Category: Business

Corporate news from all over

News Corp Trial

swanksalot1 Comment

We wrote about this case a while ago, and it seems to be getting juicy. [Source documents available here]

Tall statue aka Our Onion-headed Overlords

At issue is whether News America has lied, cheated and stolen to maintain its market share. FGI claims News America “engaged in illegal computer espionage by breaking into FGI’s password-protected computer system and obtaining propietary FGI information.” News America denies the allegations.

The saga began when, according to FGI’s complaint, News America made FGI an offer it couldn’t refuse:

At a meeting in July 1999, News’ Chief Executive Officer told FGI that News was interested in buying FGI, but if FGI refused to sell and chose instead to compete with News for in-store programs other than floor advertising — such as instant coupon machines, shelf ads, take ones or shopping cart placards — News would destroy FGI.

FGI chose to compete — and News America allegedly made good on its promise to kill FGI. The complaint:

“…on at least eleven separate occasions between October 2003 and January 2004, News intentionally, knowingly and without authorization breached FGI’s secure computer system and repeatedly accessed, viewed, took and obtained FGI’s most sensitive and private information concerning its past and upcoming advertising and marketing programs.”

FGI discovered this when one of its clients asked FGI how News America knew about a program that the client was only running with FGI. News America had blown its cover by asking the client why the program wasn’t also running with News America.

A breach of FGI’s computer system was later traced to “an IP address registered at the time to News,” the complaint states.

Following the computer break-in, FGI lost contracts from Safeway, Winn-Dixie, Piggly Wiggly and Basha’s.

[Click to read more Trial: Did News America Marketing Group Break Into Floorgraphics’ Computers? | BNET Advertising Blog | BNET]

Usually these sorts of business litigations are dryasdust, however, News Corp. isn’t most companies.

IDEO moving to West Loop

Seth Anderson0 comment

International design firm IDEO moves to the West Loop, well one office at least

Athenian Candle Co

Palo Alto, Calif.-based industrial design firm IDEO is increasing the size of its local office about 25%, to 20,442 square feet, as part of a move from Evanston to the building, 626 W. Jackson Blvd.
IDEO, whose design credits include the standup toothpaste tube, has signed a 10-year lease for the top two floors of the eight-story structure, says Menahem Deitcher, managing principal with office leasing firm Deitcher Group LLC, which is partners with Sterling Bay in the deal. He adds that they have another deal pending for one tenant to lease the second, third and fourth floors.
IDEO’s move-in date is June 1, Mr. Deitcher says.

…

Founded in 1991, IDEO has 550 employees and six other offices, including two overseas. In addition to the toothpaste tube, the company also designed Apple Inc.’s first mouse, the Eclipse 500 Very Light Jet cabin and the Samsung LCD monitor.

[From Product designer moving to former CHA headquarters – Chicago Real Estate Daily]

I know I have a photo of this place, I’ll have to delve into my archives

Lofts and Condos Doo-Dah Doo-Dah

update 127/09:
Ha, I knew I had a snapshot of 626 W Jackson…

626 W Jackson

Parting Gift to Oil Companies

Seth Anderson0 comment

Speaking of last minute jabs to the eye, Bush has a parting gift to his buddies at Exxon and elsewhere

Strapped On

The Bush administration, in one of its final acts, is proposing to let oil companies drill for oil and natural gas in half a dozen areas of the outer continental shelf that had been previously been off limits to drilling, a move that will reopen the debate over offshore drilling for President-elect Barack Obama.

In an interview with The Wall Street Journal, the director of the federal agency that manages the nation’s offshore oil and gas reserves said his agency would formally open a 60-day public comment period Friday on whether to allow leasing for oil and natural gas in all of some portion of 12 areas of the shelf, including four areas off Alaska, two off the Pacific coast, three areas in the Gulf of Mexico and three more along the Atlantic coast.

Six of the sites — those located off California, in the eastern Gulf of Mexico, and along the Atlantic seaboard — had previously been off limits to development under a quarter-century old federal moratorium that congressional Democrats allowed to expire last fall amid intense voter anger over high gas prices.

While none of the sales would occur before 2011, the proposal puts some pressure on Mr. Obama’s administration to decide what additional areas of the outer continental shelf, if any, should be open to oil and gas production

[From Bush Administration Proposes Letting Oil Companies Drill Offshore – WSJ.com]

There’s not even a joke appropriate for these clowns

FDA: Quality is job number 2

Seth Anderson0 comment

Quality Meats

Bush’s servants in the FDA gave the public one last jab in the eye: ignoring the wishes of the citizens in regards to labeling food.

Consumers Union, publisher of Consumer Reports, today said that the Food and Drug Administration (FDA) blatantly ignored consumers’ right to choose what they eat after the FDA announced that it will not require labeling on meat or fish from genetically engineered animals.

The Bush administration, which is in charge of the FDA for just two more working days, today announced Final Guidance on Regulation of Genetically Engineered Animals. The FDA Guidance states that FDA will require such animals to go through a mandatory safety approval process, a decision Consumers Union supports. However FDA will not require any labeling.

A recent Consumers Union poll found that 95 percent of consumers favor labeling of meat and milk from genetically engineered animals.

Genetically engineered animals may contain genetic material from entirely different species, even humans. For example, last week an FDA advisory committee reviewed the safety of a goat engineered with human genes so that it would produce a human blood thinner in the goat’s milk. “This animal is intended for use in drug production, but what if FDA found that it is also safe for use as food? Without labeling, consumers would have no way to know this meat was in their butcher shop,” said Michael Hansen, PhD, a senior scientist at Consumers Union. Products under development for supermarket distribution include pork where mouse genes have been put into pigs to help them metabolize phosphorous more efficiently, and salmon that has been engineered with genes from other fish to make them grow twice as fast as normal.

…

Halloran said, “This one-minute-to-midnight regulation is a final favor to industry delivered as the current FDA Administrator goes out the door.” FDA Commissioner Von Eschenbach’s resignation is effective January 20. “We hope the new Obama administration will reverse this ill-considered guidance and require labeling of genetically engineered meat and milk products as soon as possible after it takes office next week.”

[From FDA: No labeling of genetically engineered food]

If genetic modification is so great, why not label the items proudly? Why hide the facts? The obvious reason is that forcing truth-in-packaging would be the death sentence to frankenfoods.

End of Blogging

Seth Anderson0 comment

If GateHouse Media succeeds in their lawsuit, this blog, and many others will have to cease existence. What percentage of blog materials is quoted, fair-use information from other sites? Just using B12 as an example, I’d say over 75%.

GateHouse Media filed a lawsuit Monday against the New York Times Co. alleging copyright infringement after the NYT-owned Boston Globe frequently posted links containing headlines and the first sentences from articles on GateHouse’s community news sites.

-View the Document: The 25-page lawsuit [PDF]
-View the Document: Request for an injunction [PDF] to stop the Globe from posting GateHouse links.
-View the Document: 35-page support document for the injunction [PDF]
-View the Document: Affidavit by GateHouse Media Metro Editor-in-Chief Gregory Reibman [PDF]
–Your Town Newton, one of the Boston Globe’s community sites that sparked the lawsuit. See the news links in the center content gutter.

The lawsuit, if successful, could create a monumental chilling effect for bloggers, news sites, search engines, social media sites and aggregators such as Topix and Techmeme, which link to articles, display headlines and use snippets of copyrighted text from other sites. Initiatives such as the NYTimes.com Times Extra, which displays links to related articles from other sites, could be shut down for fear of copyright lawsuits. It could lead to a repudiation of one of the fundamental principles on which the Internet was built: the discovery and sharing of information.

In its complaint, GateHouse called the article links “deep links” because they do not link to the home page of the site. The “deep link” language in the complaint is meant to invoke cases such as the Supercrosslive.com case, wherein a motorcross news site was successfully prohibited from deep linking to a competing site’s streaming video file, which bypassed the site’s advertising.

…

GateHouse’s assertion is that the Boston Globe community site’s use of the headlines cannibalizes GateHouse’s content and causes it financial harm because readers gather news from the links and snippets on the Globe’s site rather than visit GateHouse’s sites. Although not explicitly stated in the complaint, this means GateHouse likely believes the loss of readers from possible increased use of the Globe’s site will not be offset by the readers brought in by its competitor’s links.

[From Journalistopia » GateHouse Lawsuit vs. New York Times Co. has Dire Implications | Danny Sanchez]

I had never heard of GateHouse Media before today1, but they put out a lot of publications, mostly weeklies it looks like.

No joke, if this lawsuit is successful, I will have to shut down this blog immediately, as will the majority of other news-related blogs. The risk of liability is just too great.

Footnotes:
  1. well except for being mentioned in the Tribune bankruptcy as a debt-ridden newspaper company [↩]

Newspapers of the future

Seth Anderson0 comment

Unfortunately, my local paper has taken a decided downturn, close to becoming just a advertising circular, with a few stories thrown in here and there. Newspapers should have more reporters, not less, staff cutbacks is not the solution to restoring newspaper profitability.

As Felix Salmon says when you pay for the physical newspaper you’re not paying for the news, you’re paying for the paper. A newspaper is a big physical object. Creating it and distributing it on a daily basis is a hugely expensive undertaking. And subscriptions to newspapers are cheap — the amount of money being charged for home delivery of The New York Times or any other major paper only does a tiny amount to defray the costs of producing and delivering the object.

The problem newspapers are having with online isn’t that the readers won’t pay, it’s that the advertisers won’t pay. The reduced costs per reader make up for the reduced revenue involved in giving the product away, but a physical newspaper generates far more in terms of ad revenue per reader than does a newspaper website. Probably once physical newspapers all disappear, ad rates for news websites will go up somewhat merely because ad buyers won’t have as many options. But I think it’s plausible that even when everything shakes out online advertising revenue still won’t support the volume of staff that print advertising revenue once did.

[From Matthew Yglesias » News Without the Paper ]

Enron Example Continues

swanksalot0 comment

Frank Rich notes how pervasive the lessons of Enron actually were, to Wall Street and the business class, contrasted to Blagojevich’s politics for cash crimes.

But the entertainment is escapist only up to a point. What went down in the Land of Lincoln is just the reductio ad absurdum of an American era where both entitlement and corruption have been the calling cards of power. Blagojevich’s alleged crimes pale next to the larger scandals of Washington and Wall Street. Yet those who promoted and condoned the twin national catastrophes of reckless war in Iraq and reckless gambling in our markets have largely escaped the accountability that now seems to await the Chicago punk nabbed by the United States attorney, Patrick Fitzgerald.

…

As our outgoing president passes the buck for his failures — all that bad intelligence — so do leaders in the private and public sectors who enabled the economic debacle. Gramm has put the blame for the subprime fiasco on “predatory borrowers.” Rubin has blamed a “perfect storm” of economic factors, as has Sam Zell, the magnate who bought and maimed the Tribune newspapers in a highly leveraged financial stunt that led to a bankruptcy filing last week. Donald Trump has invoked a standard “act of God” clause to avoid paying a $40 million construction loan on his huge new project in Chicago.

After a while they all start to sound like O. J. Simpson, who when at last held accountable for some of his behavior told a Las Vegas judge this month, “In no way did I mean to hurt anybody.” Or perhaps they are channeling Donald Rumsfeld, whose famous excuse for his failure to secure post-invasion Iraq, “Stuff happens,” could be the epitaph of our age.

[From Frank Rich – Two Cheers for Rod Blagojevich – Editorial – NYTimes.com]

Wait, what? Trump is weaseling out of a construction loan? First I’d heard of that.

and this is how history will judge Still-President Bush, as a Forest Gump figure, without the redeeming sweetness:

Bush had arrived in Washington vowing to inaugurate a new, post-Clinton era of “personal responsibility” in which “people are accountable for their actions.” Eight years later he holds himself accountable for nothing. In his recent exit interview with Charles Gibson, he presented himself as a passive witness to disastrous events, the Forrest Gump of his own White House.

Continue reading

Blago in Handcuffs, and All I Got Was This Lousy Newspaper

Seth Anderson0 comment

There does seem to be some sort of connection, in spirit, if not in wiretap goods, between Blagojevich and Zell. I’m not the only one to notice it:

Las Vegas Showgirls

But really, you know Blagojevich moved into an entirely different realm of awful when, as the Chicago Tribune reported in early November, his people called Tribune owner Sam Zell and demanded the firing of editorial board members in return for assistance in selling the Tribune-owned Chicago Cubs.

…

There was no possibility of jeopardizing Fitzgerald’s investigation, because this story didn’t need it; the wiretap wasn’t involved: Blagojevich called them! The Tribune could have and should have run the story of Blagojevich’s call to Tribune Tower in 200 point type. They should have printed it in Rod’s own blood. They would have brought down a sitting governor the same week that they were trumpeting the win of Obama. They would have pushed the Tribune’s brand into the stratosphere, at just the time that it needed it.

But they didn’t. Faced with a defining moment in journalism–this was the kind of story that we would have taught in journalism schools for years–Sam Zell decided not to do the right thing. It’s not surprising–the guy is a waxed mustache away from tying a damsel in distress to a railroad track after all–but it’s still a shock.

When you walk into the lobby of the Tribune Tower, you’re dwarfed by the etched words of legends. They speak of the importance of journalism for a functioning democracy; of the imperative to speak truth to power. One, from Thomas Jefferson himself, reads “our liberty depends on the freedom of the press, and that can not be limited without being lost.”

That lobby is for sale now. Zell wants to turn the building into condos.

[From Daniel Sinker: My Governor Got Lead Away in Handcuffs, and All I Got Was This Lousy Newspaper]

So why did the Chicago Tribune hold off on the story?

think about this: You’re a newspaper. The governor of your state–a governor who has had the stink of corruption on him for years–has his people call you up and directly state that they’ll help you out if you fire members of your editorial board. It is a phone conversation that not only wipes its ass on the ethical lines it crosses, it also treats the First Amendment like it’s optional. And you don’t report it? Why?

There’s only one reason: Zell was entertaining the offer.

Workers Pay for Tribune Debacle

Seth Anderson2 Comments

The more I read about the Tribune bankruptcy, the more Sam Zell resembles one of those old movie villains.

Dewey Defeats Truman

Andrew Ross Sorkin writes:

Mr. Zell isn’t the only one responsible for this debacle. With one of the grand old names of American journalism now confronting an uncertain future, it is worth remembering all the people who mismanaged the company before hand and helped orchestrate this ill-fated deal — and made a lot of money in the process. They include members of the Tribune board, the company’s management and the bankers who walked away with millions of dollars for financing and advising on a transaction that many of them knew, or should have known, could end in ruin.

It was Tribune’s board that sold the company to Mr. Zell — and allowed him to use the employee’s pension plan to do so. Despite early resistance, Dennis J. FitzSimons, then the company’s chief executive, backed the plan. He was paid about $17.7 million in severance and other payments. The sale also bought all the shares he owned — $23.8 million worth. The day he left, he said in a note to employees that “completing this ‘going private’ transaction is a great outcome for our shareholders, employees and customers.”

Well, at least for some of them.

Tribune’s board was advised by a group of bankers from Citigroup and Merrill Lynch, which walked off with $35.8 million and $37 million, respectively. But those banks played both sides of the deal: they also lent Mr. Zell the money to buy the company. For that, they shared an additional $47 million pot of fees with several other banks, according to Thomson Reuters. And then there was Morgan Stanley, which wrote a “fairness opinion” blessing the deal, for which it was paid a $7.5 million fee (plus an additional $2.5 million advisory fee).

[From Dealbook – Workers Pay for Debacle at Tribune – NYTimes.com]

The Tribune employees (past and present) are now just one creditor among many, and their retirement plan suddenly is near worthless.

Mr. Zell financed much of his deal’s $13 billion of debt by borrowing against part of the future of his employees’ pension plan and taking a huge tax advantage. Tribune employees ended up with equity, and now they will probably be left with very little.

…

“If there is a problem with the company, most of the risk is on the employees, as Zell will not own Tribune shares.” He continued: “The cash will come from the sweat equity of the employees of Tribune.”

…

But what about those employees? They had no seat at the table when the company’s own board let Mr. Zell use part of its future pension plan in exchange for $34 a share.

Mr. Newman, the analyst who predicted the trouble, said in an interview on Monday, “The employees were put in a very bad situation.”

An anonymous Tribune employee emails Josh Marshall:

You are right on the money, this filing goes directly to insanely bad business decisions, not the secular decline in newspapers. The amazing thing that is happening right now is that all of the company’s assets are in the black. All of them. Every television station and newspaper is making money. Now lets not kid ourselves — many are in a fast downhill spiral, revenues are declining, etc. But what has killed this company is the insane amount of debt Zell has placed upon it.

That debt was not incurred to invest in the company’s product, or even physical plant. It was incurred solely to buy out Tribune Corp’s shareholders at an inflated share price and let Zell have his toy. It was the epitome of the bubble. And now it’s caught up with Zell. He’ll be fine. The employees are the ones who will suffer, as always. Basically, Zell has destroyed several great newspapers as part of an unwitting wealth transfer to various large Tribune shareholders.

[From Talking Points Memo | Report From the Trenches, Pt. 1]

Bailing Out 100 Rich Investors in Chrysler

Seth Anderson1 Comment

Now that I think about it, why should taxpayers foot the bill for an investment gone bad? Cerberus Capital Management has plenty of profits in their other investments. Why should we support Dan Quayle and John Snow’s extravagant lifestyle? Digging a little deeper, Cerberus also owns 51% of GMAC – the financing arm of General Motors.

From Hoovers Online:

Named after the mythical three-headed dog that guards the gates of hell, Cerberus Capital Management has become a driving force among private equity firms. One of its more recent moves is the purchase of 80% of Chrysler from Daimler in 2007. Cerberus was also the lead investor of a group that acquired 51% of GMAC, the financing arm of General Motors. The company also owns bus manufacturer Blue Bird and car parts maker TA Delaware (formerly Tower Automotive). Other holdings include a 45%-stake in Japanese bank Aozora, real estate services firm LNR Property, and a 52%-stake in ACE Aviation Holdings, the parent company of Air Canada.

Cerberus has become heavily involved in the automobile industry because it believes that the sector has long been undervalued. In addition to its GMAC, Chrysler, and Tower Automotive holdings, the company now has an interest in CTA Acoustics (automobile insulation), Guilford Mills (automotive seating products), and Peguform Group (plastic auto interior and exterior parts).

A key to early success for the Cerberus-Chrysler deal may well be found in its new labor agreement with the United Auto Workers (UAW) union. While Chrysler has already announced plans to reduce its workforce by some 20,000 and to shutter at least one manufacturing facility, its biggest battle could still be to reduce labor and associated health-care costs.

Red Night of the Soul

Louise Story wrote:

Last year, Cerberus and about 100 co-investors bought 80.1 percent of Chrysler for $7.4 billion from the German carmaker Daimler. It also bought a controlling stake in GMAC, the finance arm of General Motors. Since then Chrysler has eliminated more than 30,000 jobs and struggled to keep itself afloat while its sales have plummeted. Cerberus is pressing to have Chrysler merge with G.M., but G.M. has said a tie-up is off the table. Chrysler is asking the government for $7 billion to get through the next few months.

Cerberus, named after the mythical three-headed dog that guards the gates of Hades, has a fierce reputation on Wall Street. Many bankers and investors are reluctant to talk openly about the company, which is renowned, even feared, for its hard-nosed deal-making.

But Cerberus is also pursuing its interests aggressively in Washington, where some lawmakers have questioned why the government should assist the privately owned Chrysler. In addition to Mr. Snow, the firm’s chairman, Cerberus’s Washington hands include Dan Quayle, the former vice president, and Billy J. Cooper, who has worked as partner at the lobbying firm Patton Boggs.

The firm has also hired Arnold I. Havens, a former general counsel of the Treasury Department; John B. Breaux, a former senator from Louisiana; David Hobbs, former assistant to President Bush for legislative affairs; and Christopher A. Smith, former chief of staff in the Treasury. So far this year, Cerberus has spent nearly $2 million on lobbying, while Chrysler has spent $5 million, according to Senate records. Ford has spent more than $5 million and G.M. $10 million.

[From Chrysler’s Friends in High Places – NYTimes.com]

and I’m with Representatives Maxine Waters and Elijah E Cummings:

But some lawmakers have begun voicing concern that bailing out Chrysler would amount to bailing out Cerberus. On Friday, Representative Maxine Waters, a California Democrat, pointed to Cerberus’s riches. “It seems to me that Cerberus is doing pretty well,” she said.

In an interview, Representative Elijah E. Cummings, a Democrat from Maryland, said he thought Cerberus should put more of its own money into Chrysler before asking for taxpayers’ help.

“I’m not saying they have to get all the money from Cerberus, but at least show a good faith effort,” Mr. Cummings said. “Chrysler should come back to Congress and say, ‘This is what we’ve asked Cerberus for, and this was their response.’ I think the public is due that.”

and especially because Cerberus opposed raising fuel efficiency standards:

“They are very, very well-connected,” said Harry Cendrowski, a consultant and co-author of the book “Private Equity: History, Governance and Operations.” Senator Bob Corker of Tennessee can attest to that. Last year, he was on vacation when his phone began ringing. It was Mr. Snow, and then Mr. Quayle, both calling on behalf of Cerberus. They wanted the senator to know that Cerberus opposed new fuel efficiency standards, Mr. Corker recalled. Days later, Mr. Feinberg visited Mr. Corker’s Washington office. Mr. Corker told Cerberus he was unmoved.

“I really did feel badly for these guys,” Mr. Corker, a Republican, said. But others point out that Chrysler landed on Cerberus’s lap practically free. The price it and its co-investors paid for their stake was roughly equal to the book value of Chrysler Financial. The car operation was just icing.

Mr. Snow and Mr. Feinberg declined to comment for this article. Cerberus does not have much of its own money riding on Chrysler and GMAC. The two investments amount to about 7 percent of its assets under management, and this past July Cerberus and its co-investors lent $2 billion to Chrysler. But its reputation is at stake, and it is eager to keep Chrysler and GMAC out of bankruptcy.

Talk about socialism! Republican style socialism, also known as public costs and private profit.

Wonky Details of Tribune Bankruptcy

Seth Anderson4 Comments

It seems as if the Chicago Tribune paper will continue, albeit with some changes. I hope the dozen or so of my favorite Tribune writers1 don’t get fired.

Happy 4th of July -Wrigley, Chicago Tribune tower

It seems it has something called a “Delayed Draw Facility” that becomes part of its “Tranche B” credit facility as it draws upon funds. In October, Tribune refinanced an additional $168 million in these Tranche B medium-term bonds, money it said it intended to use to pay the $70 million in medium-term notes coming due Monday.

But Tribune might have seen a somewhat chilling vision of the future when, also in October as credit markets locked up, it sent notice to lenders that it intended to draw $250 million in principal from its revolving credit facility. Fine, but there was just $237 million in it, according to information in the SEC filing.

“The shortfall of approximately $13 million is a result of the fact that Lehman Brothers Commercial Bank, which provides a commitment in the amount of $40 million under the company’s $750 million revolving credit facility, declined to participate in the company’s $250 million funding request,” Tribune said. Lehman Brothers, of course, was one of the first casualties of last fall’s financial meltdown, and its commercial bank is in Chapter 11.

Sam Zell and Co. may also be figuring it makes no sense to pay that $70 million now since, by all reports, it appears Tribune will be in technical default of its loan covenants when the debt-to-EBITDA (earnings before interest, taxes, depreciation and amortization) ratio is calculated at the end of this fourth quarter.

The loan agreement sets an outer limit of 9 times EBITDA to debt, which is pretty loose. (Consider that GateHouse Media Inc., sometimes considered a poster boy for the newspaper industry’s high debt, says its ratio is about 6 times.) Yet it appears that Tribune will be unable to report it is within the covenants.

So Monday’s $70 million payment is like the credit card bill appearing in the mail. You’re $5,000 in the hole, say. The minimum payment is just $30. But it makes you think, where are we going here? That’s no doubt what Sam Zell & Co. are asking themselves this morning in their Michigan Avenue tower.

[From Tribune: ‘Where Are We Going Here?’ ]

via Whet Moser‘s Twitter feed

The court filing [24 page PDF] if you are interested…

Update: Zell was worse than we thought. Zell really was just looking for a way to plunder the ESOP.

[Sam Zell ] put up $315 million of his own money and paid the balance of the purchase price, $8.2 billion, with the employee stock ownership plan – a move in which Tribune employees had no say whatever. But that actually overstates the amount of Zell’s investment. Of the $315 million he sunk into the company, it turns out that $225 million was simply a promissory note. Due to the vagaries of bankruptcy law, writes business analyst Mark Lacter on laobserved.com, that means that Zell has better protection for his stake than all his employees. Trib’s ESOP holds 100 percent of the company common equity – and it’s the holders of common stock who usually take a bath, or get wiped out altogether, in the debt restructuring that goes on under Chapter 11.

…

Even when measured against today’s sub-prime standards for CEO performance, Zell is in a class by himself. The CEOs of the Big Three auto companies may have paid a good deal less attention to the quality of their cars than they should have, but Zell repeatedly and profanely expressed his disdain for quality journalism. The company’s leading papers, the Chicago Tribune and the Los Angeles Times – the latter one of the four great American newspapers – carried too much national and international news, he decreed. Hundreds of excellent reporters and editors were unceremoniously shown the door; the Times lost its Sunday book review and opinion sections; the Washington bureaus of the papers were consolidated and cut back at the very moment when readers are following decisions made in Washington more intently than they have in decades.

and there’s more!

The Tribune internal Q&A website on today’s bankruptcy filing states that “all ongoing severance payments have been discontinued.” So if you’re one of the large number of reporters, editors and other staffers at the L.A. Times, the Chicago Trib or other papers who got sacked and didn’t get your severance in one lump sum, you have a real problem.

In a just world, Sam Zell would go to prison.

Footnotes:
  1. those writers who have either a consistent, interesting voice, or cover a beat that I’m interested in. I don’t have a real list, but seems like it is less than 20 journalists. [↩]

Northwest Side gas-price mystery a head-scratcher

Seth Anderson0 comment

Strangely enough, we drove by this gas station the other day on our way from the North Park Village Nature Center, looking for gasoline.

Marathon 14 gallons

Since the middle of the summer, those who’ve driven through the intersection of Irving Park and Pulaski Roads regularly, as I do, have probably been struck by the staggeringly high gas prices at the Shell mini-mart on the northwest corner.

How high? Sometimes a dollar per gallon higher than the price at the Mobil mini-mart just across Pulaski and higher than any other price in the city or suburbs. So high it was rare to see a customer at the pumps.

“I’ve been scratching my head about it just like everyone else,” said the local alderman, Margaret Laurino (39th). “If I ever see a car there, I wonder what the driver’s thinking.”

The average price for a gallon of regular in the Chicago area Monday was $1.83, according to AAA. The Mobil station at Irving and Pulaski was selling it for $2. The Shell at North Avenue and LaSalle Street, traditionally one of the priciest gas stations in the continental U.S., was charging $2.36.

The Irving/Pulaski Shell? $2.80.

I live nearby, and the most popular theory among the neighbors is that the same man owns both stations and is using asymmetrical pricing to drive customer traffic to the Mobil, which was remodeled this year to include a sandwich counter and a doughnut franchise.

[From Northwest Side gas-price mystery a head-scratcher | Change of Subject]

We bypassed this place and purchased gas elsewhere. The comments to Eric Zorn’s post are interesting: seems to be a common theme that Shell is possibly trying to shut down stations so that they can increase demand while reducing supply. And we aren’t the only citizens to notice that gasoline prices have dropped by half in a couple of months, leading to speculation that the whole thing was rigged.

On that topic, I actually think the high gasoline prices helped America in the long run: forcing some changes to policy, encouraging the sales of fuel efficient cars, encouraging discussion of public transit and national rail systems, yadda yadda. Short term pain for many, but long term benefits for us all.

Freddy Goodwin Hides Drug Company Funding from NPR audience

Seth Anderson0 comment

Dr. Goodwin sold his ethics, and NPR, for such small amounts.1 Petty greed. Is the money really worth it?

Neon - NH Ballin Drugs Prescriptions

An influential psychiatrist who was the host of the popular NPR program “The Infinite Mind” earned at least $1.3 million from 2000 to 2007 giving marketing lectures for drugmakers, income not mentioned on the program.

The psychiatrist and radio host, Dr. Frederick K. Goodwin, is the latest in a series of doctors and researchers whose ties to drugmakers have been uncovered by Senator Charles E. Grassley, Republican of Iowa. Dr. Goodwin, a former director of the National Institute of Mental Health, is the first news media figure to be investigated.

Dr. Goodwin’s weekly radio programs have often touched on subjects important to the commercial interests of the companies for which he consults. In a program broadcast on Sept. 20, 2005, he warned that children with bipolar disorder who were left untreated could suffer brain damage, a controversial view.

“But as we’ll be hearing today,” Dr. Goodwin told his audience, “modern treatments — mood stabilizers in particular — have been proven both safe and effective in bipolar children.”

That same day, GlaxoSmithKline paid Dr. Goodwin $2,500 to give a promotional lecture for its mood stabilizer drug, Lamictal, at the Ritz Carlton Golf Resort in Naples, Fla. In all, GlaxoSmithKline paid him more than $329,000 that year for promoting Lamictal, records given to Congressional investigators show.

[From Radio Host Has Drug Company Ties – NYTimes.com]

Kudos to Senator Grassley, by the way, who isn’t all bad.

My radio-listening mornings have been replaced by sleeping in, so I cannot verify or deny NPR’s claims to be canceling the show as soon as the current episodes are aired, but the controversy first emerged way back in May of 2008. NPR’s Ombudsman tried to spin the fact that technically, The Infinite Mind is not an NPR show:

But more importantly, the show didn’t disclose that the guests and host had some financial ties to makers of anti-depressants. “To me, it’s not terribly relevant whether there’s a clear scientific link between anti-depressants and suicide,” said Gary Schwitzer, publisher of HealthNewsReview, an independent website that evaluates health coverage. “Bill Lichtenstein does good work. But he should have disclosed the financial ties.”

One of the guests was Peter Pitts, a former Food and Drug Administration official. The show’s host doesn’t mention that Pitts is senior vice president for global health affairs at a public relations firm. That firm represents drug companies that make anti-depressants. Lichtenstein acknowledged that Pitts’ business ties should have been mentioned. He said Pitts didn’t disclose them while the Website Center for Medicine in the Public Interest, where Pitts is president, says he did.

“If we had known, and (full mea culpa here) we should have, we would have disclosed that connection,” wrote Lichtenstein in a response on Slate’s, The Fray. “Pitts apparently didn’t disclose it elsewhere, either – he’s appeared on NPR’s Talk of the Nation as well as PBS’ News Hour with Jim Lehrer, without either of those programs mentioning the PR company ties.” (Slate responded to Lichtenstein on May 12.)

Lichtenstein is correct about Talk of the Nation. Pitts appeared on the show in June 2005, one year after joining the public relations firm Manning Selvage & Lee, according to the firm. The call-in show identified him only as with the Pacific Research Institute, which lists itself as a non-profit educational charity promoting free market policy solutions.

Another issue is The Infinite Mind’s funding. According to Lichtenstein, he takes no more than 15 percent of the budget from any one sector. In 2006, he told me, the program got $100,000 from Eli Lily, which makes the anti-depressant, Prozac.

All that said: Is The Infinite Mind an NPR show?

Technically, it depends on what you mean by an NPR show.

but then recommended NPR add disclaimers:

a few things should happen. On NPR’s website listing “popular public radio shows,” NPR should make it clear which are distinctly NPR-produced shows and which ones are not. For instance, the site lists Prairie Home Companion and provides a link, even though the popular show is produced and distributed by American Public Media, a competing public radio service.

The Infinite Mind, particularly since it deals in the controversial world of science and medicine, should include information on its website about how it is funded. It should also add Peter Pitts’ public relations job to the link for the “Prozac Nation” episode and to any related transcripts.

Being upfront about real or potential financial conflicts of interest is key to establishing credibility. Financial associations don’t mean that experts should necessarily be disqualified as commentators, but the public must be told about them.

With the Internet, it is much easier for news operations to be transparent, and they should take advantage of the ability to be more transparent if they ever want to win back the public’s respect and trust.

Again, I don’t listen to the show, but it seems as if NPR never followed this advice:

Margaret Low Smith, vice president of National Public Radio, said NPR would remove “The Infinite Mind” from its satellite radio service next week, the earliest date possible. Ms. Smith said that had NPR been aware of Dr. Goodwin’s financial interests, it would not have broadcast the program.

and Dr. Goodwin was very concerned about maintaining his home in Aspen, and wasn’t going to let any damned ethics get between him and that sweet, sweet drug corporation cash…

In the fine print of a study he wrote in 2003, Dr. Goodwin reported consulting or speaking for nine drugmakers, including Pfizer, Johnson & Johnson and Novartis. Mr. Grassley asked for payment information only from GlaxoSmithKline. Dr. Goodwin said that in recent years, GlaxoSmithKline paid him more than other companies.

He said that he had never given marketing lectures for antidepressant medicines like Prozac, so he saw no conflict with a program he hosted in March titled “Prozac Nation: Revisited.” which he introduced by saying, “As you will hear today, there is no credible scientific evidence linking antidepressants to violence or to suicide.”

That same week, Dr. Goodwin earned around $20,000 from GlaxoSmithKline, which for years suppressed studies showing that its antidepressant, Paxil, increased suicidal behaviors.

Footnotes:
  1. well, $1,400,000 isn’t petty cash, but Dr. Goodwin wasn’t hurting for cash [↩]

MillerCoors selects Chicago HQ

Seth Anderson0 comment

MillerCoors1 is moving headquarters from Milwaukee to Chicago:

A River never forgets
[Chicago River just south of Jackson]

MillerCoors announced Wednesday that it has signed a 15-year lease agreement for nearly 130,000 square feet of office space for its new headquarters location at 250 S. Wacker Drive in downtown Chicago.

In July, following the closing of a transaction to combine the U.S. and Puerto Rico operations of Milwaukee-based Miller Brewing Co. and Coors Brewing Company of Golden, Colo., the newly formed MillerCoors selected Chicago as the home city for its corporate headquarters.

MillerCoors selected the West Loop high-rise office building because of its “dynamic environment for employees and visitors, access to public transportation, green space, and surrounding amenities,” MillerCoors management said.

The new location provides a unique opportunity to establish MillerCoors identity as a beer company in downtown Chicago, MillerCoors chief executive officer Leo Kiely said.

“We are a beer company and you’ll know that as soon as you walk through the doors of our Chicago headquarters,” said Kiely. “The offices will showcase our brands and create a work environment that inspires our employees’ passion for beer.”

MillerCoors will be the largest tenant in the building housing nearly 400 employees on eight floors. The headquarters will house a majority of MillerCoors senior executives, as well as marketing, human resources, legal, finance, information technology and communications divisions.

Chicago-based architecture and interior design firm VOA has been selected for the interior design and construction of the headquarters.

As part of the project, VOA will develop sustainable and environmentally responsible designs.

[From MillerCoors selects Chicago headquarters site – The Business Journal of Milwaukee: ]

(h/t Colonel Tribune’s twitter feed)

Minor quibble, I consider the Chicago River the demarcation between the Loop and the West Loop, and 250 S. Wacker is on the east of the river, not the west.


View Larger Map

Chicago River Taxi is Yellow
[Chicago River, near Jackson and Wacker]

Footnotes:
  1. what a lame-o name [↩]

Ethics Not Important for McCain Ranch

Seth Anderson1 Comment

For all of McCain’s yammering about changing the culture of corruption in Washington, you’d think he’d start by cleaning up his own corruption first. I’m sure you could call up Verizon or AT&T and complain about your cellphone reception, and they’d install cell-phone towers in your remote location, free of charge, right?

Early in 2007, just as her husband launched his presidential bid, Cindy McCain sought to resolve an old problem – the lack of cellphone coverage on her remote 15-acre ranch near Sedona, Ariz., nestled deep in a tree-lined canyon called Hidden Valley.

Over the past year, she offered land for a permanent cell tower, and Verizon Wireless embarked on an expensive public process to meet her needs, hiring contractors and seeking county land-use permits.

Verizon ultimately abandoned its effort to install a permanent tower in August. Company spokesman Jeffrey Nelson said the project would be “an inappropriate way” to build its network. “It doesn’t make business sense for us to do that,” he added.

Instead, Verizon delivered a portable tower known as a “cell site on wheels” – free of charge – to the McCain property in June…

In July, AT&T followed suit, wheeling in a portable tower for free to match Verizon’s offer. “This is an unusual situation,” AT&T spokeswoman Claudia B. Jones said. …

Ethics lawyers said Cindy McCain’s dealings with the wireless companies stand out because her husband is a senior member of the Senate commerce committee, which oversees the Federal Communications Commission and the telecommunications industry. He has been a leading advocate for industry-backed legislation, fighting regulations and taxes on telecommunication services.

Sen. John McCain (R-Ariz.) and his campaign have close ties to Verizon and AT&T. Five campaign officials, including manager Rick Davis, have worked as lobbyists for Verizon. Former McCain staff member Robert Fisher is an in-house lobbyist for Verizon and is volunteering for the campaign. Fisher, Verizon chief executive Ivan G. Seidenberg and company lobbyists have raised more than $1.3 million for McCain’s presidential effort, and Verizon employees are among the top 20 corporate donors over McCain’s political career, giving his campaigns more than $155,000.

McCain’s Senate chief of staff Mark Buse, senior strategist Charles R. Black Jr. and several other campaign staff members have registered as AT&T lobbyists in the past. AT&T Executive Vice President Timothy McKone and AT&T lobbyists have raised more than $2.3 million for McCain. AT&T employees have donated more than $325,000 to the Republican’s campaigns, putting the company in the No. 3 spot for career donations to McCain, according to the nonpartisan Center for Responsive Politics.

“It raises the aura of special consideration for somebody because he is a member of the Senate,” said Stanley Brand, a former House counsel for Democrats and an ethics lawyer who represents politicians in both parties.

[From Exclusive: Verizon and AT&T Provided Cell Towers for McCain Ranch – Washington Post Investigations]

What a perfect description of John McCain: special consideration for some, and bupkis for the rest of us. The tower would be so infrequently used, it made no business sense, unless you are helping out your friend in Washington, D.C.

Three telecommunications specialists consulted by The Post said the proposed site covers so few users that it is unlikely to generate enough traffic to justify the investment. Robb Alarcon, an industry specialist who helps plan tower placement, said the proposed location appeared to be a “strategic build,” free-of-charge coverage to high-priority customers. A former Verizon executive vice president, who asked not to be named because he worked for the company, agreed with Alarcon, saying, “It was a VIP kind of thing.”

Escaped Red Guard

The Atlantic’s Joshua Green follows up (and please click through if you are interested in the topic, there are several primary documents hosted at The Atlantic)

What’s clear from the report is that the process of putting up a tower required a lot of work—in addition to consultants and archeologists and Indian tribes, it meant notifying all sorts of government agencies, as the report lays out. What’s also clear from the public record is that Verizon knew full well whose non-sacred Indian land this ranch belonged to. Though the formal, bureaucratic name for the McCain’s ranch seems to be “AZ 2 Hidden Valley Ranch,” Verizon’s internal map, obtained by The Atlantic (it was part of a Verizon engineer’s report on the property), refers to it as “John McCain’s cabin.” So while Cindy McCain may indeed have requested the tower over the web like an ordinary millionaire rancher with spotty phone reception, Verizon was well aware that she was anything but that. (As of this posting, Jeffrey Nelson, the Verizon spokesman, hadn’t returned my call.)

All of this suggests a number of things: Rogers looks to have been correct in stating that the Secret Service asked for, and received, temporary towers—but that doesn’t address the parallel issue of the permanent towers, long underway until just recently, that lay at the heart of the Post piece and in the public record. The McCains may not have asked Verizon for any special favors—but, wittingly or not, they sure look like they were about to receive them. To my mind, Verizon looks worst of all: the company is claiming that it abandoned the tower because it wouldn’t “make business sense to do it.” In a sense, this is self evident: you don’t have to look any further than a map of the area to see what a remote and sparsely populated place is “AZ 2 Hidden Valley Ranch.” And so the only reason to embark on the two-year process of lawyers, regulators, consultant, archeologists, and Indians is if you’re seeking a payoff of another kind.