Have mercy, now the Tribune!!?

And they say "No news it's good news." Little did the guy who came up with that maxim know that this isn't always the case.

From the Associated Press (and I hope THEY don't go under...)


Initial hearing held in Tribune bankruptcy


By RANDALL CHASE


WILMINGTON, Del. (AP) — Tribune Co. was authorized Wednesday to make certain payments to employees, vendors and others as it works through a Chapter 11 bankruptcy reorganization.

Judge Kevin Carey said the company, which owns the Los Angeles Times, Chicago Tribune, The (Baltimore) Sun and other dailies, could pay $74 million that was owed to employees before Monday's bankruptcy petition was filed. That total includes a cap of $10,950 per person but excludes payments for health care, long-term disability, reimbursable expenses, workers' compensation and retiree medical care.

Carey also approved orders allowing Chicago-based Tribune to use its existing, centralized cash management system during the reorganization and to continue a securitization arrangement with Barclays PLC bank that will allow it to access an additional $75 million, for a total of $300 million.

The judge also authorized Tribune to make payments for a variety of other pre-petition obligations, including some $20 million to critical vendors, $18 million in tax, licensing and similar obligations, and $5.5 million to shippers.

James Conlan, an attorney representing the company, said the nation's largest employee-owned media and entertainment company was forced to seek bankruptcy protection because of dwindling advertising revenues.

"There has been, to say the least, a precipitous decline in the advertising business generally," Conlan said.

Tribune, which also owns 23 television stations and the Chicago Cubs baseball team, is the first major newspaper publisher to file for bankruptcy protection since the Internet plunged the industry into a struggle for survival.

Conlan told the judge that with the exception of two stock pledges, the Tribune operating companies have no secured debt, which leaves the company in "a strikingly good position" to reorganize intelligently.

The bankruptcy case involves 111 of Tribune's 128 entities, with the others, notably the Cubs, not part of the proceedings.

James McMahon, an attorney representing the acting U.S. trustee, expressed concerns about allowing the company to use its existing cash management system during the reorganization, suggesting that cash transfers to or from parts of the company not involved in the bankruptcy could make it difficult to define what issues the court faces.

McMahon said that if the Cubs' positive cash flow, for example, masked problems with other Tribune entities, "then we've got an issue."

But Bryan Krakauer, an attorney representing Tribune, said it would be unreasonable to set up separate cash management accounts for each of the debtor entities, given the size of the company.

Krakauer said the 14 entities not involved in the bankruptcy are valuable assets of the debtors, and that, in the aggregate, any transfers among them would be cash positive to the debtors. He said Tribune would provide monthly updates on the transfers to other parties in the case.

Carey agreed to issue an interim order allowing the use of transfers under the existing cash managaement system at least until the next court hearing, which is scheduled for Jan. 5.

"I do so based on the understanding that it's a net positive between now and then," the judge said.

The company filed for bankruptcy protection Monday, listing $13 billion in debt and $7.6 billion in assets.

In an interview on CNBC, Tribune Chairman and Chief Executive Sam Zell described the bankruptcy filing as a "pre-emptive" act to preserve the company's assets and allow for a reorganization.

"In the end, my responsibility is to preserve the value of the company and to make sure that it will go on into the future," he said.

Tribune already has made hundreds of layoffs at its papers and reduced the number of pages they publish. Zell said that bankruptcy protection will allow the company to focus on broader issues, including consolidation.

He said the bankruptcy filing should not impede the planned sale of the Chicago Cubs, Chicago's Wrigley Field and other sports properties, which Tribune had been looking to sell to generate cash for a $593 million principal payment due in June.

The company got three final bids, but a tight credit market has made it tougher for potential buyers to obtain loans.

(This version SUBS 19th graf to correct syntax and REMOVE attribution to Zell in first sentence of that graf.)

Curse you Rod Blagojevich!


I called for Mr. Obama to distance himself and the bulk of the Dems from the mess, and it happened.

From the New York Times. Ouch.

===

Obama Calls for Governor Under Siege to Step Down


By MONICA DAVEY and JACK HEALY

CHICAGO — The political fortunes of the besieged governor of Illinois unraveled further on Wednesday, after President-elect Barack Obama joined a near-unanimous chorus of political leaders calling for him to resign.

A day after the governor, Rod R. Blagojevich, was arrested and accused of putting Mr. Obama’s vacant United States Senate seat up for bid, politicians from Washington to Chicago to the plains of Illinois made it clear that they wanted Mr. Blagojevich gone as soon as possible. Robert Gibbs, a spokesman for Mr. Obama, said that “it is difficult for the governor to effectively do his job and serve the people of Illinois.”

The Illinois legislature, which is currently adjourned, was making plans to reconvene on Monday to try to neutralize Mr. Blagojevich’s authority by stripping him of his appointment authority, or even impeaching him.

The state House is expected to draft a bill that would call for a special election to fill Mr. Obama’s Senate seat, which he resigned last month; state law authorizes the governor to appoint the President-elect’s successor.

More than 50 lawmakers have already signed a draft resolution to create a committee to investigate whether Mr. Blagojevich, a Democrat, should be impeached. And the state’s attorney general is weighing whether to file a legal action on behalf of the people of Illinois seeking to declare the governor unfit to serve.

Cindy Davidsmeyer, a spokeswoman for Emil Jones Jr., the president of the state Senate, said lawmakers could pass a bill on the special election as soon as next Tuesday. It is unclear whether Mr. Blagojevich would sign such legislation; he could veto it or delay it by returning it to the legislature with requests for changes or by taking no action at all for as long as 60 days.

Steve Brown, a spokesman for the state House speaker, Michael Madigan, said the legislature would act quickly “to try and send yet another signal that there is not confidence in the governor’s ability to make this appointment.”

While Mr. Blagojevich still has the power to appoint Mr. Obama’s successor, leading Democrats in the Senate were circulating a letter to the governor on Wednesday warning him not to exercise that authority. The letter from Senators Harry Reid, Democrat of Nevada, and Richard Durbin, Democrat of Illinois, urges Mr. Blagojevich to step down and “under no circumstance make an appointment to fill the vacant Illinois Senate seat.”

Mr. Blagojevich (pronounced bluh-GOY-uh-vich), a Democrat, has not made any public comments on his arrest. Sheldon Sorosky, his lawyer, told reporters that the governor was “very surprised and certainly feels that he did not do anything wrong.” A hearing in federal court will be held in January to determine whether there is probable cause to go forward with the charges.

On Wednesday morning, Mr. Blagojevich’s 52nd birthday, he went back to work. Briefcase in hand, he emerged from his home on Chicago’s North Side, and ducked into a waiting black sport-utility vehicle.

A spokeswoman for the governor said he spent the day immersed in trying to address the state’s $2 billion budget shortfall.

“We’re not losing focus,” said Kelley Quinn, the spokeswoman. “It is business as usual around here.”

Bob Greenlee, one of three deputy governors in Illinois, resigned on Wednesday, but the governor’s office would not say why. It was unclear whether Mr. Greenlee, 33, had any connection to the “Deputy Governor A” described in the federal affidavit supporting Mr. Blagojevich’s arrest.

Just a day earlier, F.B.I. agents with a warrant for the governor’s arrest had led him from his home while his children slept. The early-morning arrest would become the first in a series of developments on Tuesday that stunned a state that thought it had seen every brand of political corruption, created grave doubt over how or when the Obama seat in the Senate might be filled, and left many wondering who else might yet be implicated in Mr. Blagojevich’s brash negotiations, which were captured in phone calls recorded by federal agents since before Election Day.

“The conduct would make Lincoln roll over in his grave,” Patrick J. Fitzgerald, the United States attorney in Chicago, said in announcing the arrest of Mr. Blagojevich and his chief of staff, John Harris.

Mr. Obama, who Mr. Fitzgerald said was not implicated in the case, sought to put distance between himself and the governor during brief remarks on Tuesday afternoon and later in an interview with The Chicago Tribune, saying he did not discuss his Senate seat with Mr. Blagojevich.

“I had no contact with the governor or his office, and so we were not — I was not aware of what was happening,” Mr. Obama said.

The federal accusations against Mr. Blagojevich go beyond the Senate question into what the authorities here described as a “olitical corruption crime spree.”

The governor is accused of racing to solicit millions of dollars in donations from people with state business before an ethics law bars such behavior in January, and threatening to rescind state money this fall from businesses, including a Chicago hospital for children, whose executives refused to give him money.

He is also accused of putting pressure on The Chicago Tribune to fire members of its editorial board who had criticized him or lose the governor’s help on the possible sale of Wrigley Field, which is owned by the Tribune Company and is home to the Chicago Cubs.

In conversations with advisers that were recorded by the F.B.I., the governor seemed alternately boastful, flippant and spiteful about the Senate appointment, in which he likened his role at one point to that of an agent shopping around a free-agent ballplayer for the steepest price, a federal affidavit showed. At times, he even spoke of appointing himself to the job, the prosecutors said.

“I’ve got this thing,” Mr. Blagojevich is heard saying on one recording, according to the affidavit, later calling the seat “golden” and saying “I’m just not giving it up.” He added: “I can always use it. I can parachute me there.”

According to the affidavit, in more than a month of recorded phone calls at his home and campaign office, Mr. Blagojevich considered numerous ways that he might personally and politically gain from the various Senate candidates, none of whom were identified by name in the court filing. One possible choice might be able to help him secure a post with the new administration as secretary of health and human services or energy; a “three way” deal involving a union and a candidate might win him a union leadership post; or perhaps, he could secure the high-paying helm of a nonprofit organization that could be created for him.

Even before Mr. Obama was elected president, Mr. Blagojevich was recorded telling an adviser on Oct. 31 that he was giving greater consideration to one candidate described as Senate Candidate 5 after an approach by “an associate” of that candidate who offered to raise $500,000 for Mr. Blagojevich, while another emissary of the Senate hopeful offered to raise $1 million. “We were approached ‘ay to play,’ “ Mr. Blagojevich said on a recording.

On Wednesday, a lawyer for Representative Jesse L. Jackson Jr. said Mr. Jackson was the person identified as Candidate 5, but denied any wrongdoing on Mr. Jackson’s part.

Mr. Obama’s advisers made the decision on Tuesday essentially to remain silent and ignored criticism for doing so from Republicans, a strategy reminiscent of how the Bush administration reacted to the last high-profile case of Mr. Fitzgerald, who was the special prosecutor in the C.I.A. leak case. Still, David Axelrod, a senior adviser to Mr. Obama, issued a statement late Tuesday saying he had misspoken in comments he made in November that now seemed to contradict Mr. Obama’s assertions that he had no contact with Mr. Blagojevich in the conversations over a replacement.

“I know he’s talked to the governor,” Mr. Axelrod said in an interview with “Fox News Sunday” on Nov. 23. “And there are a whole range of names, many of which have surfaced.”

On Tuesday, Mr. Axelrod said he had been wrong. “They did not then or at any time discuss the subject,” according to his statement.

On Monday, Mr. Blagojevich, who was visiting a factory sit-in here in Chicago, said he was unconcerned about reports of the corruption investigations that have swirled around his administration since at least 2005 and have swept up 14 other people.

“I don’t believe there’s any cloud that hangs over me,” he told reporters at the factory. “I think there’s nothing but sunshine hanging over me.”

Mr. Blagojevich seemed not to mind earlier news reports that his conversations had been recorded. “I should say if anybody wants to tape my conversations, go right ahead, feel free to do it,” he said, though he added that those who carried out such recordings sneakily, “I would remind them that it kind of smells like Nixon and Watergate.”

Steven Greenhouse, Susan Saulny, Jeff Zeleny and Carl Hulse contributed reporting.

===



I think the GOP just got some new fuel in its tank for '09.