Archive for May 2009
General Motors will file a bankruptcy petition at 8 a.m. Eastern on Monday, CNN is reporting as it quotes a source with direct knowledge of the bankruptcy proceedings.
President Barack Obama will address the nation shortly before noon Eastern, the report says, in an effort to explain the rationale for the filing and his hopes for the future, two officials close to the situation told CNN.
“Today will rank as another historic day for the company — the end of an old General Motors and the beginning of a new one,” the administration stated in documents released Sunday.
Taxpayers will be the majority owners of the Chapter 11 company that at one time sold half the cars built in the United States. The “new GM” will get $30.1 billion in bankruptcy financing from the federal government. This is on top of the $19 billion it has already received in taxpayer funds. White House officials said that the Treasury “does not anticipate providing any additional assistance” beyond that. The federal government will have a 60 percent equity stake in the retooled automaker, and 12 percent will be held by the Canadian government, which is lending $9.5 billion to the company.
GM stock closed at about 75 cents a share on Friday, and is sure to be worthless soon.
Months ago, GM executives were telling people that the company would not file for bankruptcy.
“GM going through bankruptcy is a very positive thing for the auto industry: They should emerge as a reasonable competitor,” Len Blum, managing director at investment- banking firm Westwood Capital LLC in New York, told Bloomberg News. “The only thing that’s been holding GM back is labor contracts and relationships with debtors and franchisees. All that should be cleansed in a bankruptcy.”
CNN reported on the breakdown of ownership:
A trust established to fund health-care benefits for retirees of the United Auto Workers union will own 17.5 percent of the company, and get the right to purchase another 2.5 percent. The governments of Canada and Ontario will lend $9.5 billion and receive 12 percent of the equity in the new GM. Bondholders who lent GM $27 billion will forgo much of what they are owed and instead get a 10 percent share of the new company plus the right to secure another 15 percent.
In addition, investors who own 54 percent of those bonds have agreed to not fight plans for a quick bankruptcy. The deal could make it easier for GM to restructure by neutralizing some of the opposition to a bankruptcy filing.
GM intends to eliminate 20,000 jobs and close 11 factories by 2010. It will idle an additional three, but try to reopen a facility to build a new small car, administration officials said. CNN reports that it currently has 80,000 hourly and salaried U.S. employees, half of its workforce in 2001. GM has already said it will cut 40 percent of its 6,000 retail dealerships by next year and drop four brands — Hummer, Saab, Saturn and Pontiac. CNN says GM dealerships employ 300,000 nationwide. In addition, there are hundreds of thousands of workers in the auto parts industry and GM suppliers whose livelihood depend on the automaker.
Here’s something you don’t see every day.
A moderate think tank in Tehran, led by Iran’s former top nuclear negotiator, has accused President Mahmoud Ahmadinejad of distorting facts about the country’s nuclear program to depict himself as a hero and improve his chances in the upcoming election, according to The Jerusalem Post.
… the Center for Strategic Research, led by former nuclear negotiator Hasan Rowhani, said Ahmadinejad has attempted to downplay the role of his predecessors in developing Iran’s nuclear program, which was started in the 1980s under former Prime Minister Mir Hossein Mousavi, the president’s leading election challenger.
It also accused Ahmadinejad of exaggerating his role in standing up to the West over a 2003 deal his reformist predecessor, Mohammad Khatami, reached with three European countries to temporarily suspend Iran’s uranium enrichment program.
Ahmadinejad has called the deal, which was negotiated by Rowhani, “disgraceful” and said he restored Iran’s dignity by resuming the country’s enrichment program after he took office in 2005. But the think tank noted that Khatami actually reversed the freeze shortly before Ahmadinejad took office in response to international demands to permanently suspend the nuclear program.
“It’s deploring that some historical facts have deliberately been distorted in the past four years,” the group said in a statement issued Friday.
The 2003 deal with Britain, France and Germany was aimed at easing Western fears that Iran was seeking to build nuclear weapons – a charge that Tehran has denied. The think tank said Iran’s Supreme Leader Ayatollah Ali Khamenei approved the deal, which it said was “wise” because it was temporary and saved Iran from UN punishment.
In contrast, the group said Ahmadinejad’s hard-line policy has prompted the UN to impose three rounds of financial sanctions on Iran for failing to suspend uranium enrichment – a process that can produce fuel for a nuclear reactor or material for a bomb.
Iran first began enriching uranium under Ahmadinejad’s leadership in Feb. 2006 and produced nuclear fuel for the first time in April of that year.
The think tank said Ahmadinejad’s decision to dismiss the UN sanctions as “worthless” and “torn bits of paper” has only brought greater harm to Iran.
Rowhani has invited Ahmadinejad to debate Iran’s nuclear policy, but the president has not yet responded.
The alternative weekly publications of the New Mass. Media group, the Hartford Advocate, New Haven Advocate and Fairfield County Weekly have taken the unusual step in outsourcing all of their editorial content to freelance journalists in India.
All the local news, arts and entertainment reviews, restaurant critiques in the Advocate papers in New Haven and Hartford plus the Fairfield County Weekly were written by Indian freelancers hired for the occasion using ads on Craigslist sites in Mumbai and Bangalore — the two favorite spots for U.S. outsourcing to India. “It’s been fascinating to me to see this go from a chuckle in an edit meeting to an entire issue,” Group Managing Editor John Adamian told Editor & Publisher’s Mark Fitzgerald.
The first issues will be released Thursday with the cover of each paper each paper emblazoned with the statement: “Sorry, we’ve Been Outsourced. This Issue Made In India,” according to editorsweblog.org.
The relationship between the content and the reporter has produced results that may provoke some bemusement among the Connecticut readership. The pieces outsourced cover local news, entertainment and culture. Nilanjana Bhowmick enlightens Essex (Conn.) residents about the annual Rotary Club Shad bake, and advises, “Enjoy shad the way you feel comfortable. If George Washington was not daunted by its bones, why should you? After all, shad is not just a fish, it’s a celebration of life!”
Immediate reactions of readers ranged from “this is an interesting, entertaining and provocative idea” to “some people who think it’s idiotic,” Adamian revealed. The publishers were conscious that they would inevitably risk encountering problems of a professional and logistical nature, “What if they’re really good at it?” Adamian said. “What if we laugh ourselves out of a job? And then the questions grew more practical and more pressing: How do we coordinate an interview between an Indian journalist and a Californian musician with the 12-plus-hour time difference?”
The journalists replied to advertisements posted on Craigslist on the Mumbai and Bangalore sites, the primary cities for US outsourcing. “We got some responses from people who were very, very qualified and had written for The Guardian, the BBC and The Times of India – and were well outside our budget,” Adamian said. In an explanatory note for online readers, the staff of the Advocate qualified that outsourcing was “not cheap” but the “experiment” was worth the “price”, in the longer term campaign for the protection of classic journalism. Ultimately, with the benefit of wisdom through trial and error, the ‘old school’ local journalist could be reinstated with aplomb.
“But it’s clear that in an age when publications are aggressively cutting costs and reducing staffs, India’s millions of wired English speakers may present an irresistible resource. If so, our Indian colleagues will have earned the last laugh.”
The Nieman Foundation at Harvard University announced today that it would suspend the Nieman Conference on Narrative Journalism and the Nieman Seminar for Narrative Editors during the 2009-2010 academic year.
“This will disappoint those who have participated in the conferences in the past and who anticipated attending another narrative gathering in the spring of 2010. This difficult step reflects the foundation’s need to make a major reduction in spending for the next fiscal year, beginning in July,” Robert H. Giles, Nieman Foundation curator, wrote in a memo obtained by Jim Romenesko.
The annual conferences, which were attended by hundreds of journalists and writers, were part of our strategy to establish the Nieman Foundation as a leader in supporting the value of long-form storytelling.
This is just another blow to the world of journalism, especially in a age where 140-character tweets are taking over. It’s impact was best described by blogger, author and former Los Angeles Times staffer Scott Martelle.
… I moderated a couple of panels at the most recent conference this past March, and every time I’ve gone I’ve come away with a deeper understanding of how to make narrative work, and a broader appreciation for the folks who do it, and teach it, exceedingly well (Adam Hochschild, a friend and regular panelist, comes to mind).
This really is a loss to the art of journalism.
The Portland (Maine) Press Herald’s largest union voted by 161 to 19 this afternoon to accept wage and benefit concessions in an effort to allow the Seattle Times Co.’s sale of its Blethen Maine subsidiary. A union official told reporters that he expects the deal to close by mid-June.
Three more unions still need to vote on the deal, which includes a 10 percent wage cut, a two-year pay freeze, a pension freeze and a two-year suspension of 401k contributions. In return, employees get a 15 percent stake in the company.
Richard Connor, editor and publisher of the Times Leader in Wilkes-Barre, Pa., has been negotiating to buy the Press Herald, the Morning Sentinel in Waterville, the Kennebec Journal in Augusta and other Blethen Maine properties.
He thanked the union for its months of work “to reach what we believe will be a turning point for all three Blethen Maine newspapers.”
Newspaper Guild President Tom Bell told the Associated Press that concessions from the union — including an unknown number of layoffs — represent members’ contribution to an ownership stake. Under the deal, three union representatives will serve on the board of the company.
Researchers at a Donald W. Reynolds Journalism Institute conference have developed four tools newspaper publishers can use to increase revenues and profits.
“With newspapers in crisis Americans are losing their highest quality source of information” said Esther Thorson, director of research at the Reynolds Journalism Institute at the University of Missouri. “Independent researchers have developed several approaches that newspaper managers may not know exist which can help newspapers increase revenues and grow profits.”
Thorson convened a forum at the University of Missouri on May 18 and 19 that brought together both newspaper executives and experts in news research. The purpose was to explore research designs aimed at solving the industry’s urgent problems using advanced analytic tools with practical applications. The conference, titled “How Newspapers Could Have Saved Themselves and How Some Still Can,” identified financial strategies to significantly increase revenues and profits and to help newspaper finance managers better understand how budgeting decisions across news, advertising, and circulation departments affect revenues and profits.
Among the approaches presented:
1. A resource optimization model publishers can use to measure whether they are investing too much, too little, or the right amount among news, ad sales, and distribution departments for maximum revenue growth. The model was tested on hundreds of newspapers by Thorson, Shrihari Sridhar, assistant professor at Michigan State University, and Murali Mantrala, Sam. M. Walton distinguished professor of Marketing at the University of Missouri.
2. Guidelines for optimal distribution of layoffs and buyouts among departments. This approach, based on dozens of newspapers’ experiences, shows which departments should shoulder the biggest and smallest shares of employee layoffs for optimal revenue and profit maintenance. Developed by Thorson, Mantrala, Sridhar, and Elina Tang of the University of Missouri, the study found that cost-cutting evenly across the board at many newspapers may actually destroy profitability.
3. A new page-view pricing strategy for online and print ads that offers a more accurate picture of consumer online behavior for advertisers, offered by Jim Smith, vice president of research for Morris Communications.
4. Online pricing strategies that can help publishers decide how to repurpose, hold back, or charge for online content that also appears in print. One approach, similar to how movie studios have multiple revenue streams from theater showings, pay-per-view, DVD sales, and foreign sales, was offered by Hugh Martin, associate professor at the Grady College of Journalism and Mass Communication at the University of Georgia. A second approach was presented by Hsiang Iris Chyi, assistant professor at the University of Texas at Austin.
“Newspapers hold rich sources of data which can be mined for additional revenue generation,” Thorson said. “Academic researchers have the expertise to mine this data for the benefit of newspapers and their customers.”
Top newspaper executives gathered Thursday in Chicago in a semi-secret meeting to discuss charging for online content and tried to determine if they did, would they be violating antitrust laws.
John Sturm, chief executive officer of the Newspaper Association of America, which hosted the meeting, told Jennifer Saba and Mark Fitzgerald of Editor & Publisher that at no point was price discussed during the gathering.
At the meeting on Thursday were McClatchy chief Gary Pruitt, Dallas Morning News Publisher Jim Moroney, Lee Enterprises’ Mary Junck and E.W. Scripps Mark Contreras.
Also in attendance were William Baer, a partner at the Washington, D.C., law firm Arnold & Porter and a former bureau director for the Federal Trade Commission.
“Everybody in the room is an adult,” Sturm told E&P today. “Price was never discussed and there was no reason to discuss price — it’s always a local decision.”
Northwestern law professor Fred McChesney told E&P that newspapers could collectively charge for online content. McChesney said the courts have upheld similar arrangements, including the 1979 Supreme Court decision involving the music license company Broadcast Music Inc. and the Columbia Broadcasting System.
In that case, he explained, BMI represented all the owners of music and sold packages to radio stations and other broadcasters. The individual owners of the music agreed to a pay structure; BMI turned around and sold blanket licenses for a single price. CBS, however, accused BMI of price fixing.
The high court decided that the BMI arrangement was allowable in that specific case because it was extremely costly for individual owners of the rights to negotiate individually with each station.
The court agreed it was a form of price fixing, but the alternative was so expensive for individuals it would never get done — and in fact it would encourage people to steal the rights.
“Generally, newspapers are in trouble,” McChesney told E&P. “It could well be that without this arrangement, newspapers are going to go out of business. That could be a point in their favor.”
Zachary M. Seward, writing for the Nieman Journalism Lab today, had four observations about charging for online content that seem to be missing in the debate:
1. Newspaper companies that attempt a pay wall imperil their value.
2. Pay walls aren’t necessarily intended to generate revenue.
3. “It’s not pay wall/no pay wall.”
4. Even if pay walls are the future of newspapers, they aren’t the future of news.