Dec 9, 2008 (Tribune Seeks Bankruptcy Protection)
BENTON'S COMMUNICATIONS-RELATED HEADLINES for TUESDAY DECEMBER 9, 2008
THE TRIB
Tribune files for bankruptcy protection
Tribune: 'Where Are We Going Here?'
Zell's Bad Trib
A Bankrupt LA Times and Sam Zell's Donations to Rahm Emanuel
NBC
NBC Cutting Back Network Primetime; Giving 10pm Slot to Jay Leno
NBC restructures TV divisions in bid to beat slump
JOBS
Media Companies Cull 30,000 in Fight for Their Future
Media: Don't Cut Jobs, Cut Bad Biz Model
Obama Asks For Broadband; Are Jobs Cuts the Answer
Write Now
THE TRANSITION
A Look at Bill Richardson
Financial Crisis, Obama, Big Three Drive News Coverage
Improving Education with Broadband
Change Comes to MAP, too
BROADCASTING
NTIA, FCC, More Discuss DTV Transition
Demographic-Based TV Buys Not Enough
TELECOM
What the FCC didn't tell us about the USF audit
iPhone Grows Rapidly as Internet & Entertainment Device
QUICKLY -- Some Final Thoughts on Campaign '08; Would You Pay Money to See Your Favorite Site Ad-Free?; Halpern Added to UN Team; Obama: the video game
THE TRIB
TRIBUNE FILES FOR BANKRUPTCY PROTECTION
[SOURCE: Reuters, AUTHOR: Jui Chakravorty Das]
Tribune Co, which owns eight major daily newspapers and 23 television stations, filed for Chapter 11 bankruptcy protection after collapsing under a heavy debt load just a year after real estate mogul Sam Zell took it private. Tribune's bankruptcy filing is the latest chapter in the unraveling of the leveraged buyout boom which saw many companies bought by private equity firms and other investors ending up with massive debt loads. Zell loaded up the privately held publisher with about $8 billion in additional debt when he took the company private in a transaction largely financed by company contributions to an employee stock option plan. Like other big companies which took on heavy debt burdens during the private equity boom, Tribune is now being forced to find a way to cut its borrowings to an amount it can handle. "This process of deleveraging America, whether financial institutions or Tribune, will be a long, slow and painful process," said Duke University Law School Professor James Cox. "That's what's going to prolong this recession." Most of the $8.2 billion Zell buyout price was paid for by the pensions of Tribune's 20,000 workers, held in an employee stock ownership plan, or ESOP. The ESOP structure was designed to reduce Tribune's taxes and it lowered Zell's own price tag to $315 million.
http://benton.org/node/19651
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TRIBUNE: 'WHERE ARE WE GOING HERE?'
[SOURCE: Editor&Publisher, AUTHOR: Mark Fitzgerald]
On Monday the Tribune Co had a $70 million payment due and even although it had the financing lined up to handle the payment, executives decided instead that it would be better off reorganizing under bankruptcy protection. As of Dec 8, the Tribune's total assets were $7.6 million while total debts were ~$13 million. Tribune's bank creditors reads like a list of firms that could surely use the money they're owed in this credit crunch. As word of Tribune Co.'s bankruptcy filing reached the Chicago Tribune newsroom Monday, there were constant reassurances from management that things sounded worse than they are. "They're telling us, it's business as usual," said one journalist. "As long as we're making money, we'll get out of this." But outside the newsrooms of Tribune's sprawling media business, observers saw the bankruptcy filing as a chilling harbinger of financial failure that could spread well beyond Tribune Tower.
http://benton.org/node/19650
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ZELL'S BAD TRIB
[SOURCE: The Big Money, AUTHOR: Mark Gimein]
Zell's strategy: Buy cheap, cut mercilessly, consolidate until you're the only game in town, and you can charge what you want. It worked for shipping; it would work for radio. Media: just another undervalued asset class. It all works the same way. Except, it doesn't, as Zell and the rest of us found out unequivocally Monday with the implosion of Sam Zell's latest media venture in the bankruptcy of the Tribune Co. When it comes to the LAT and the Chicago Tribune—and now pretty much any other media—those rules don't hold at all. Cutting-and-consolidating doesn't keep advertisers from departing in droves to search for ever-cheaper eyeballs. When Tribune or whatever is left of it emerges from bankruptcy, it will wake up still staring at the problem of how it can make money in anything like its present form when advertisers think they can get the same eyeballs elsewhere for less. The bottom line that's now clearly emerging is that cutting-and-consolidating, the model that's worked for Zell before, isn't going to be enough to keep media companies afloat in a world in which there is no shortage of forums in which to buy ads on the cheap. What the Los Angeles Times is seeing in real estate is going to be repeated again and again, and if newspapers really think that they can deliver something to advertisers that Google and the local Pennysaver can't, they're going to have to turn to models like ZetaBid to prove it. Let's hope they succeed, because there's a lot more than just Sam Zell's money on the line.
http://benton.org/node/19649
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A BANKRUPT LA TIMES AND SAM ZELL'S DONATIONS TO RAHM EMANUEL
[SOURCE: OpenLeft, AUTHOR: Matt Stoller]
[Commentary] Why did the Federal Communications Commission ignore the concerns of the Teamsters, Common Cause, and the Media Access Project who argued that the sale of the Tribune would damage local communities because of Sam Zell's overleveraged strategy? As usual in DC, is a mixture of influence peddling and social ties. Last year, then-Rep Rahm Emanuel (D-IL) and Sen Richard Durbin (D-IL) wrote to the FCC, urging the agency to act quickly on the sale of Tribune Co. to real-estate magnate Sam Zell. The lawmakers said the FCC shouldn't allow its review of its media- ownership rules to delay completion of the transaction. Both Dick Durbin and Rahm Emanuel received substantial donations from the predominantly right-wing Zell, with Emanuel having an especially close set of ties. Zell gave to him for his contested 2002 primary slot, after Emanuel had just finished his stint as a Chicago investment banker.
http://benton.org/node/19648
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NBC
NBC CUTTING BACK NETWORK PRIMETIME; GIVING 10PM SLOT TO JAY LENO
[SOURCE: Broadcasting&Cable, AUTHOR: Claire Atkinson]
NBC Universal chief executive Jeff Zucker indicated on Monday that more changes were on the way. Among the possibilities: Fewer nights or hours of primetime programming on NBC. "We do have to continue to rethink what a broadcast network is today. Do we have to be what we've always been? We used to run movies on Sundays, we used to put original programming on Saturday nights. It used to be the only place where you got sports," Zucker said. "We have to rethink what the broadcast network is." "Can we continue to program 22 hours of primetime? Three of our competitors don't. Can we continue to program seven nights a week? One of our competitors doesn't." Several affiliates welcome the possibility, and said Saturday night seems like a logical place to give local content a shot. NBC affiliates board chairman Michael Fiorile was pleased to hear Zucker raise the possibility. "The affiliates asked NBC to do this last summer," said Fiorile, who seemed somewhat surprised that Zucker had not brought it up sooner. On Tuesday, NBC is expected to announce that it has signed its late-night star Jay Leno to a new contract that will keep him at the network in a new format that will give him the 10 pm (eastern) time period each weeknight for a show similar to the one he has done on NBC's "Tonight Show" show since 1993. No broadcast network has ever before offered the same show in prime time five nights a week. The move means the network may be able to greatly reduce costs of developing and producing other prime-time shows.
http://benton.org/node/19646
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NBC RESTRUCTURES TV DIVISIONS IN BID TO BEAT SLUMP
[SOURCE: Reuters, AUTHOR: Jill Serjeant]
NBC, currently in last place among major U.S. television networks, said on Monday it is merging two divisions responsible for making TV shows in a bid to cut costs during the economic crunch. NBC said the restructuring would streamline the creative process and create a more viable business model in the fast- changing TV business. Financial details were not disclosed. NBC said it would also further integrate its international production and reorient domestic TV production into a more central hub that could produce shows more efficiently and globally. Network officials declined to give cost savings or detail jobs cut, but said the network had tried to eliminate redundancies as far as possible.
http://benton.org/node/19647
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JOBS
MEDIA COMPANIES CULL 30,000 IN FIGHT FOR FUTURE
[SOURCE: AdAge, AUTHOR: Michael Learmonth]
Citing the effects of a recession that's prompting marketers to trim budgets and the number of media outlets they work with, media companies are shedding jobs at a furious rate. But the deep cuts they're making are as much about these conglomerates shedding their old media models as they are about the economy. The media industries have shed more than 30,000 jobs in 2008, according to an Ad Age analysis of Department of Labor employment statistics and news reports. That's about 3.5% of the total media work force of 858,000. Since the bubble-inflated high-water mark in 2000, media has lost more than 200,000 jobs. The latest round of restructuring is driven by two concurrent forces: On the one hand, there's a crippling recession that is crushing marketing budgets; on the other hand, there is the ongoing effect of the fragmentation of audiences. "Collectively, media will continue to be strong," said Group M Chief Investment Officer Rino Scanzoni. "We are looking at a generation of people that have grown up with multiple media that are now becoming major consumers. Viewing has increased; it's just fragmented over more pieces. It's about weaving those pieces together to accomplish your advertising objectives."
http://benton.org/node/19645
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MEDIA: DON'T CUT JOBS, CUT BAD BIZ MODEL
[SOURCE: MediaPost, AUTHOR: Diane Mermigas]
[Commentary] The recession is prompting massive layoffs in all media sectors, even at the biggest players. The sheer magnitude denotes a scramble for survival that masks the urgent need for major restructuring. However, the intense focus on cutting rather than building is unlikely to leave media players as they prepare for digital growth. Job losses in an unreformed legacy structure only address part of the reinvention equation. It also requires the closing of some traditional operations and the launching of new operations to accommodate new skill sets and growth paradigms. It is unclear how much of the latter is occurring in a market driven by fear. Even more overwhelming than the most recent unemployment numbers, bordering on 7% nationally, is the dearth of efforts to innovate for better times. There is a troubling lack of evidence across the domestic business landscape that funds from the federal bailout or cash reserves being hoarded by corporations are being put to work for the future.
http://benton.org/node/19644
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OBAMA ASKS FOR BROADBAND; ARE JOB CUTS THE ANSWER
[SOURCE: PublicKnowledge, AUTHOR: Art Brodsky]
[Commentary] Things are going so well for AT&T that it can spend $2 billion each quarter simply to buy back stock and boost its stock price. That's $6 billion through the first three quarters of 2008 that won't help to lay one new foot of fiber, or bring faster service to one new rural community, or help one new school get connected. All it does is jack up the stock. At the same time, AT&T's investment in its network is about the same level. That combination signals to analysts that AT&T is focused on harvesting the money in the short term. Through three quarters this year, AT&T's capital expenditures were $14.8 billion, the same as its depreciation. For comparison, Verizon's capital expenses were $12.5 billion, with $10.8 billion for depreciation. AT&T also announced it is cutting 12,000 jobs and will lower its capital expenditures next year.
http://benton.org/node/19643
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WRITE NOW
[SOURCE: The New Republic, AUTHOR: Mark Pinsky]
America's newspaper industry has been imploding in the last few years, a development that predates the Wall Street collapse but has been hugely accelerated by the economic meltdown, forcing thousands of journalists onto the street. Hundreds more have now joined them from retrenching magazines and faltering websites, bringing the year-to-date total to 14,683. Any federal effort to put back to work the hundreds of thousands thrown out of work in the nation's hard-hit industrial, construction, airline, and financial sectors should consider displaced news media workers as well. The Federal Writers Project operated from 1935-1939 under the leadership of Henry Alsberg, a journalist and theater director. In addition to providing employment to more than 6,000 out-of-work reporters, photographers, editors, critics, writers, and creative craftsmen and -women, the FWP produced some lasting contributions to American history, culture, and literature.
http://benton.org/node/19642
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THE TRANSITION
A LOOK AT BILL RICHARDSON
[SOURCE: New York Times, AUTHOR: James McKinley]
A look at Gov Bill Richardson (D-NM), tapped to be Sec of Commerce by President-elect Barack Obama. Obama has said he wants his commerce secretary to play a pivotal role in salvaging the economy, and aides to Richardson say they expect that he will try to expand the traditional role of the office. Gov Richardson, McKinley reports, a reputation for doing whatever it takes to cajole companies to invest in his home state. In six years as New Mexico's governor, Richardson is credited with creating 80,000 jobs while revamping this impoverished state's economy. The governor has created a thriving film industry from scratch and has nurtured a fledgling solar-energy sector, mostly through tax breaks for investors. He has also persuaded several light manufacturers to set up shop, attracted investments from high-tech companies, built a commuter railroad and transformed a sleepy border crossing into a transportation hub to increase trade with Mexico. Some of Mr. Richardson's detractors, however, say he can be overbearing and vicious when he does not get his way. He enjoys the limelight that comes from his visionary pronouncements, they say, and he is impatient with opponents. [more at the URL below]
http://benton.org/node/19655
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FINANCIAL CRISIS, OBAMA, BIG THREE DRIVE NEWS COVERAGE
[SOURCE: Project for Excellence in Journalism, AUTHOR: Mark Jurkowitz]
With desperate automakers asking Congress for $34 billion, Barack Obama unveiling key Cabinet members, and the U.S. scrambling to ease tensions between India and Pakistan, the three top storylines in the news intertwined last week. Together, the three storylines accounted for more than two-thirds of the coverage in the weekly News Coverage Index of the Pew Research Center's Project for Excellence in Journalism. They also reinforced a message growing ever more prominent in the post-election media narrative -- that Obama will take office facing the most daunting set of crises since Franklin Delano Roosevelt in 1933. Indeed, one idea that surfaced in the week's coverage, articulated bluntly by Congressman Barney Frank, was that Obama needed to, in effect if not officially, grab the reigns of power before his inauguration.
http://benton.org/node/19654
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IMPROVING EDUCATION WITH BROADBAND
[SOURCE: Benton Foundation, AUTHOR: Jonathan Rintels]
Too often, America educates its children for the challenges they will face in the global, knowledgebased 21st century using 20th-century technology and methodology. Other nations provide students with laptop computers, fast broadband connections, and state-of-the-art digital applications, infusing technology and innovation throughout their educational experiences. The competitiveness and vibrancy of our economy, as well as our homeland security, depend on our ability to maintain a highly-skilled workforce. We must educate new generations of digitally literate citizens to ensure they are able to compete successfully in today's global workforce and participate in our increasingly knowledge-based society. Our education system, however, is failing to meet this challenge. In America's schools, Internet access is often far too slow, with insufficient bandwidth for online learning, collaborative work, video conferencing, and other educational applications. In some cases, schools still use dial-up Internet access. School technology is often antiquated, in short supply, and insufficiently supported. Distance learning over broadband is a distant dream. Online curricula is offline. Teachers are insufficiently trained to use technology in their classrooms, so that whatever technology is available to them languishes. Students are taught the basic 3 Rs, as required by the No Child Left Behind Act, but not the digital skills that will enable them to translate those 3 Rs into success in today's Information Age. The bottom line is that rather than "no child left behind," the failure to fully infuse technology and broadband throughout the education system has left behind many of America's children. The new Administration should include in its National Broadband Strategy initiatives to promote the rapid adoption of technology and broadband throughout the classroom. It should also include initiatives to advance online learning and "digital excellence" training. In this way, the new Administration will not only stimulate broadband supply and demand, but deliver significant improvements in our nation's ability to educate its children.
http://www.benton.org/initiatives/broadband_benefits/action_plan/education
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CHANGE COMES TO MAP, TOO
[SOURCE: Media Access Project, AUTHOR: Press release]
Andrew Jay Schwartzman, President and CEO of Media Access Project (MAP),
announced that the public interest media and telecommunications law firm will undergo a reorganization. The plan is designed to enable MAP to take
advantage of the new political climate and to adapt to the forthcoming departure of MAP's Senior Vice President, Harold Feld. Schwartzman will make way for a new CEO and become MAP's Legal and Policy Director. The new CEO will focus on managing operations, planning and development. After 10 years, Feld will leave to write and pursue other opportunities. "Replacing Harold will be the toughest part of the challenge MAP faces," Schwartzman said. "He is a brilliant analyst and advocate. His work on issues such as Internet freedom and opening access to spectrum has been a major element of MAP's success in recent years." Among MAP's major pending cases are a challenge to the FCC's deregulation of broadcast ownership rules and the defense of an FCC ruling that Comcast for unlawfully blocked customers' Internet access. "Needless to say, the coming of a new Administration enables MAP to go on the offensive for the first time in eight years," Schwartzman added. "This is an opportunity to take concrete steps to combat media consolidation, promote diversity in media ownership and programming, obtain more authorizations for community-based low power radio and, of course, seek network neutrality on the Internet."
http://benton.org/node/19639
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BROADCASTING
NTIA, FCC, MORE DISCUSS DTV TRANSITION
[SOURCE: National Telecommunications and Information Administration, AUTHOR: Press release]
The Commerce Department's National Telecommunications and Information Administration hosted more than 25 federal agencies to further coordinate efforts to educate vulnerable Americans about the February 17, 2009, deadline to transition to digital television and the TV Converter Box Coupon Program. During the meeting, NTIA and Federal Communications Commission officials provided updates on their coordinated consumer education activities and other federal agency officials discussed immediate action needed to be taken to urge unprepared consumers to get ready now. Federal agencies participating in the meeting included the Department of Veterans Affairs; Department of Health and Human Services, Administration on Aging; Department of Agriculture; Department of Homeland Security; the Appalachian Regional Commission; the National Council on Disabilities; and the Social Security Administration. To date, more than 20 million households have requested more than 39 million coupons and redeemed more than 16 million coupons since the program opened on January 1, 2008.
http://benton.org/node/19640
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DEMOGRAPHIC-BASED TV BUYS NOT ENOUGH
[SOURCE: Adweek, AUTHOR: Steve McClellan]
For decades the major TV networks have based their sales pitches to advertisers on demographics -- primarily age, sex and income characteristics of the audiences that watch their programs. But that's no longer enough, said David Poltrack, chief research officer at CBS. Poltrack will present new research at the UBS media conference this week, compiled by the Advertising Research Foundation, that shows network TV advertising is just as effective as it has ever been. But in order to remain that way going forward the networks must start providing metrics to advertisers that tie TV-viewing patterns to buying behavior. The networks must also focus on delivering more granular commercial viewing data to advertisers, who increasingly want to be able to track viewing of their spots on a second-by-second basis.
http://benton.org/node/19641
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TELECOM
WHAT THE FCC DIDN'T TELL US ABOUT THE USF AUDIT
[SOURCE: TelephonyOnline, AUTHOR: Joan Engebretson]
[Commentary] The Federal Communications Commission audited a large sample of Universal Service Fund (USF) recipients -- 390 out of 1751 -- and projected the total estimated overpayment for all fund recipients based on estimated overpayments for 384 of the audited companies. Eighty-five of the companies audited, or 22%, had the full value of the money they received from the USF deemed an erroneous payment -- not because the entire amount was deemed to be incorrect but rather, as the FCC explains in the report, because of insufficient documentation. The FCC notes that auditors were following guidelines established by the Office of Management and Budget -- and while those may be great guidelines for how to conduct an audit, it creates a distorted picture when a snapshot of mid-term audit progress is used to make broader generalizations. Added together and projected to the entire base of fund recipients, the 85 companies whose payments were completely rejected in the initial estimate account for 83% -- or about $803 million--of the estimated overpayment. The FCC must know that a large part of that amount eventually will be deemed legitimate, and I would argue that it was more than a little audacious to issue a news release using the bloated initial estimates to extrapolate the $970 million overpayment.
http://benton.org/node/19638
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IPHONE GROWS RAPIDLY AS INTERNET & ENTERTAINMENT DEVICE
[SOURCE: MediaPost, AUTHOR: Jack Loechner]
According to a recent comScore study, "All about iPhone," 43% of iPhone owners earn in excess of $100,000 annually, but the strongest growth in users is coming from those earning less than the median household income. iPhone adoption since June 2008 rose 48% among those earning between $25,000 and $50,000 per year and by 46 percent among those earning between $25,000 and $75,000. These growth rates are three times that of those earning more than $100,000 per year. Jen Wu, senior analyst, comScore, notes that "... a $200 device plus at least $70 per month for phone service seems... extravagant for those with lower disposable income... (but) when the device is used in lieu of multiple digital devices and services, one actually realizes cost savings... "
http://benton.org/node/19636
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QUICKLY
SOME FINAL THOUGHTS ON CAMPAIGN '08
[SOURCE: Pew Research Center for the People and the Press, AUTHOR: ]
From the beginning of the campaign to its conclusion, Democrats consistently expressed more interest in election news than did Republicans. That represents a change from previous campaigns. There were only a few weeks when Republican news interest matched or surpassed Democratic interest, including the weeks just before and after the nominating conventions. Despite signs of less Republican engagement, it is not clear whether core GOP groups turned out to vote at lower rates than in the past. What is evident from the national exit polls is that African American turnout increased markedly.
http://benton.org/node/19637
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WOULD YOU PAY MONEY TO SEE YOUR FAVORITE SITE AD-FREE?
[SOURCE: AdAge, AUTHOR: Mike Vorhaus]
[Commentary] Consumers might "hate ads," but not enough to pay even as little as a few cents a day to avoid them. When asked if $4/month for an ad-free version of one of their favorite sites, only 2.4% said definitely yes, they would be likely to do so. And only 3.5% said they'd be very likely. In fact, 84% of the people said they'd be unlikely or not at all likely.
http://benton.org/node/19635
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HALPERN ADDED TO UN TEAM
[SOURCE: The White House, AUTHOR: Press release]
President George Bush has nominated Cheryl Halpern, a member of the Board of Directors of the Corporation for Public Broadcasting, to be an Alternate Representative of the United States of America to the Sixty-third Session of the General Assembly of the United Nations.
http://benton.org/node/19634
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OBAMA: THE VIDEO GAME
[SOURCE: Reuters, AUTHOR: Alex Dobuzinskis]
Video game maker Eversim will start selling "Commander-in-Chief" on January 20, 2009. Played on a three-dimensional world map, contestants must pick a cabinet then tackle problems ranging from terrorism to economic woes.
http://benton.org/node/19633
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When you're paper thin
Yeah, read all about it
When you were out of luck, well, luck was doin' alright
Now you're paper thin
Yeah, they can see right through ya
You just cut you're little finger on the edge of the night
-- John Hiatt
http://www.sing365.com/music/lyric.nsf/Paper-Thin-lyrics-John-Hiatt/D243...