Tribune Said to Want Chief to Resign

NY Times

The board of the Tribune Company agreed on Tuesday that Randy Michaels, the beleaguered chief executive, should resign soon but stopped short of immediately asking for his resignation, according to a person directly involved in the discussions.

The board met on Tuesday to discuss the future management of the bankrupt company, which owns The Los Angeles Times, The Chicago Tribune and many other media properties, and will continue deliberating in the coming days, said this person, who spoke only on a condition of anonymity.

The company issued a statement Tuesday saying, “Tribune’s board of directors is focused on filing the company’s plan of reorganization this Friday and has no comment on any other issue.” As he was heading to lunch after the meeting, Mr. Michaels told a Chicago Tribune reporter, "I work here today and I’m still working."

Mr. Michaels, a veteran of the radio industry, was hired by Sam Zell, the Chicago real estate mogul who bought the company for $8.2 billion in 2007, to run Tribune’s broadcasting and interactive businesses, along with six of the company’s midmarket newspapers. Mr. Michaels became chief executive and was elected to Tribune’s board in December 2009.

Mr. Michaels came in for increased scrutiny when Lee Abrams, the company’s chief innovation officer, sent out an offensive e-mail, was suspended and then resigned last week.

The e-mail and resignation came after reports in The New York Times that management, led by Mr. Michaels, had received millions in bonuses even as 4,200 employees lost their jobs, hired associates from his days in the radio business for jobs they had little relevant experience for and created a coarse and hostile work culture that offended many employees.

Tribune Executive Resigns After Sending Inappropriate Email

The Wall Street Journal

 

Lee Abrams, the Tribune Co. executive suspended earlier this week after sending an inappropriate memo to staff, resigned from his post as chief innovation officer.

Tribune Co. Chief Executive Randy Michaels announced the resignation, effective immediately, in a note to employees on Friday.

"As you know, earlier this week we suspended Lee Abrams from his position as Tribune Co.'s chief innovation officer for distributing an email and video link that some employees found offensive," Mr. Michaels wrote. "Today, Lee offered his resignation and I accepted it. Effective immediately, Lee will no longer be an employee of Tribune."

Mr. Abrams' resignation stems from a memo he sent to employees on Monday that included a link to a fake news segment from the Onion, a humor website. The link, labeled "Sluts," sent people to an Onion video depicting a reality-TV bus crash spilling "more than 2,000 pounds of slut."

Tribune announced on Wednesday it had suspended Mr. Abrams indefinitely and without pay while it "reviews the circumstances surrounding the email and video link he distributed on Monday."

Mr. Abrams was part of an executive team brought in after Tribune was taken private in 2007 in an $8.2 billion deal led by real-estate magnate Sam Zell. The deal ran into trouble almost from the start as sharp declines in advertising revenue at Tribune's newspapers heightened the financial pressure at a company saddled with about $13 billion in debt. Tribune filed for Chapter 11 bankruptcy protection in December 2008.

Tribune remains stuck in bankruptcy proceedings that have dragged on for nearly two years. The company said it expects to file a plan in bankruptcy court by next Friday incorporating settlement agreements with unsecured creditors and major senior lenders.

Tribune Co. Taps Lazard,Weighs Filing for Chapter 11

Tribune Co. is preparing for a possible filing for bankruptcy-court protection as soon as this week, according to people familiar with the matter, in a sign of worsening trouble for the newspaper industry.

In recent days, as Chicago-based Tribune continued talks with lenders to restructure its debt, the newspaper-and-television concern hired investment bank Lazard Ltd. as its financial adviser and law firm Sidley Austin to advise the company on a possible trip through Chapter 11 bankruptcy, people familiar with the matter say.

A Tribune spokesman said the company doesn't comment on rumors or speculation. Tribune owns eight major daily newspapers, including the Los Angeles Times, Chicago Tribune and Baltimore Sun, plus a string of local TV stations.

A spokeswoman for Lazard didn't respond to requests for comment. Representatives of Sidley Austin couldn't be reached for comment.

Tribune's latest actions underscore the deepening distress enveloping Tribune and other newspaper publishers. Their businesses are being battered by dwindling advertising sales, and many are carrying debt loads that are unmanageable in current market conditions. Industry insiders expect some papers will need to fold in coming months or seek protection from creditors to reorganize.

Tribune has been on wobbly footing since last December, when real-estate mogul Samuel Zell led a debt-backed deal to take the company private. Tribune has stayed ahead of its $12 billion in borrowings with the help of asset sales. Now, however, shrinking profits are tightening the noose.

The company's cash flow may not be enough to cover nearly $1 billion in interest payments due this year, and Tribune owes a $512 million debt payment in June.

One of Tribune's most pressing concerns: The company is likely to be in violation of debt terms that limit borrowings at the end of the year to nine times its adjusted profits. The ratio stood at 8.3 at the end of the second quarter, before Tribune reported an 83% decline in operating profit for the three months ended Sept 28.

Violations of such debt covenants have become commonplace for newspaper companies as their profits have ebbed. Lenders so far have been willing to give the companies a pass in exchange for higher interest rates and other concessions, but Tribune has little wiggle room. Terms of the company's debt already are so loose and its financial standing so unsteady that a covenant waiver may not help.

To be sure, a restructuring outside of bankruptcy court remains an option for Tribune. Executives have indicated that its talks with lenders are amicable, and it remains possible the two sides can agree to rework the company's borrowings on their own, as other newspaper publishers are doing.

Tribune's hiring of Lazard, meanwhile, brings it a firm experienced in debt restructuring, and one that has become a go-to adviser for newspaper companies in financial distress.

Even as its financial performance worsens, Tribune has some options. A sale of its Chicago Cubs baseball team is under way, and Tribune owns valuable stakes in businesses including the cable-TV channel Food Network.

Tribune already has auctioned off pieces of the company, including the Long Island, N.Y., daily Newsday to raise cash. Now, frozen credit markets have depressed sale prices.

Selling off more newspapers may not be a viable alternative because buyers are scarce and Tribune may be better off holding onto the profits from its papers.