Thursday, September 29, 2005

Willes and Unterman Cost The Tribune Co. At Least $850 Million

Probably no nightmare in the history of Los Angeles is worse than the sale of the Times-Mirror newspapers, including the L.A. Times, to the Tribune Co. of Chicago.

It's certainly not been good for the Times, down more than 200,000 in circulation, threatened by persistent cost-cutting, suffering through catastrophes on the editorial page and repeated staff reductions.

But it's not been good for the Tribune either. Now, due to a federal court ruling that executives Mark Willes and Tom Unterman grossly mishandled the sale of two Times-Mirror Companies, including the quality book manufacturer, Matthew Bender, the Tribune owes a $850 million tax bill to the government.

Willes and Unterman, so clever while they were knifing each other under the table (Chief Financial Officer Unterman arranged the sale of Times-Mirror to the Tribune for the Chandler family, without letting CEO Willes know what he was up to), to think they could fool the government's tax auditors into thinking that they owed no tax on a taxable sale, are the bad boys in this drama.

Taken were the Tribune executives. Maybe, they will rescue themselves in bringing an appeal, but they have decided now to pay the tax bill pending further decisions, out of fear they will owe many millions of dollars more in interest if they go forward with an appeal and lose.

Willes walked away from the Times with a reported $64 to $100 million in severance when the newspapers were sold from underneath him, and even Unterman got a $1 million bonus for arranging the Bender sale. Two miscreants are smelling like roses while the poor Tribune, (we can feel sorry for them just once), is stuck with paying the taxes.

Would Tribune have bought Times-Mirror if it knew it would face such a large tax bill five years later? Probably not. And one of these days, like the Pharoah confronted with Moses and his plagues in ancient Egypt, the Tribune Co. executives will probably decide to let the Times go, selling the paper for a loss, maybe even to David Geffen.

Willes, inclined to boast always in the most silly way, thought he was getting Times-Mirror a $1.4 billion profit without having to pay any taxes. Now, a federal judge has told the Tribune it will pay the taxes.

Are Willes and Unterman smiling or ashamed? Unlike Richard Scrushy at HealthSouth down in Alabama, both have come away without victories in the courts, or even a glamorous third wife like Leslie Scrushy.

Could there be a lawsuit against Willes and Unterman by all those whose careers and fortunes were impacted by them?

5 Comments:

Anonymous JV said...

It would seem to me that is was the Chandler “family” that were the greedy ones, pushing Willes and Unterman for higher “creative” returns and for the sale of “their” beloved company to Tribune. The “family” just outsmarted Tribune just like they did us.

9/29/2005 6:43 AM  
Anonymous Anonymous said...

This morning, I received an LA Times telemarketing call. The rep thought lower prices would encourage me to renew the 20-year subscription I cancelled earlier this year. Since I had cancelled due to biased reporting rather than the subscription price, I told him that reducing the price was not likely to get me to subscribe again. His response was "Well, 90% of our subscribers are liberal, so that's the audience we choose to focus on."

The demographics of LA County are not 90% liberal/10% conservative. So it seems the LAT has a faulty business plan. Why would they not want to focus on what could be a large unreached target population? Dumb answer.

9/29/2005 6:31 PM  
Anonymous Edward D. Padgett said...

As a thirty-three year employee of the Los Angeles Times Pressroom I'm wondering how much longer I will be employed by the newspaper?

With the stock price setting new lows the past two days I wonder how many employees of the Tribune will be getting pink slips in December to cover the cost of paying for the Mathew-Bender fine?

Edward Padgett

9/29/2005 9:56 PM  
Blogger shelly sloan said...

You don't have to wonder, Edgar, it will be a lot.

At the end of the day, they will have to cut even more to pay for their greed, and it is always the little guy who will pay.

The business plan of the Times is and was based upon an assumption that they controlled the media in LA. The Internet, and the Bloggers have changed the world, and the Times just keeps thinking if they call enough people and offer them lesser rates, they will come back.

Well, I'm with Anon. 6:31 above; I canceled my subscription because I could not stand the description of those murdering homicidal maniacs as "insurgents" or "freedom fighters", rather than "cold blooded killers if innocent human beings". I became sick of the arrogant John Carroll and the weasely Michael Kinsley and their liberal line.

The subscribers of the LA Times might very well end up being 90% liberal and 10% moderate/conservative, but that'll be because all we moderates and conservatives have left their ranks.

I still read the local news online, but only the stories I care about, and only after I've read The Daily News. I'd subscribe to the DN, but they don't deliver to Santa Monica or West Los Angeles.

Ken, by the time you "Take back the Times" there's gonna be nothing to take back.

9/30/2005 6:32 AM  
Anonymous Anonymous said...

Working for The Hartford Courant (part of the Tribune/Times Mirror aquisition) we have been reported to be producing 24% net profit, yet Tribune has laid people off in mid-career, frozen pensions, increased health care costs, and reduced staff to ridiculously low levels. I wonder where the "Brains" of Tribune are and they don't appear to be at the "Top".

2/09/2006 2:23 AM  

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