiana is being disenfranchised because without a quorum none of us can conduct business."
Most Indiana House Democrats are continuing to stay in Urbana to prevent action on labor and education bills they oppose. But two of them were on the House floor Thursday for a quorum call --- including State Representative Charlie Brown (D-Gary). Brown said it is customary for such fines to be waived when the minority party returns. But he said Republican House Speaker Brian Bosma warned him from the speaker's rostrum, "Don't bet on it, Representative Brown."
"So obviously once more he's digging his heels in, and creating a greater divide between the Democratic and the Republican caucus," Brown said.
Democrats' boycott of the Indiana House session has now extended to an 11th day. Brown said there are five bills that are keeping Democrats from returning to the Indiana House --- one on school vouchers, and four related to Right-to-Work legislation.
Ind. Elections Chief Charged With Voter Fraud
Indiana's top elections official was indicted Thursday on voter fraud and other charges for allegedly listing his ex-wife's address as his own on voting and loan forms and serving on a town council when he was ineligible, a prosecutor said.
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