Monday, April 30, 2007
Saturday, April 28, 2007
While rank and file folks are dealing with buyout documents and layoff fears, Tribune execs are making personal decisions too.
Some Tribune execs are either declining to accept their huge bonuses, or settling for less. CEO FitzSimons passed on his entirely. And Tribune Publishing president Scott Smith will give up his $400,000 bonus. Senior VP of finance/administration Donald Grenesko will settle for a meager $400,000 instead of the $600,000 due him and Tribune Broadcasting president John Reardon will receive $200,000 instead of $350,000. When the Zell deal closes, the five highest-paid executives will cash out about $65 million worth stock, options and restricted stock.
Read more about it here.
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Posted by Contributors at 4/28/2007 07:13:00 PM
Friday, April 27, 2007
Included with the stock buyback offer made to shareholders this week is the disclosure of financial assumptions used by Tribune and its advisors during the auction process. Chicago Tribune's Michael Oneal explains the upside and the downside of what those documents reveal.Read More......
Posted by Contributors at 4/27/2007 07:25:00 AM
Thursday, April 26, 2007
A Guild blog reader suggested we post the link to a newyorker.com column titled "It's The Workforce, Stupid!" Author James Surowiecki writes that recent research has concluded that workforce layoffs is an effective way to cut costs, but the practice is a temporary fix and has a "negative impact on morale."
Staff cuts negatively impact morale because those left behind are expected to produce more – in addition to their own work – to make up for work previously done by their departed colleagues and often for less pay and longer hours.
Union contracts usually have seniority provisions in the event of layoffs. Union members appreciate seniority provisions because a) it prevents employers from forcing out older workers; b) the layoffs would be made by the very same mismanagement that decided on downsizing; c) union members get to bargain over the impact on work schedules and workloads; and, d) it allows the unions to negotiate for better buyout provisions to employees losing their job through no fault of their own.
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Posted by Contributors at 4/26/2007 01:05:00 PM
Wednesday, April 25, 2007
Tribune's tender offer to repurchase approximately 126,000,000 Tribune common stock at $34 per share begins today. The offer ends May 24. Tribune employees hold approximately 23 million shares.
The company will send material to the shareholders containing terms and conditions of the offer. Read the press release.
Posted by Contributors at 4/25/2007 07:12:00 AM
Tuesday, April 24, 2007
The same package offered in LA and Chicago was laid out today in Baltimore, except that the program is subject to discussion with Guild leaders on behalf of those covered by the contract.
Take-it-or-leave-it packages don't automatically apply where workers are represented by a union. The Sun's 600+ Guild-represented employees have a voice through their elected leadership and if involuntary layoffs are needed, they will be subject to the terms and conditions of their collective bargaining agreement.
Update: 15 in the newsroom
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Posted by Contributors at 4/24/2007 03:17:00 PM
Monday, April 23, 2007
The plan in Chicago, according to Chicago Tribune's publisher Scott Smith, is to achieve savings through — among other ways — reduced overtime and reduced staffing by "up to 100 employees across all departments".
Looks like the separation packages and deadlines are the same as in LA.
We noted that his memo included the use of a term we recognize from Kotter' s "Leading for Change": "Thanks for your commitment to solve our challenges, both near term and longer term. To do so will require great talent, teamwork and a tremendous sense of urgency to act and achieve for the benefit of all we serve."
We hope the urgency isn't so much so that folks aren't given significant time to review the professional and financial impact of – in some cases – one of the most life-altering decisions of their lives.
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Posted by Contributors at 4/23/2007 03:07:00 PM
Los Angeles Times publisher David Hiller announced the deal in a lengthy memo to all employees – though the deal itself is not available to all. Editor O'Shea followed up with a memo in which he said he had "worked extremely hard to minimize any staff reduction." Read them here and here on LAObserved.com.
The Employee Voluntary Separation Plan (EVSP) includes:
-- one week's pay for every 6 months of service paid thru salary continuation;
-- benefits continued for eligible employees for length of separation pay;
-- employer 401(k) allocation that will continue for eligible employees;
-- outplacement assistance
The company needs to eliminate positions and not fill others, so if it doesn't get the numbers through the voluntary separation offer, folks will have to go involuntarily.
So should you roll the dice? According to the plan, if your position is eliminated you get the same buyout as if you participated in the EVSP. If you are "encouraged" to take the EVSP but don't, what's the chance you are taking?
What's the plan in Chicago?
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Posted by Contributors at 4/23/2007 02:25:00 PM
The Guild's ESOP advisor Chris Mackin of Ownership Associates received an inquiry from a long-term Tribune employee seeking information specific to the Times-Mirror plans and the new Tribune plan.
The employee and a group of like-minded coworkers are so concerned about the changes to their retirement plans they are considering pooling their money to hire a lawyer/accountant to provide them with an independent evaluation of the sale and its affect on their retirements. At the Los Angeles Times, management and the employees in the newsroom have formed a committee to seek answers as to how the sale affects their retirement funds.
Guild members at The Baltimore Sun and WPIX-TV have been doing their own research. With buyouts and retirement on the line, members don't have to spend time figuring out how to hire, pay for and choose experts to help them. They are already getting answers. That's just one of the things a union does better than individuals can afford to do.
As we have stated before, the information we provide should not be construed as legal, financial or tax advice provided by The Newspaper Guild-CWA or Ownership Associates, Inc.
The response to the questions are here. Further questions may be submitted to this blog or here.
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Posted by Contributors at 4/23/2007 10:22:00 AM
Saturday, April 21, 2007
Friday, April 20, 2007
Reports yesterday were about the 1Q loss and 12% cash flow drop and today Zell's new company has buyout/layoff plans for 100 in Chicago. No one's talking about how many positions will go company-wide. Zell has said he didn't think cost-cutting would solve Tribune's problems, but how is slashing jobs not cost-cutting?
While we all wait for the bad news, perhaps there's a bit of good news in a Tribune plan to fix it's leadership/management problems.
In today's Chicago Tribune online edition, we learn that Harvard Business School professor John Kotter, author of business manual "Leading Change", was invited to Chicago this week to address top executives. "Kotter talked about creating a sense of urgency and removing barriers that get in the way of doing new things ..."
Kotter's 8-step program for guiding change according to the book's Table of Contents:
1. Establishing a sense of urgency
2. Creating the guiding coalition
3. Developing a vision and strategy
4. Communicating the change vision
5. Empowering broad-based action
6. Generating short-term wins
7. Consolidating gains and producing more change
8. Anchoring new approaches in the culture
A Library Journal review begins "After trying an endless array of quick fixes and other panaceas, executives struggling to stay in business in a rapidly changing world are finding it necessary to consider more fundamental reasons for their lack of success." Mary Whaley for Booklist wrote that Kotter "acknowledges that substantive change requires leadership, but not the elitist notion of leadership as a divine gift of birth granted to a few. Kotter makes a compelling case that winners will be those who outgrow their rivals." Could it be that Zell brought in Kotter?
We might read the book. We just hope the barriers needing removal aren't the hard-working, content-providing folks who are the very core of the company.
Posted by Contributors at 4/20/2007 07:49:00 AM
Thursday, April 19, 2007
As the big newspaper companies continue to make decisions to close bureaus in their effort to cut costs, journalists continue to speak up about the impact such measures have on their papers and their work.
Adam Reilly in today's Boston Phoenix congratulates Charlie Savage of The Boston Globe on his Pulitzer for National Reporting, which, according to Reilly "brings up some bigger issues that merit discussion. Anyone who follows the newspaper industry knows that dailies across the US are scaling back their institutional ambitions and anyone who follows the Globe knows that it’s very much a part of this trend: while the Washington, DC, bureau (where Savage is based) remains intact for now, the paper closed down its foreign bureaus earlier this year."
Posted by Contributors at 4/19/2007 02:36:00 PM
Two Pulitzer Prize winners and a Washington correspondent speaking on behalf of war correspondents were among Guild Local 1096 (IAPE) members who addressed Dow Jones directors and shareholders Wednesday in support of their demands for a quality contract. In a memo to the membership, local president Steve Yount wrote: "Union members who attended said they saw the speeches' impact on directors' and senior executives' faces... Middle managers came up to speakers afterward to thank them for speaking out, and the issues we raised were discussed by directors after the meeting."
The union's presentation at the meeting is an example of how organized workers use their collective voice in support of their issues. In IAPE's case, "draconian (company) bargaining proposals" that include the move "to health plans that will cost us more and provide more limited benefits. All to save the company a few million dollars a year..." have created a very mobilized membership.
"... The compact that has long existed between the company and its employees is in the process of being broken. The outsiders who have arrived to run the company are carrying out cutbacks and outsourcing that threaten our quality standards. The cutbacks have put in danger our precious knowledge base, rooted in the generations of editors and reporters who built this newspaper and handed down the knowledge to their successors. The outrage among employees is making the union more and more powerful. Senior management will tell you not to worry about this. For one thing, the outsiders who now run our company figure that we are all easily replaceable. They are trying to cut the benefits they offer new hires, so they can hire on the cheap. They figure one reporter is the same as another. ..." — Bargaining Committee Chair E.S. (Jim) Browning
Posted by Contributors at 4/19/2007 06:00:00 AM
Wednesday, April 18, 2007
Although Tribune's ESOP has already been created, and most employees are already participants, those represented by unions aren't yet included. Unlike unrepresented workers, union-covered employees must be consulted and under law, it must be bargained.
To that point, the Washington-Baltimore Newspaper Guild (which represents over 4000 workers including employees at The Baltimore Sun) recently sponsored a meeting for it's members with TNG's consultants Chris Mackin and Ian Laird, an investment banker working with Mackin, and CWA-TNG research economist, Bob Patrician, who advises the Local on retirement benefits. The Local issued a summary of that meeting – you can find the full text on it's website: "ESOP Fables and Facts – and we have it's permission to use a couple of summary highlights here:
How does an ESOP work in general?
There are good ESOPs and bad ESOPs. We don't yet know enough to place the Tribune one on the good-bad continuum. In general, we prefer those that give employee-owners a real voice in running the company. There are some 10,000 ESOPs currently functioning.
Most are "plain vanilla" ESOPs, where a company/founder decides to transfer ownership, over time, to the employees. These ESOPs typically take place in small and mid sized privately-held companies of between 50 and 2000 workers and provide tax advantage to the seller for choosing the ESOP. Many of the these companies do make an effort to create what is called and "ownership culture," that not only allows employees to participate but, studies show, leads to improved profitability.
Another group of ESOP transactions — including Tribune's — are what might be called "tycoon ESOPs", set up by savvy investors looking for advantage in a competitive bidding situation where ESOP tax benefits can help them succeed. Sometimes these work out well: Avis car rentals, for example, was bought through a "tycoon ESOP" and when it was sold, it's employees received nice checks.
The law that created ESOPs doesn't guarantee employees a direct voice in running the company. Under law, the ESOP is managed by a trustee, who has a legal obligation to look out for the long-term interest of the employee-owners. This doesn't necessarily mean the wishes of the employee-owners. For example, employees might oppose a staff reduction, but the trustee would support it if he felt the staff reduction was in the long-term interest of the business and would improve the value of the shares.
When workers are represented by a union, they are in a better position to tap into expertise (by hiring lawyers and consultants), to gather ideas from employee-owners and express the wishes of the employees.
How does the Tribune ESOP work?
In the case of this ESOP, where the ESOP will own all the stock of the reorganized company, trustees have a particularly strong voice in the corporate affairs with the ability to elect the board of directors. Trustees can sometimes act aggressively — including, if warranted, the firing of CEOs — to protect the long-term interests of employee-owners. Since the ESOP shares aren't publicly traded, the "fair market value" of the shares is determined periodically by an independent valuation firm. Employees are allocated ESOP shares each year based on their base salary, but they can't sell their ESOP shares while they're still employed. When they retire or leave the company, their shares are cashed out at fair market value as determined by the independent valuation firm.
The trustee to the Tribune ESOP is GreatBanc. It is an experienced trustee with a good track record of representing the interests of employee-owners. Although Tribune has made public filings with some ESOP documents, it isn't clear yet exactly what latitude the trustee will have in nominating and electing Board members, although the trustee will be required to elect two representatives of Sam Zell and the CEO. It is also unclear what special powers will be vested with Zell, as Chairman, and his representative on the Board. No mechanism has yet been proposed for employee-owners, most of whom are not represented by a union, to express their ideas or to vote on key issues. Tribune has said it will initially contribute 5% of pay into an account for each participating employee; that money will purchase ESOP shares at a value determined by the trustee.
Tribune is borrowing a lot of money to buy out existing shares (notice offer likely to go out end of April). As it generates cash from operations, money will be paid into the ESOP and the ESOP will make payments on the loans, while benefiting from substantial tax savings.
If the reorganized Tribune prospers, the shares will become valuable over time for both Sam Zell and employee ESOP participants as the debt is paid down. If Tribune continues to slip, it could have trouble making it's payments and the shares could become worthless.
Posted by Contributors at 4/18/2007 11:18:00 AM
Monday, April 16, 2007
Very concerned about the Zell Deal, Thomas D. Williams of Litchfield, CT fires off a letter to the Securities and Exchange Commission adding his voice to the outrage over the ESOP deal's benefit to Tribune executives first, employees last.
"There are at least two monumental questions here: How can these executives, responsible for this giant corporation and the well being of its employees and stockholders, create two classes of people: themselves who gain millions in income even when the company they manage is failing to measure up; and employees/stockholders who are lured into stock transactions that continue to threaten their financial well being? And how can corporate executives pay themselves millions for the sale of their own company when that sale requires discretion on who to sell the company to and was forced by their own operations of the company?"
Posted by Contributors at 4/16/2007 09:32:00 AM
Friday, April 13, 2007
Maria Bartiromo writes on BusinessWeek.com about her April 6th interview with Zell before he headed off to his dinner with Geffen. He told her the dinner had "nothing to do with the L.A. Times" and he has "no intention of selling the L.A. Times. Period. End of speech." And no plans for Baltimore or NY to local groups either.
He also told her he's "perfectly happy to have the newsrooms continue to do what they've been doing and maybe do it better."
Read the whole interview. (Not sure what to make of the dateline. Must be a typo.)
Posted by Contributors at 4/13/2007 11:41:00 AM
Union employees are covered by a collective bargaining agreement (CBA) which requires the Employer to negotiate with the Union over changes to retirement benefits because it is a mandatory subject of bargaining (descriptions on Page 2). Any new retirement plan and/or participation in the ESOP are subject to a collective bargaining process between the new Tribune and it's union employees.
Alternatively, non-union employees – under certain criteria – will automatically be participants of the ESOP and subject to the terms and conditions of the ESOP as described in Exhibit 10.14 of the SEC filing (see previous post). There will be no rollover of existing benefits to the ESOP. The ESOP will be the vehicle for all future retirement benefits as described in Exhibit 10.14. In other words, Tribune won't be making any more contributions to your 401(k) but you can continue doing so if you choose. The new Tribune will establish a cash-balance pension plan that accrues interest, funded with an amount equal to 3% of your base pay (excluding OT, bonuses, etc.) and you'll get shares equal to 5% of your salary put into your ESOP account.
Posted by Contributors at 4/13/2007 06:05:00 AM
Click here for the SEC filing on the Tribune sale. Scroll down on the left rail to select Form 8k (4/5/07) and select Exhibit 10.14 for the "Tribune Employee Stock Ownership Plan".
It's 44 pages long (printed), but reading it could be worth your while if you feel compelled to do your own research.
Posted by Contributors at 4/13/2007 05:55:00 AM
Wednesday, April 11, 2007
When Tribune Company sold it's Stamford Advocate to Gannett in March, the new owners told union members there that the collective bargaining agreement (which doesn't expire until September 30, 2008) "was not part of the sale and would not be honored."
The sale was blocked by a U.S. Court judge, at the request of the union, pending the outcome of the arbitration hearing on the contractual "successors and assigns" clause that requires Tribune to ensure that a buyer honors the contract.
Posted by Contributors at 4/11/2007 09:35:00 AM
Marketwatch Media Report analysis by David B. Wilkerson said "Away from the steady and unforgiving gaze of Wall Street, Tribune can emphasize the ability newspapers have, both online and off, to provide detailed information that bloggers may not have access to, and that radio and television stations don't have time to offer. That means adding to their newspapers' most valuable resource -- journalists." Wilkerson goes on to suggest that Tribune hire a minimum of 30 reporters in LA, Chicago and NY "who could be assigned to the newspaper's metro desk. These reporters could be assigned to the online edition, but would also contribute to the print newspaper."
The reality right now is that Tribune intends to reduce – not increase – it's staff, the result of which will be that you will continue to be required to produce a lot more with a lot less in the way of resources and potentially, for a lot less in benefits.At Tribune properties that are union-representated, workers have the right to engage the company in discussion about the likely effect layoffs have on the remaining staff and to negotiate terms that can reduce the negative impact of the impending staff cuts. In addition, a collectively bargained contract provides the terms and conditions under which the laid off employee exits the company, including notice and severance pay. In some cases, Guild representatives can negotiate enhanced severance packages for Guild-covered employees choosing to leave the company and may offer alternative strategies that could help the company achieve the staff savings it needs.
The Guild believes you are the company's best asset and most valuable resource and an investment in you is an investment in journalism.
Posted by Contributors at 4/11/2007 07:43:00 AM
Thursday, April 5, 2007
With Geffen still seeking control of the Los Angeles Times and Venetoulis the Baltimore Sun, a complicated deal could get more so before we understand the extent to which it will impact Tribune workers.Read More......
Posted by Contributors at 4/05/2007 10:32:00 AM
Wednesday, April 4, 2007
There's power in numbers. IAPE Local 1096 of TNG-CWA, which represents about 2,000 Dow Jones employees in the United States and Canada, notified Dow Jones on March 30 that it is claiming representation rights on behalf of more than 200 newswire employees at the company's Harborside facility in Jersey City, NJ. The local is currently in contract negotiations. "There's still a lot of work to do in our efforts to win the employees of Dow Jones more money, better benefits, stronger job protections and improved working conditions," said local president Steve Yount, "but with Harborside joining the fight, we're stronger than ever before."
Read more here and here.
Posted by Contributors at 4/04/2007 08:32:00 AM
Tuesday, April 3, 2007
Tribune employees have gazillions of questions but this one from one of our blog readers needs to be shared with all of you: "Given the fact that Tribune, unlike say some of the airlines, is not now in danger of bankruptcy and that the sole purpose of the sale seems to be to give the Chandler heirs more money, would pension trustees who chose to invest even 10 percent of the pension funds in the new and perhaps risky Tribune venture be subject to any sort of legal action for not acting in the best interests of those with a stake in the pension plans?"
We have had a number of questions over the weekend, such as this one, relating to the duties and obligations of pension trustees in approving or directing investment of pension funds and whether they may be held accountable for making an investment in what may be considered a risky investment in a highly leveraged company and in an industry in transition, such as the proposed deal for the Tribune Company.
In general, the answer is yes. The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that establishes certain fiduciary responsibilities for those who manage private pension plans. ERISA requires that pension trustees or administrators, as fiduciaries, act prudently and carefully in making investment decisions. And they can be held accountable if they don't act in such a manner.
A more specific response to these questions is clearer today than yesterday now that the Tribune's Board of Directors has signed off on an improved offer from Zell. The company press release and FitzSimon's memo to employees has sketched out the general framework of the deal and the proposed ESOP. While critical details are still unknown, what is clear is that the Zell ESOP does not require – nor could it require – any direct investment or roll over of individual employee pension funds or 401k funds into an ESOP to finance the acquisition of the Company. Such a design option is by law discretionary. Individuals cannot be compelled to invest their own personal account funds into an ESOP. The question remains whether this will be an option that the Zell Group makes available in the future. If they do, more commentary on this will follow in this blog. For now at least, employees are not being asked (or invited) to make any upfront investment. In fact, employees holding Tribune stock indirectly in the Tribune pension plan or directly in a 401k will receive $34 per share in cash.
The Zell deal does propose that future Company (as distinct from individual) contributions to the 401k plan will be made in company stock into the ESOP. Although there is certainly a greater risk in having future Company contributions be concentrated in a privately held, leveraged company, there are mitigating factors. First, the value (or price) of the Company stock that is contributed to the ESOP will be determined annually by an independent valuation firm that will take into account the amount of leverage and the future prospects of the company and the industry. From reports we have read, the initial price of the shares in the ESOP has been set at $28 — which cannot be compared to the cash offer of $34 due to the completely different capitalization of the "new" company. The price of future shares will depend on the performance of the company. Secondly, the employee is not actually "buying" the shares since the shares are being contributed by the company, although the employees will be foregoing the cash contributions that the Tribune has previously made.
Posted by Contributors at 4/03/2007 11:33:00 AM
Monday, April 2, 2007
It may take a while to learn everything we want to know about the upcoming Tribune transfer of ownership, but as TNG president Linda Foley said in her statement today, the Guild will "do everything possible on behalf of union-represented workers ... and look out for the interests of all 20,000 Tribune employees." There will be lots of info to sort through in the coming days and weeks, but one thing is for sure: now is the time for Tribune workers to join together to ensure that all their interests will be fairly represented.Read More......
Posted by Contributors at 4/02/2007 05:23:00 PM
A Guild is a lot like a carbon monoxide detector: If you're lucky, you'll never need it, but if you don't have one when you do need it . . . For eleven of my twelve years at the Baltimore Sun, I required nothing extraordinary from the Guild. But when I did need the Guild, it was there for me, and it helped me survive a very difficult year. True, I ended up leaving at the end of that year, but that was my decision. If I had wanted to continue through arbitration, instead of reaching a confidential agreement with the Tribune Co., the union would have been there for me. But my shop steward and other union officials also respected my decision to give up fighting, recognizing that I was lucky enough to have other options, professionally. There is a strange perception among some workers that a union is for the weak, that it's of no benefit to those who are above average. And I've found that newsrooms are a lot like Lake Woebegone; everyone seems to consider themselves above average. No, a union sets a base, a minimum, a lowest common denominator for fairness. Look, I'm just saying that if work ever gets so bad that you find yourself spitting out your back teeth onto your desk – this really happened to me – a Guild can help.
Laura Lippman, best-selling author
Posted by Contributors at 4/02/2007 04:38:00 PM