UPDATE 1-Tribune CEO quits after hostile workplace reports

(Note: language in seventh paragraph may be offensive to some
readers)

* CEO replaced after damaging reports in NYT, elsewhere

* Four-member committee takes over chief executive post

* Detailed reorganization plan expected later Friday
(Updates following court hearing)

By Tom Hals

WILMINGTON, Del., Oct 22 (BestGrowthStock) – Bankrupt newspaper
publisher Tribune Co replaced its chief executive on Friday
after a series of embarrassing news stories emboldened critics
who said he tolerated a sexist and hostile workplace.

The owner of the Chicago Tribune and Los Angeles Times said
Randy Michaels offered to resign and the board would transfer
his duties to a four-member committee.

Michaels was brought to Tribune by Sam Zell, the real
estate developer who bought the company in 2007 with billions
of dollars of debt. The company filed for bankruptcy less than
a year after the takeover that Zell has called “the deal from
hell.”

Zell’s management has clashed with unions whose members are
bitter about pay freezes while executives have reaped
performance bonuses. The unions said thousands of layoffs made
those bonuses possible.

Michaels became a target of that opposition following a
recent New York Times story that quoted numerous employees who
were upset at pervasive sexual banter and profanity among the
managers.

A Michaels ally, Lee Abrams, resigned his job as chief
innovation officer earlier this month after sending staff an
email containing a link that some found offensive.

One link cited in a Chicago Tribune report was to an online
video called “sluts,” which featured female nudity.

Michaels was replaced by a committee of Don Liebentritt,
the company’s chief restructuring officer; Nils Larsen, its
chief investment officer; Tony Hunter, the CEO of Chicago
Tribune Co; and Eddy Hartenstein, the CEO of Los Angeles Times
Communications LLC.

In addition, Larsen was been named Chairman of Tribune
Broadcasting.

However, the new management is unlikely to serve more than
a few months.

The company will soon turn over ownership to the holders of
its loans that funded Zell’s buyout, and they have already
begun looking for new faces for the executive suite.

Former News Corp (NWSA.O: ) executive Peter Chernin has had
one preliminary discussion about the role of chairman with
creditors, but no formal proposals have been made, according to
people familiar with the talks.

RESTRUCTURING PLAN

Tribune was still expected later on Friday to detail its
plan for settling billions of unpaid debts and ending its
nearly two years in bankruptcy.

Tribune operates newspapers, 23 television stations and
radio stations. Its emergence from bankruptcy would come in the
midst of a recovering economy, and after elections boost ad
revenue.

Helped by a mediator, Tribune has sketched out a plan to
give ownership of the company to senior loan holders led by
JPMorgan Chase & Co (JPM.N: ) and hedge funds Angelo Gordon & Co
and Oaktree Capital Management LP.

Those $8 billion in loans funded Zell’s leveraged buyout
(LBO), but the bankruptcy that soon followed rendered the
company’s pre-buyout bonds nearly worthless.

Outraged bondholders digging in to fight for a better
deal.

“Obviously it should not be lost on the court that no
pre-LBO creditor supports that settlement that emanated from
the mediation,” said Daniel Golden at a Friday court hearing.

Golden is an attorney with Akin Gump Strauss Hauer Feld
LLP, which represents the hedge fund Aurelius Capital
Management LP, which said it is one of the largest holders of
$1.3 billion of senior Tribune bonds.

Bondholders were given ammunition for their fight this
summer from a court-appointed examiner who determined the
second part of Zell’s two-step buyout was “somewhat likely” to
be seen as an “intentional fraudulent transfer.”

The examiner’s report set up targets for bondholders’
lawyers: $3.6 billion of loans, $4 billion of payments to
selling shareholders and “substantial amounts of fees” paid to
investment bankers.

Aurelius, which has a reputation for aggressive legal
tactics, has indicated it wants to sue a variety of
shareholders, officers, directors and advisers.

Tribune would normally file those lawsuits, but on Friday
it agreed to transfer that right to the committee of unsecured
creditors and eventually any unsettled claims will go to a
litigation trust after the company exits bankruptcy.

Aurelius has different ideas. Their attorney Golden said
Aurelius will submit its own reorganization plan next week.

The case is In Re Tribune Co, U.S. Bankruptcy Court,
District of Delaware, No. 08-13141.
(Reporting by Tom Hals. Additional reporting by Kenneth Li and
Jennifer Saba in New York and Sue Zeidler in Los Angeles.
Editing by Gerald E. McCormick and Robert MacMillan)

UPDATE 1-Tribune CEO quits after hostile workplace reports