The story behind Tribune's broken deal

At the end of 2007, real estate tycoon Sam Zell took control of Tribune Co. in a deal that promised to re-energize the media conglomerate. But the company struggled under the huge debt burden the deal created, and less than a year later, it filed for bankruptcy.

One of Chicago's most iconic companies — parent to the Chicago Tribune — was propelled into a protracted and in many ways unprecedented odyssey through Chapter 11 reorganization.

On Dec. 31, after four years, Tribune Co. finally emerged from court protection under new ownership, but at a heavy cost. The company's value was diminished, its reputation was tarnished and its ability to respond to market opportunities during its long bankruptcy was constrained.

Tribune Co.'s bankruptcy saga began as an era of superheated Wall Street deal-making fueled by cheap money was coming to an end. The company's tale is emblematic of the American financial crisis itself, in which a seemingly insatiable appetite for speculative risk using exotic investment instruments helped trigger an economic collapse of historic proportions.

Tribune reporters Michael Oneal and Steve Mills, in a four-part series that begins today, tell the story of Tribune Co.'s journey into and through bankruptcy, throwing a spotlight on the key decisions and missed opportunities that marked a perilous time in the history of the company, the media industry and the economy.

Read the full story, "Part one: Zell's big gamble," as a digitalPLUS member.
To view videos and photos and for a look at the rest of the series visit, chicagotribune.com/brokendeal.

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NFL analyst: Bears hiring Trestman as head coach

Chicago Tribune sports reporter Brad Biggs discusses the rumors surrounding the Bears hiring Marc Trestman. (Posted: January 11, 2013).

By Brad Biggs, Tribune reporter

12:53 p.m. CST, January 11, 2013

Chicago Bears general manager Phil Emery has at least three interviews scheduled for this weekend but Jimmy Johnson strongly implies a choice has been made for the next head coach of the team.

According to the Fox analyst and former coach of the Dallas Cowboys and Miami Dolphins, Marc Trestman will be the next head coach of the Bears. That is what Johnson wrote early this morning on his personal Twitter account.

Trestman later Friday denied the rumor in an email to the Montreal Gazette. "I have not heard from the Bears and have responded in that manner on multiple levels,” Trestman wrote.

A Bears spokesman declined comment, saying the team would maintain the policy it adopted when the coaching search process began.

Johnson employed Trestman before as a quarterbacks coach when he was he head coach at the University of Miami.

“Looks like 2 of my guys getting NFL jobs ... Chud Cleveland and my QB coach at U Trestman to Chicago,” Johnson wrote on Twitter.

Johnson has not explained the situation any further. Trestman is currently the head coach of the Montreal Alouettes in the CFL. He last worked in the NFL in 2004 with the Dolphins. The Alouettes have won two Grey Cup titles under Trestman, who had also interviewed for the head job with the Browns that went to Carolina Panthers offensive coordinator Rob Chudzinski on Thursday night.

Emery was in Green Bay on Thursday night where he interviewed Packers offensive coordinator Tom Clements. It is believed Houston Texans offensive coordinator Rick Dennison will be interviewed today. Seattle Seahawks offensive coordinator Darrell Bevell is scheduled to be interviewed on Saturday in Atlanta. Emery is scheduled to interview Indianapolis Colts offensive coordinator Bruce Arians on Sunday.

Now, Johnson did not specify Trestman was specifically coming to the Bears as head coach. It is possible he could be considered for another role but Emery is on the road looking for the team’s next head coach, not in an effort to hire the offensive coordinator for his next coach.

bmbiggs@tribune.com
Twitter @BradBiggs

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Sprint confirms it will launch BlackBerry 10 later this year

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Seattle bankruptcy hearing to decide Tully’s sale

SEATTLE (AP) — The auction for beleaguered coffee company Tully’s will likely conclude Friday in federal bankruptcy court, with an ownership group led by actor Patrick Dempsey in position to take over the chain. But Starbucks isn’t’ out of the running.

Dempsey — dubbed “McDreamy” in the “Grey’s Anatomy” hospital TV drama — claimed victory last week after an auction.

But a company that teamed up with Starbucks to bid for the Tully’s chain filed an objection Wednesday. AgriNurture Inc. says it’s still willing to proceed with its combined bid with Starbucks of about $ 10.6 million. The bid from Dempsey’s company, Global Baristas LLC, was for $ 9.2 million.

Tully’s has 47 shops in Washington and California with more than 500 employees. It filed for Chapter 11 bankruptcy protection in October.

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U.S. to review Boeing 787 design, safety

Two new incidents involving the Boeing 787 Dreamliner have been reported in Japan -- a crack in the cockpit and an oil leak. Norah O'Donnell reports.

The U.S. Federal Aviation Administration said Friday it will launch a high-priority and comprehensive review of Chicago-based Boeing's new 787's critical systems, following a rash of malfunctions this week, such as a battery fire and fuel leaks. However, federal transportation officials also supported Boeing, saying repeatedly that the plane is safe.

"We are confident about the safety of this aircraft," said Federal Aviation Administrator Michael Huerta, adding that a priority in the review will be the plane's electrical systems. He said he would not speculate on how long the review would take.

The review, an unusual move for the FAA that will not ground planes or halt production of new 787s, will examine the plane's design, manufacture and assembly, said U.S. Transportation Secretary Ray LaHood.

"Through it, we will look for the root causes of recent events and do everything we can to make sure these events don't happen again," he said. "I believe this plane is safe and I would have absolutely no reservation of boarding one of these planes and taking a flight."

Boeing shares were down 2.5 percent in midday trading to $75.15.

The announcement comes amid yet more reports Friday of problems with the highly anticipated "Dreamliner" jet, including a cracked cockpit window and another oil leak on a Japanese carrier. They add to a rash of other reported problems this week, most seriously a battery fire on a parked 787 in Boston, an incident under investigation by the National Transportation Safety Board.

The plane model is in use in Chicago for temporary United Airlines flights between Chicago O'Hare and Houston. Chicago-based United has five other 787s in service domestically. "We continue to have complete confidence in the 787 and in the ability of Boeing, with the support of the FAA, to resolve these early operational issues," a United spokeswoman said. "We will support Boeing and the FAA throughout their review."

Next week, LOT Polish Airlines plans to begin operating the region's first regular flight on a 787 between O'Hare and Warsaw, Poland. That inaugural flight is still planned for Wednesday, a spokeswoman said. All told, Boeing has delivered 50 Dreamliners to customers around the world, many to Japanese carriers.

Aviation experts have said the planes are safe and that glitches are common on new models of planes, especially ones as revolutionary as the 787, which uses mostly composite materials instead of metals to create an aircraft that's more lighter, more fuel-efficient and more comfortable for passengers. However, other observers have said the concentration of problems in a short period and the media attention they garner is damaging the reputation of Boeing, which was already under scrutiny for delivering the Dreamliner to customers more than three years late. The plane's list price is about $207 million.

The latest problems came Friday, when Japanese carrier All Nippon Airways said a domestic flight from Tokyo landed safely at Matsuyama airport in western Japan after a crack developed on the cockpit windscreen, and the plane's return to Tokyo was cancelled.

"Cracks appear a few times every year in other planes. We don't see this as a sign of a fundamental problem" with Boeing aircraft, a spokesman for the airline said. The same airline later on Friday said oil was found leaking from an engine of a 787 Dreamliner after the plane landed at Miyazaki airport in southern Japan. An airline spokeswoman said it later returned to Tokyo after some delay. No one was injured in either incident.

Boeing said Friday the 787 logged 50,000 hours of flight, with more than 150 flights occurring daily, and that its performance has been on par with the Boeing 777, which it calls "the industry's best-ever introduction" of a new airplane. "More than a year ago, the 787 completed the most robust and rigorous certification process in the history of the FAA," Boeing said in a statement. "We remain fully confident in the airplane's design and production system."

Ray Conner, president and chief executive officer of Boeing Commercial Airplanes, said Friday that the recent problems were not caused by Boeing's outsourcing of production or by ramping up production too quickly.

"We are fully committed to resolving any issue that affects the reliability of our airlines," he said.

gkarp@tribune.com

Reuters contributed
 

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'Lincoln' leads Academy Award contenders with 12 nominations

With a conspicuous diss of Kathryn Bigelow, the un-nominated director of “Zero Dark Thirty,” the Academy Awards nominations were announced Thursday morning.

“Zero Dark Thirty” was one of nine films given the best picture nomination nod. The others: “Beasts of the Southern Wild”; “Silver Linings Playbook”; “Lincoln”; “Les Miserables”; “Life of Pi”; “Amour”; “Django Unchained”; and “Argo.” With 12 nominations total, director Steven Spielberg’s “Lincoln” led this year’s pack, unusually full of films that have reached a broad mainstream audience. “Life of Pi” came in with 11 nominations; “Silver Linings Playbook” and “Les Miserables” received eight.

The best actress Oscar nominees include the oldest-ever performer in that category (Emmanuelle Riva, 85, for “Amour”) as well as the youngest (Quvenzhane Wallis, 9, “Beasts of the Southern Wild”). They’ll compete for the Feb. 24 Oscars against Naomi Watts (“The Impossible”), Jessica Chastain (“Zero Dark Thirty”) and Jennifer Lawrence (“Silver Linings Playbook”).

To the surprise of no one on this planet or any other, Daniel Day-Lewis led the best actor competition for “Lincoln.” His fellow nominees: Denzel Washington, “Flight”; Hugh Jackman, “Les Miserables”; Bradley Cooper, “Silver Linings Playbook”; and in the year’s most unsettling performance, Joaquin Phoenix, “The Master.”

“Silver Linings Playbook” fared well, against some predictions, scoring a supporting actor nomination for Robert De Niro and a supporting actress nod for Jacki Weaver. Other supporting actors nominated include Christoph Waltz for “Django Unchained”; Philip Seymour Hoffman, “The Master”; Alan Arkin, “Argo”; and Tommy Lee Jones,” Lincoln.” All have won Oscars before.

Along with Weaver, Sally Field received a supporting actress nomination, hers for “Lincoln.” The competition: Anne Hathaway, singing her guts out all the way to the podium on Feb. 24 (I’m guessing) for “Les Miserables”; Helen Hunt for “The Sessions” (more of a leading role, in fact); and Amy Adams as the Lady Macbeth of the action in “The Master.”

It’s a huge showing for “Beasts of the Southern Wild,” whose director, Benh Zeitlin, goes toe to toe against his fellow directing nominees David O. Russell (“Silver Linings Playbook”), Ang Lee (“Life of Pi”), Michael Haneke (“Amour”) and Spielberg. Along with “Zero Dark Thirty” director Bigelow, “Argo” helmer Ben Affleck, widely expected to be nominated ... wasn’t.

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Architecture writer Ada Louise Huxtable, awarded first Pulitzer for criticism, dead at 91

LOS ANGELES (TheWrap.com) – Ada Louise Huxtable, the architecture critic who was awarded the first Pulitzer Prize for criticism, has died. She was 91.

Huxtable, who was the architecture critic for the New York Times from 1963 to 1982 and, later, the Wall Street Journal, died Monday at Memorial Sloan-Kettering Cancer Center in New York, the Journal reported.

Huxtable was a firm believer in the power of tall buildings to enhance a city and decried the cookie-cutter suburban developments springing up around New York in the 1960s.

“The promise of… a new, improved suburbia in the greater metropolitan area, the dreams of beauty and better living are mire in mud,” Huxtable wrote in Newsweek magazine. She added that these suburban landscapes – including those in Staten Island “could not be better calculated to destroy the countryside if….planned by enemy action.”

In her final piece for the Journal – a look at the renovation plans for the landmark New York Public Library, dated December 3, 2012 – Huxtable wrote: “Buildings change; they adapt to needs, times and tastes. Old buildings are restored, upgraded and converted to new uses. For architecturally or historically significant buildings with landmark protection, the process is more complex; subtle, subjective and difficult decisions are often required. Nothing, not even buildings, stands still.”

A native New Yorker, Ada Louise Landsman was born March 14, 1921, the daughter of a doctor. She graduated from Hunter College in 1941. A year later, she married L. Garth Huxtable, an industrial designer, and together they produced tableware for the Four Seasons Hotel.

Throughout the 1940s, she continued graduate school at New York University but was more interested in her work as a curatorial assistant for architecture and design at the Museum of Modern Art.

From 1950 to 1963, she contributed articles to “Progressive Architecture” and “Art in America.” She became the first architecture critic of the Times in 1963. She wrote more than 10 books. Her early essays were collected in the book “Will They Ever Finish Bruckner Boulevard?”

She was awarded the first Pulitzer Prize for criticism in 1970. In 1981 she was awarded a MacArthur genius grant.

She also served for a time a juror for the Pritzker Prize, architecture’s highest honor.

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Jewel-Osco stores to be sold to Cerberus group

Jewel-Osco stores will be sold to a consortium of investors led by Cerberus Capital Management, Jewel's parent Supervalu said Thursday.

The deal, valued at $3.3 billion, also includes the Albertsons, Acme, and Shaw stores.

The announcement ends months of speculation that all or parts of the troubled grocery chain would be sold to New York-based Cerberus, an investment firm. Supervalu acquired Jewel in 2006 as part of a larger, complex acquisition of the Albertsons company.

Supervalu also reported earnings of $16 million, or 8 cents per share, in the third quarter ended on Dec. 1, compared with a year-earlier loss of $750 million, or $3.54 per share.

Excluding an after-tax gain related to a cash settlement from credit card companies and after-tax charges primarily related to store closures, it earned $5 million, or 3 cents per share.

As part of the deal, which includes $100 million in cash and $3.2 billion in debt, the five grocery chains will be acquired by AB Acquisition, an affiliate of Cerberus. Other investors in the deal include Kimco Realty Corp, Klaff Realty, Lubert-Adler Partners and Schottenstein Real Estate Group.

Following the sale, which is expected to close in the spring, a newly formed entity called Symphony Investors, led by Cerberus, will purchase up to 30 percent of Supervalu's outstanding shares for $4 each, representing a 50 percent premium over the stock's 30-day average. If Symphony cannot acquire at least 19.9 percent of the outstanding shares at that price, Supervalu must issue additional stock.

Wall Street has long expected Eden Prairie, Minn.-based Supervalu to sell some or all of its assets.

Following the deal, Supervalu will consist of its wholesale grocery business, the Save-A-Lot discount chain, and traditional grocery chains like Cub, Shop N' Save and Hornbacher's.

In a call with investors, outgoing CEO Wayne Sales said the deal brings Supervalu "a very strong balance sheet," and the ability to focus on investments in price reductions, fresh produce, and customer experience at its remaining chains. 

The new company is smaller, "with more bandwidth and leadership" to focus on its wholesale business, Save-A-Lot, and its traditional grocery stores, he said.

Sam Duncan, 61, will replace Wayne Sales as CEO. Duncan was CEO of Office Max from 2005 to 2011, and prior to that, was CEO of ShopKo, a Midwestern grocery chain. Five unidentified board members will resign as part of the deal, making room for Duncan, Albertsons CEO Robert Miller, and three new appointees. The size of the board will shrink from 10 to seven.

Concurrent with the announcement, Supervalu announced that it has secured access to a $900 million asset-based credit facility, and a $1.5 billion loan.

This deal ends a long and difficult year for one of the country's largest grocers.

Last April, Supervalu reported a loss of $1.04 billion for fiscal 2012, which included a $519 million operating loss and $509 million in interest expense. Sales also declined 3 percent, to $27.9 billion. In July, the company said it was exploring strategic alternatives, including a sale. Soon after, the company dismissed CEO Craig Herkert, with Chairman Wayne Sales stepping in to helm the troubled grocer.

Cerberus, an investor in the deal to acquire Albertsons in 2006 was long seen as the leading candidate. Last week, rumors that Supervalu was near a deal with Cerberus sent stock soaring nearly 15 percent.

In September, Supervalu said it would 60 underperforming stores, primarily from the Save-A-Lot and Albertsons chains. No Jewel locations were identified at the time. The announcement was particularly troubling to investment community because Save-A-Lot, a hard discount chain, has been Supervalu's primary growth vehicle.

Supervalu has long acknowledged that many of its stores are not price competitive. In 2012, it homed in on Jewel-Osco and the Chicago market. Supervalu surveyed customers and lowered prices throughout the store. When the company reported results for its second fiscal quarter in September, (Supervalu CEO Wayne) Sales said that Jewel had been "competitively priced throughout the store" for about six weeks.

Sales said that the initiative had resulted in "dramatic improvement" in how consumers "think about the quality of products we sell, how they feel about the service they get in various departments" and that the company was pleased with increased unit sales.

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Baseball Hall of Fame to render verdict on Steroid Era

Jon Keller reports

By Dave van Dyck




Tribune reporter

1:02 p.m. CST, January 9, 2013

Barry Bonds, Roger Clemens and Sammy Sosa finally faced a jury Wednesday that would decide whether they are worthy of the Hall of Fame, and the verdict was a resounding no: For only the eighth time, no players were selected for induction.

The inclusion of the Steroids Era players on this year’s ballot overshadowed those who were thought to have the best chance of being voted into baseball’s hallowed shrine in Cooperstown: former Chicago White Sox outfielder Tim Raines, the Houston Astros’ long-time duo of Craig Biggio and Jeff Bagwell and All-Star pitcher Jack Morris.

Also in contention was former Chicago Cubs closer Lee Smith, who was on the ballot for the 11thtime.

This Hall of Fame eligible class has received more attention than most because of the inclusion of Bonds, who won seven MVP awards; Clemens, who won seven Cy Young awards and Sosa, the former Cub who won a National League MVP award after his famous 1998 home run duel with the Cardinals’ Mark McGwire.

McGwire, the only one of those who publicly has acknowledged using performance-enhancing drugs, has failed seven times in his Hall of Fame election bid. Former Cub Rafael Palmeiro, who tested positive for a drug, has failed three times.

The so-called Steroids Era has caused division within the electorate, comprised of 10-year members of the Baseball Writers Association. They historically have been very stingy with their votes, especially considering it takes 75 percent to be included in the summer induction ceremonies.

dvandyck@tribune.com

Twitter @davandyck

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Why bother with a Facebook phone? Facebook’s app is already on 86% of iPhones and iPads

Rumors suggesting Facebook (FB) is working on a smartphone have resurfaced a number of times over the past year. Each time, Facebook denied the various claims. Facebook may indeed still be working on its own phone but as a new report from market research firm NPD Group shows, it probably doesn’t need to.

[More from BGR: Is Samsung the new Apple?]

Facebook makes money by gathering information about its users and serving targeted ads based on that data. Allowing users to update Facebook with fresh data as often as possible is obviously beneficial to the company, and smartphones present a terrific opportunity to give users access to their Facebook accounts from anywhere. The more people using Facebook’s mobile apps, the better, and Facebook’s smartphone penetration is absolutely staggering right now.

[More from BGR: iPhone 5 now available with unlimited service, no contract on Walmart’s $ 45 Straight Talk plan]

According to data published by NPD Group on Tuesday, Facebook’s iOS application was used by 86% of iPhone, iPad and iPod touch owners as of November 2012. On the Android platform, 70% of smartphone and tablet owners used Facebook’s mobile app in November.

No other third-party app even comes close to approaching Facebook’s mobile penetration. Google’s (GOOG) YouTube app is the next most popular third-party app on iOS with 40% penetration and Amazon’s (AMZN) mobile application is the second most popular third-party Android app with just 28% penetration.

So why would Facebook bother making its own phone?

One answer — perhaps the obvious one — is that an own-brand smartphone with custom software would give Facebook access to far more personal data than it can reach using third-party applications. Considering Facebook’s track record with matters relating to privacy, however, users may be reluctant to buy a Facebook phone.

In any case, a Facebook phone certainly doesn’t seem like a necessity for the time being. Instead, focusing on ways to effectively monetize the hundreds of millions of users who interact with Facebook from a smartphone or tablet each month might be a wiser use of resources.

This article was originally published on BGR.com

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