Opinion

Jack Shafer

What happens to Tribune after bankruptcy?

Jack Shafer
Jun 11, 2012 22:40 UTC

Choking softly on the wad of debt “rescuer” Sam Zell fed it, Tribune Co checked into a Wilmington, Delaware, bankruptcy court at the end of 2008. Now newly slimmed, especially after the payment of $410 million in legal and other professional fees, the much diminished patient is about to be released and turned over to its new owners, a group of banks and hedge funds. How diminished? At the time Zell acquired control in 2007, Tribune Co’s newspapers, television stations, other media properties and Chicago Cubs baseball franchise were valued at $8.2 billion. Reporting from court filings, Chicago Tribune reporter Michael Oneal put Tribune Co’s current value at about $4.5 billion.

That’s not a haircut. That’s a beheading. Some of that loss in value represents the sale (for $845 million) of Tribune’s Chicago Cubs operation in 2009, but still.

What will the likely new owners (JPMorgan Chase; Angelo, Gordon & Co.; and Oaktree Capital Management) do with the reconstituted Tribune Co? According to Oneal, who has been monitoring the ailing company’s vitals since before its bankruptcy, Tribune isn’t so sick that it must sell off all its parts immediately. But hedge funds and banks aren’t the best managers of media properties, and when combined with today’s declining market for media properties, those hedge funds and banks might want to put out a for-sale sign as soon as possible. I’m sure that if you were interested in Tribune’s 23 TV stations, which are valued at $2.9 billion, they’d meet you for coffee.

But Tribune’s eight remaining dailies – the Los Angeles TimesChicago TribuneBaltimore SunHartford CourantOrlando SentinelFt. Lauderdale Sun Sentinel, Allentown Morning Call, and Hampton Roads Daily Press – are another story. Given the collapse of newspaper properties, the hedgies and bankers might be willing to bring Irish coffee, pastries, and the pink slips for the papers to your home in hopes of doing a quickie deal. Evidence is mounting that newspaper properties – with the exception of the national dailies and some small-town franchises – now have expiration dates stamped on their sides. Every moment the new owners don’t sell the Los Angeles Times and the Chicago Tribune is a moment that the newspapers decline in value. If some of these newspapers don’t sell in the next five years, there might not be anything left for the owners to sell.

Oneal provides a couple of data points that illustrate the decaying value of Tribune’s newspapers. In December 2006, prior to Sam Zell’s takeover, David Geffen made a reported $2 billion cash offer for the Los Angeles Times alone, but company adviser Lazard Freres & Co recently valued the Tribune newspaper portfolio at about $623 million. That’s $27 million less than what Tribune got for Newsday when it sold the paper to Cablevision in 2008. (Cablevision took a write-down for half of that price in 2009.)

The great newspaper liquidation

Jack Shafer
Jun 5, 2012 22:53 UTC

In his 2004 book The Vanishing Newspaper: Saving Journalism in the Information Age, Philip Meyer imagined “the final stages” of a “squeeze scenario” by a newspaper owner who wanted to exit the business but didn’t want to actually sell the title: He would start charging more for his newspaper and delivering less, commencing the “slow liquidation” of his property. This slow liquidation would not be immediately apparent to observers, Meyer wrote, because the asset “being converted to cash” would be “goodwill” – the newspaper’s standing in the community and the habit of advertisers and subscribers of giving it money.

One reason an owner would want to extract a newspaper’s goodwill value before selling its physical assets – its real estate, presses, computers, trucks, paper, ink, etc. – is that traditionally, goodwill is where most of a newspaper’s value has resided. When Meyer asked two newspaper appraisers to estimate how much of a newspaper’s value was locked up in goodwill versus physical assets, both gave him the same answer: 80 percent goodwill, 20 percent physical assets.

Selling goodwill is a dangerous strategy because once sold, it’s difficult to reacquire. But a newspaper owner who feels trapped by losses and can’t find a new owner at what he considers a fair price may feel he has no alternative but to cheapen his newspaper bit-by-bit, month-by-month. He may explain the goodwill sell-off as temporary economizing to be reversed once business conditions improve, or even as the exploration of a new business model. Sellers of newspaper goodwill might protest that the financial losses they’re absorbing constitute a serious investment in the newspaper’s future, that they’re harvesting nothing. But don’t be fooled. If you’re winding your company down with no strategy to wind it up, you’re burning goodwill even if you don’t acknowledge it.

Drug panics, bath salts, and face-eating zombies

Jack Shafer
May 31, 2012 23:26 UTC

Last Saturday afternoon, a naked man gnawed off most of the face of a half-naked man on a Miami causeway. He continued chewing even after police shot him and did not stop until they shot him dead.

Things like that don’t happen everyday – not even in Miami – so quite naturally the horror story has been picked up by every flavor of media around the world. The most sensational – and I don’t mean that in a good way – coverage came from local TV station CBS4 (WFOR-TV). On the day Rudy Eugene attacked Ronald Poppo, CBS4 relied on the musings of the president of the Miami Fraternal Order of Police and an emergency room physician – neither of whom attested to having firsthand knowledge of the case – to speculate that the attack was caused by a new kind of LSD, by a mixture of drugs, or by “bath salts,” the street name given to the many quasi-legal, over-the-counter stimulant concoctions that are packaged and sold under such wacky brand names as “Ivory Wave,” “Vanilla Sky,” “White Cloud” and “Zoom.”

Before any criminal lab could determine that Rudy Eugene had drugs in his system, some outlets, including the Guardian, the New York Daily News and CNN were seizing on CBS4′s reporting to vilify a “new” drug and its users, exaggerate the peril it presents and launch a new drug panic. To believe the early press accounts about bath salts – recall last year’s story of a West Virginia man found in bra and panties next to his neighbor’s murdered goat – madness comes in a $20 package of powder, the product gives its users superhuman strength, and they may have turned a 31-year-old man into a flesh-eating zombie.

The cable news audience has peaked

Jack Shafer
May 24, 2012 21:15 UTC

CNN’s rotten ratings have grown only rottener. The Time Warner-owned news network drew fewer prime-time viewers last week than any week since September 1991, the New York Times just reported. But CNN isn’t the only network riding the down escalator when it comes to ratings. Over the same week, Fox News Channel attracted its fewest viewers in the important 25-to-54-year-old category since July 2008, the Times added. * But CNN isn’t the only cable news network in the doldrums, according to year-by-year data. Various observers have blamed the viewership downturn on the lull in the 2012 campaign, on viewers defecting to the season finales on the entertainment channels and on the lack of breaking news. But I interpret the falloffs as fresh evidence that the audience for cable news has peaked.

The first sign of a peak in cable news appeared in March 2011, when the Pew Research Center released a study that proclaimed, “Though many will remember 2010 as a hard year for CNN, in reality, most cable news channels suffered audience losses.” The able chartists at Pew drew a sad graph of cable news. Combined median viewership for CNN, Fox News and MSNBC during prime time had receded 16 percent, to 3.2 million, that year. Mean viewership had also dropped 13 percent, to 3.3 million, making it the largest year-to-year drop for cable news since Pew started analyzing the numbers in 1997. It also marked the first drop in the median audience since 2006.

The bad news continued through 2011, as cable news viewership remained nearly flat. This was fairly astonishing considering all the breaking news from that year – the Arab Spring, Japan’s tsunami, the killing of Osama bin Laden, the Libyan civil war and the European economic crisis – not to mention the bustle of the presidential campaign.

So Warren Buffett likes newspapers again?

Jack Shafer
May 18, 2012 23:05 UTC

Just because Warren Buffett blew $142 million in cash on 63 daily and weekly Media General newspaper titles yesterday doesn’t mean that newspapers are back. All it means is that an old cow that’s still a milker has been moved to a neighboring farm’s pasture, where it will be squeezed until it can give no more and will then be ground into pet food.

Buffett has long loved newspapers, having made about a half a billion dollars on the Washington Post Co. after his company, Berkshire Hathaway Inc, started investing in it in 1973. In 1977, he bought the Buffalo Evening News for $32.5 million, and after it vanquished the city’s other daily, it became one of the country’s most profitable newspapers, as measured by return on assets.

But Buffett isn’t romantic about newspapers. He buys when he sees value that others don’t. For instance, in a lecture he gave at Notre Dame in 1991 (pdf), Buffett explained why he bought Washington Post Co. stock.

Candidate-press relations are, well, about as ‘sour’ as usual

Jack Shafer
May 16, 2012 23:53 UTC

Having secured the nominations of their parties, Barack Obama and Mitt Romney have set their campaign throttles to late-spring idle with a speech here, a speech there, a commencement address over there, and fundraisers and soft TV appearances everywhere. Eventually, the two candidates will stop coasting, but until they do, reporters will continue to lard their work with exercises in meta-journalism, such as today’s 1,800-word Politico piece, “Obama and Romney’s common foe.”

The common foe, don’t you know, is the press! According to Politico’s Maggie Haberman and Glenn Thrush, Barack and Mitt both “disdain” the “political news media” because they believe reporters are “eager to vaporize them for the sheer sport of it.”

Is there anything new about presidents and presidential candidates having bad feelings for the press? Does nobody recall John McCain’s low regard for the New York Times coverage of his 2008 campaign? Or of George W. Bush’s attitude toward the press? Bill Clinton’s scorn? George H.W. Bush’s hatred? Carter’s? Nixon’s? Johnson’s? Sometimes candidates do charm the press, as McCain did in 2000, and the anti-war candidates of 1968 and 1972, but it’s the exception, never the rule.

Aiming for Bradlee but missing

Jack Shafer
May 9, 2012 14:21 UTC

This review originally appeared in the Washington Post on May 6, 2012, and is being reprinted by permission of the Post.

Jeff Himmelman uses his new book, Yours in Truth, to take shots at Bob Woodward, Carl Bernstein and their 1974 book, All the President’s Men. But Himmelman’s fire does not come from the usual redoubt of Watergate revisionism. He is a former researcher for Woodward, one who worked so diligently on Maestro the reporter’s 2001 book about Alan Greenspan, that Woodward gushed about him in his author’s note.

“Jeff Himmelman,” he wrote, “was my full-time collaborator at every step of this book—reporting, writing and editing. … A truly remarkable man of unusual maturity, brainpower and charm, Jeff is an original thinker who retains a deep sense of idealism. … This book would never have been completed without him, and it is his as much as mine. I consider him a friend for life.”

Anatomy of a leak, 1966-67

Jack Shafer
May 8, 2012 15:27 UTC

Every leaker of information has an agenda. The leaker can be an honest whistleblower, a spinner, a junior Machiavelli, a nut job, a misinformed flunky or a combination of several of the above. But with every trickle of privileged information, the leaker invites other interested parties to leak their side of the story, setting institutions against institutions and publications against publications.

An extraordinarily well documented account of battling leaks appears in Marigold: The Lost Chance for Peace in Vietnam, a new book by George Washington University history professor James G. Hershberg. Professor Hershberg’s exhaustive book – and by exhaustive I mean 936 pages long – draws on declassified diplomatic cables, foreign archives, countless interviews, and reporters’ private notes to recount the breakdown of secret Polish-Italian efforts in 1966 – code-named “Marigold” – that hoped to coax the United States and North Vietnam into direct peace negotiations.

Like all history lessons, Marigold charges a high price for admission. If you’re not already a student of the Vietnam War or weren’t reading newspapers in the 1960s, the players will sound sketchy and the dispute ephemeral. But I promise a payoff: Marigold etches a template that can provide relief for today’s news consumers who find themselves perplexed by dueling accounts in competing publications. It teaches that sometimes the real news is often who is leaking, and that’s news that can’t often be found in newspapers.

Rupert Murdoch’s escape act

Jack Shafer
May 1, 2012 21:49 UTC

The publication today of Parliament’s 121-page report (pdf) on phone hacking has the British press all but publishing obituaries for Rupert Murdoch. The report damns him for turning “a blind eye” to the scandal of phone hacking at his companies, News Corporation and News International.

Murdoch is not “a fit person to exercise the stewardship of a major international company,” the report concludes, leveling a hammer to the media baron’s head. As the Telegraph interprets this finding, BSkyB, the UK satellite broadcaster that Murdoch owns 39.1 percent of, is “vulnerable” to a challenge from the regulators at Ofcom. If the regulators applied their “fit and proper” test to BSkyB, they could cancel its broadcasting license, order News Corp. to reduce its holdings in the broadcaster and oust Rupert’s son James Murdoch from its board of directors. The BBC seconded the Telegraph‘s take, and the Telegraph and the Guardian speculate that the report will echo in the United States, triggering criminal prosecutions and unending damage to Murdoch’s corporate reputation here.

Murdoch’s corporate counterattack today states that News Corp. has “already confronted and … acted on the failings documented in the Report,” insisting that the company has righted all the wrongs. In a memo to his 50,000 employees, Murdoch remained defiant, minimizing corporate wrongdoing and maximizing the corrective measures his company has taken.

What did Ben Bradlee know, and when did he know it?

Jack Shafer
Apr 30, 2012 21:13 UTC

In 1990, former Washington Post Executive Editor Ben Bradlee told journalist Barbara Feinman, who was helping him on his memoir A Good Life: Newspapering and Other Adventures, that he had “a little problem with Deep Throat.” Bradlee, who was then 69 years old, continued:

Did that potted [plant] incident ever happen? … and meeting in some garage. One meeting in the garage? Fifty meetings in the garage? I don’t know how many meetings in the garage … There’s a residual fear in my soul that that isn’t quite straight.

This confession and other findings drawn from Ben Bradlee’s papers appear in a book excerpt that was published in New York magazine last night. The excerpt has sparked a near riot in Watergate Nation – the principals who reported the story, other journalists, history buffs, and political devotees for whom the 1972 Democratic National Committee headquarters break-in and Nixon administration cover-up remain an inexhaustible topic of fascination.

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