The biggest controversey about today's news at my client's office comes down to this: who is actually the stupidest governor in the US, Blagojevich or Palin? The morning's events bring this important question to the fore.
Exhibit A: The governor.
On the issue of the U.S. Senate selection, federal prosecutors alleged Blagojevich sought appointment as Secretary of Health and Human Services in the new Obama administration, or a lucrative job with a union in exchange for appointing a union-preferred candidate.
Blagojevich and Harris conspired to demand the firing of Chicago Tribune editorial board members responsible for editorials critical of Blagojevich in exchange for state help with the sale of Wrigley Field, the Chicago Cubs baseball stadium owned by Tribune Co.
Blagojevich and Harris, along with others, obtained and sought to gain financial benefits for the governor, members of his family and his campaign fund in exchange for appointments to state boards and commissions, state jobs and state contracts.
"The breadth of corruption laid out in these charges is staggering," U.S. Attorney Patrick Fitzgerald said in a statement. "They allege that Blagojevich put a 'for sale' sign on the naming of a United States senator; involved himself personally in pay-to-play schemes with the urgency of a salesman meeting his annual sales target; and corruptly used his office in an effort to trample editorial voices of criticism."
U.S. Attorney Pat Fitzgerald's office put out a press release (pdf) that is worth reading.
Exhibit B: The newspaper.
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).
Good times, good times.
The Tribune is reporting this hour that Illinois Gov. Rod Blagojevich has been taken into Federal custody in Chicago.
Blagojevich joins a long line of Illinois governors hosted by Club Fed going back to the early days of the Republic.
First, hoping to capitalize on their sterling reputation for honesty and good management, Tribune claims that the Cubs sale will continue as planned:
Tribune Co. did not include the franchise and Wrigley Field in its bankruptcy petition, allowing the media company to retain control of the sales process. Nonetheless, Tribune Co. will have to keep creditors informed about the auction, and the winning bid will have to be signed off by a bankruptcy judge, sources close to the situation told the Chicago Tribune.
Moreover, the bidders are unsure of how to proceed. "I really don't know enough to comment," said one bidder. "Some very complex issues have arisen."
Some issues, yes. I'm sure publisher Tony Hunter can clear things up:
What does all this mean for our readers, viewers and advertisers? As a practical matter, very little. Tribune is continuing to operate its media businesses, including its newspapers, television stations and websites. And, at Chicago Tribune, we remain dedicated to providing you with the level of service and news coverage you've come to expect from us every day.
The decision to restructure our debt was driven by the dramatic and unexpected operating conditions we've encountered this year. We have experienced the perfect storm -- a precipitous decline in revenue and a tough economy has coupled with a credit crisis, making it extremely difficult to support our debt. All of our major advertising categories have been dramatically impacted.
In other words, we had no way of knowing that taking on $8.2 billion in debt during a credit crisis while denuding our news departments of reporters under the direction of a man who doesn't actually read newspapers could, in any way, get in the way of us transferring vast amounts of wealth to our major shareholders. Hoocoodanode?
Sad. Very sad.
It's official:
The Chicago Tribune's parent company was working with bankruptcy advisers at investment bank Lazard and law firm Sidley Austin to weigh financial options, sources told the Chicago Tribune for this morning's paper.
Tribune Co. has been struggling under a $13 billion debt load since real estate magnate Sam Zell took the company private last December in an $8.2 billion leveraged buyout. The company faces a deadline today on $70 million of unsecured debt it took on before Zell's deal.
More:
Analysts have said the sale of the Chicago Cubs baseball team by the end of this year is critical to keeping Tribune Co. within its existing debt covenants, which prohibit borrowing more than nine times its earnings before interest, depreciation and amortization.
But even a potential windfall of a Cubs sale might provide only temporary relief if the Tribune Co. and its advertisers continue to be dragged down by the current economic crisis, which has compounded the effects of splintering audiences for media companies.
My question is, did Zell expect this outcome? Or did he figure, as others have done in the past, that because he made a lot of money in one arena he was therefore qualified to work in another?
It's a little thing, but it means our evenings won't seem as gloomy from now on: tonight's sunset in Chicago is the earliest of the year. Seriously. It has to do with the speed of the earth's orbit around the sun this time of year (it's faster, as we approach perihelion).
In any event, tomorrow night the sun sets just a few seconds later than it does tonight, which just adds a little happiness this time of year.
After eight years of having a president who could barely speak English, and having him say the most reactionary, anti-labor things possible when he did manage to croak out a polysyllable, this overwhelms me with joy:
"When it comes to the situation here in Chicago with the workers who are asking for their benefits and payments they have earned, I think they are absolutely right," [President elect] Obama said Sunday....
"Have we done everything that we can to make sure credit is flowing to businesses and to families, and to students who are trying to get loans? And to homeowners who have been making payments on their homes but are still finding their property values so depressed that it becomes very difficult for them to make the mortgage payments?
"That's where the rubber hits the road and that's going to be the central focus of my administration."
I could cry, I'm so happy. For the first time in, I think, ever, I feel like my vote wasn't a compromise.
The Wall Street Journal reports that Tribune Media may go under; Crain's has more. Thanks, Sam, we appreciate it.
From my dad, yet another New York Times article to make you all warm and fuzzy inside:
Thieves Winning Online War, Maybe in Your PC
Despite the efforts of the computer security industry and a half-decade struggle by Microsoft to protect its Windows operating system, malicious software is spreading faster than ever. The so-called malware surreptitiously takes over a PC and then uses that computer to spread more malware to other machines exponentially. Computer scientists and security researchers acknowledge they cannot get ahead of the onslaught.
As more business and social life has moved onto the Web, criminals thriving on an underground economy of credit card thefts, bank fraud and other scams rob computer users of an estimated $100 billion a year, according to a conservative estimate by the Organization for Security and Cooperation in Europe. A Russian company that sells fake antivirus software that actually takes over a computer pays its illicit distributors as much as $5 million a year.
Sigh.
Still mulling over intergenerational conflict as I am, at least I have some good news about Chicago's infrastructure:
[T]he CTA today announced that Purple Express trains in the Loop will resume operation traveling clockwise on Monday, December 29. In April 2007, when three-track operation began at both the Belmont and Fullerton stations, the CTA moved Purple Express trains to travel in the same direction as Brown Line trains (counter-clockwise around the Loop) to supplement Brown Line service and help ease congestion in the Loop during three-track operation.
With fewer Brown Line trains in service as a result of three track, Purple Express trains were rerouted in the Loop to mimic Brown Line service and help customers more quickly exit the downtown area.
This won't make the ride any warmer, but it will make it faster.
Forgot to mention, it won't make it any cheaper 
, either.