[Marxism] A Bankrupt LA Times and Sam Zell's Donations to Rahm Emanuel

[Louis Proyect]

http://www.openleft.com/showDiary.do?diaryId=10340
A Bankrupt LA Times and Sam Zell's Donations to Rahm Emanuel
by: Matt Stoller
Mon Dec 08, 2008 at 17:09

So the debt-laden Tribune Company, owner of the LA Times and Chicago 
Tribune, went bankrupt; that's not a surprise, the newspaper business is 
in dire straights and this company has been in trouble for years.  But 
the details here are fascinating.  The Tribune took on most of its debt 
recently, in a transaction taking the company private put forward by 
billionaire conservative Sam Zell, who is widely known in media reform 
circles as one of the single worst influences on media policy in the 
country.

The FCC actually tried to block this transaction on the grounds that 
taking the Tribune private would require them to relax cross-ownership 
requirements.  Zell's contempt for journalism in general and his 
employees is legendary, with one clip online showing Zell cursing out a 
journalist employee asking him a question at a public forum.  This 
extended to financial self-dealing, with Zell financing most of the deal 
by borrowing against the employee pension and stock ownership program. 
He himself only put $315 million into the total $8.5 billion deal.

The Teamsters, Common Cause, and the Media Access Project all argued 
that the sale of the Tribune would damage local communities, and with 
Zell's overleveraged strategy combined with immediate layoffs, they were 
right.  But the FCC ignored their points and allowed Zell to proceed 
anyway.  The question is why, and the answer, as usual in DC, is a 
mixture of influence peddling and social ties.

     Last year, Emanuel and Sen. Richard Durbin, D-Ill., wrote to the 
Federal Communications Commission, urging the agency to act quickly on 
the sale of Tribune Co. to real-estate magnate Sam Zell. The lawmakers 
said the FCC shouldn't allow its review of its media- ownership rules to 
delay completion of the transaction.

Both Dick Durbin and Rahm Emanuel received substantial donations from 
the predominantly right-wing Zell, with Emanuel having an especially 
close set of ties.  Zell gave to him for his contested 2002 primary 
slot, after Emanuel had just finished his stint as a Chicago investment 
banker.  Their social worlds are so close that Emanuel actually attended 
the strongly pro-Israel school that Zell built.  None of this is to 
allege some sort of conspiracy, as local media barons tend to have a 
great amount of power everywhere.  In fact, the story, while fetid, is 
only different because Zell combined several forms of acceptable legal 
corruption in one set of egregious moves.

Much to his credit, Obama stayed out of Zell's orbit.  Zell was a huge 
McCain donor and blamed Obama and Clinton for the sour economy.  That 
month, of course, in the throes of a debt-laden company, Zell still 
found time to throw himself an 800 person birthday party in a 'tented 
fantasyland' with the Eagles providing the entertainment.

So while there is a lot of hand-wringing at the newspaper business 
dying, there's almost no focus on how egregiously mismanaged and corrupt 
these companies often are.  The New York Times (and until its sale the 
Wall Street Journal) were framed as 'family dynasties' akin to public 
trusts, though how nepotistic control of powerful for-profit media 
corporations is some sort of public trust is a mystery.  Local newspaper 
publishers often have strong public policy preferences, such as ending 
inheritance taxes, and they use their newspapers to pursue them.  Zell's 
horrific legal theft from his employees, his unseemly political 
influence with high-level Democrats and Republicans, his financial 
gamesmanship, and his general contempt for the product itself are just 
particularly obvious.