August 2009

Disgruntled Tribune bondholders have asked a US bankruptcy judge to let them investigate Sam Zell's 2007 buyout of the newspaper-and-television chain in an effort to derail a plan that would hand the company over to its banks. "Fraudulent conveyance" is a legal term most often used in bankruptcy court, in which creditors allege a company has used assets in a way unfair to creditors. In the context of leveraged buyouts, creditors can argue a deal loaded up a company with too much debt, leaving it undercapitalized and unable to meet future obligations. The filing will seek to slow or nullify an advancing plan for Tribune to exit from bankruptcy protection with J.P. Morgan, Bank of America Corp.'s Merrill Lynch and other banks owning nearly all of Tribune in return for the banks forgiving about $8 billion in debt. Bondholders would likely receive only a sliver of new equity under the deal.

Economists speaking at the Federal Communications Commission workshop on Economic Growth, Job Creation, and Private Investment said that rolling out broadband does not necessarily translate into job creation, and online video will be the death of traditional TV.

James Prieger, a professor at Pepperdine, pointed out that broadband may add to productivity, but that could mean doing more with fewer workers. He said that deploying high-speed Internet was not a Band-Aid that could be "slapped on" an ailing labor market or economy. Broadband could attract workers from town x to town y, he said, but he didn't see how from a state's point of view that was necessarily a good thing. And he called a deeper problem the issue of globalization. Chris Furman, a professor at the Georgia Tech, seconded Prieger's assessment, saying that there was "little evidence that use of advanced Internet was associated with growth in employment."

Ralph Everett, president of the Joint Center for Political and Economic studies, wasn't ready to concede the point. "Broadband means jobs and communities need jobs," he said. He had his own studies, including one that showed that increased broadband contributed to 52,000 or 281,000 new jobs in California in 2005. He said access to broadband was about online job searches and 21st century skills that would be necessary to live in that century. He pointed out the higher unemployment rate for African Americans and lower broadband adoption rates said the way out begins with a broadband plan that connects them and at least gives them a fighting chance for the social and economic progress that for them is now "just a dream."

Delaware, Rhode Island, and Massachusetts have some of the fastest Internet access speeds in the country, according to a new survey by the Communications Workers of America, while Hawaii, Alaska, Montana and Wyoming have the slowest. In other words, there appears to be a direct correlation between Internet speed and population density. States with more residents per square mile were almost guaranteed to have faster Internet access, with the exception of Hawaii (which has its own issues, being in the middle of the ocean and all). California ranked 11th in terms of both population density and download speed. The linking of population density to download speed is most likely the result of the revenue that can be gleaned by introducing high-speed services in more populated areas, along with the technical limitations of rolling out high-speeds in rural areas where customers may be many miles away from the nearest switching office.