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GateHouse Media, the severely ailing upstate New York newspaper chain, has sued Copley Press for failure to pay termination benefits for certain employees. Copley sold its Illinois and Ohio papers to GateHouse in early 2007 for more than $380 million. According to a Peoria, Illinois, website, Copley had been paying the benefits until March of this year. The payments were to reimburse GateHouse for termination pay and continued benefits for employees dropped on or before Dec. 1, 2007. GateHouse wants actual and compensatory damages of $63,791, according to the website. (The Peoria paper was one that was sold.) GateHouse's revenues are dropping -- in this year's first quarter to $139.2 million from $163.8 million in the same quarter a year earlier. The company lost $10.3 million in the quarter, down from a slight profit the year before. Cash flow was negative in the quarter. GateHouse stock sells for 20.5 cents.

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Comments

peoriapundit Aug. 1, 2009 @ 3:09 p.m.

Not to complain too much, because the story is more important that the stort teller, but the Peoria website mention is mine: Peoria Pundit. It's at http://peoriapundit.com/blogpeoria. Thanks.

And remember, GateHouse is the organization that took the New York Times to court because the NYT set up a regional news portal page filled with headlines and ledes from GateHouse newspapers in that region. And the NYT backed down.

But I would agree with Mr. Bauder: GateHouse got taken to the cleaners. GateHouse bought the Journal Star right after the Copley bought a big expensive press, and assumed all the debt for that. And the value of a priting press becomes less and less each year.

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Don Bauder Aug. 1, 2009 @ 3:30 p.m.

Response to post #5: There is nothing with going to court to prove a point, especially if you are establishing ground for a later invasion. The principle might lead to principal. Best, Don Bauder

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Don Bauder Aug. 1, 2009 @ 3:38 p.m.

Response to post #6: I doubt if Platinum took on these commitments. If it had, it would have been named a defendant in the suit. I don't know why Copley would be late in making these payments, or renege on its commitment, if indeed it has.

One of the things I have always wondered is whether Copley took some of the payment for the Illinois and Ohio papers in GateHouse stock, which, of course, has completely cratered. I was assured early on that the deal was for cash that was forwarded by Fortress. However, Fortress and GateHouse always refused to tell me the terms of the deal -- whether it was for stock, cash, or a combination, and I could never find anything in GateHouse filings on the topic. For now, I have to accept the word that the deal was for cash, but if it was not, then there is a whole new relationship between Copley and GateHouse. Best, Don Bauder

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Don Bauder Aug. 1, 2009 @ 3:46 p.m.

Response to post #7: The reason your website wasn't named is that there was no source attached to the copy that I received. I knew it was from a website. I did check to see that such a suit had been filed. I have seen your stuff before. You do good work. Maybe you can enlighten us on how the Peoria Journal Star is doing. Best, Don Bauder

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Burwell Aug. 1, 2009 @ 7:58 p.m.

The lawsuit filing the Peoria blogger posted was downloaded from a US District Court website. This is clear from the over writing at the top of the pages. Anyone can download the filing for 9 cents a page. It's not like the Peoria blogger published the Pentagon Papers.

The Gatehouse sales agreement is attached to the 4/11/2007 Form 8-K on file at the SEC website. The agreement indicates the sale was a cash transaction. The Cash Flow statement in the 2007 Form 10-K indicates the Copley shares were purchased for cash from the proceeds of a stock offering.

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Duhbya Aug. 3, 2009 @ 6:49 a.m.

This article begs the question(s): How many more alleged breaches might the Copley whale have made? I wonder if David has any subpoenas in his future, or is he still untouchable?

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Don Bauder Aug. 6, 2009 @ 12:48 p.m.

Response to post #37: What a delightful headline. It would never run today. But you are right: the situation today is the same as it was then. But the major newspaper soft-pedals the corruption -- in fact, is part of it in many cases. Best, Don Bauder

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Don Bauder Aug. 3, 2009 @ 7:42 a.m.

Response to post #33: Good questions. What else lurks? And why? If I knew, I would have posted the answers. Best, Don Bauder

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peoriapundit Aug. 1, 2009 @ 8:15 p.m.

Burwell: I never claimed it was on par with the Pentagon Papers. Paying for the download wasn't an option for me at the time. I posted a link to me site because, well, I hoping to get some hits. If readers of this article can learn a thing or two from my site, so much the better.

Mr. Bauder: The Journal Star is one of the bigger revenue producers in GateHouse's stable, according to folks I have spoken to. A while back, when GateHouse stock tanked, there was talk GateHouse might be selling holdings off piece by piece. In a sense, the collapse of the economy might have put that to rest. Who would buy the pieces now?

Few people in Peoria are fold of GateHouse, but they mostly blame Copley for the sorry state of affairs and for screwing over retirees.

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peoriapundit Aug. 1, 2009 @ 8:16 p.m.

And thank you for your kind comments about my little blog.

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SurfPuppy619 Aug. 1, 2009 @ 8:25 p.m.

The blog's link to the lawsuit was cool. I did read the lawsuit, and found it strange that they both agreed to a forum clause when the forum was Los Angeles.

Why they picked LA was strange. I also found it strange Copley Press was incorporasted in IL. (in 1954).

Any federal lawsuit, and all the court filings, can be accessed by PACER- and the cost is 8 cents per page.

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Burwell Aug. 1, 2009 @ 8:32 p.m.

Any federal lawsuit, and all the court filings, can be accessed by PACER- and the cost is 8 cents per page.

======

Pacer raised the price to 9 cents.

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SurfPuppy619 Aug. 3, 2009 @ 10:55 a.m.

Hmmmm.....it may be kind of hard subpoena David out in the middle of some ocean..........in fact it could be close to impossible.

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Burwell Aug. 1, 2009 @ 9:06 p.m.

Peoria Pundit does put out a good product, and he should be commended for being the first to publish this story.

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Don Bauder Aug. 3, 2009 @ 12:41 p.m.

Response to post #35: Yeah, but he comes ashore in SD once in awhile. Come to think of it, maybe he doesn't have to anymore.... Best, Don Bauder

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SurfPuppy619 Aug. 1, 2009 @ 9:19 p.m.

Pacer raised the price to 9 cents.

By Burwell

Those low down dirty scumbags.

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Fred Williams Aug. 1, 2009 @ 10:11 p.m.

Don, here's a tech tip from your pal Fred:

When you're given unattributed material you think may have been copied from an unknown source online,

  1. Copy about ten words from the middle of the text.
  2. Paste this string of words into a search engine like Google.
  3. Put quote marks on the front and back of the string of text.
  4. Click search.

The results of such exact match searching with a longer text string should be few and almost always lead you directly to the originating source.

Best,

Fred "the geeks shall inherit the earth" Williams

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Burwell Aug. 1, 2009 @ 11:51 p.m.

When you're given unattributed material you think may have been copied from an unknown source online,

The lawsuit filing could have been sent to Bauder by someone who has a Pacer Account. I don't think we should assume the filing came from the Peoria Pundit's site.

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peoriapundit Aug. 2, 2009 @ 5:35 a.m.

Oh fer crying ...

I learned about the lawsuit, but didn't have the details. I posted a brief article about it. I couldn't access the PDF files because I don't have a Pacer account.

A source emailed the PDF files. I uploaded them to my site and posted a link. I summarized them and posted an article.

A reader of my site emailed Mr. Bauder.

There's no controversy or dispute over how EITHER of us got the files, which are public record and relatively easy to obtain.

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Don Bauder Aug. 2, 2009 @ 8:52 a.m.

Response to post #11: Thanks for the info. I guess I never thought of looking there. I was told the deal was for cash but had never found it in the 10-Ks and 10-Q SEC filings, where I was looking. Best, Don Bauder

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Don Bauder Aug. 2, 2009 @ 8:55 a.m.

Response to post #12: How are the retirees being screwed over, other than worrying about GateHouse going BK? Have the terms of their retirement packages changed? Best, Don Bauder

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Don Bauder Aug. 2, 2009 @ 8:56 a.m.

Response to post #13: I suspect that your blog is a source of information for those wanting to know what is REALLY going on in Peoria. Best, Don Bauder

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Don Bauder Aug. 2, 2009 @ 9 a.m.

Response to post #14: Copley was founded in Illinois around 100 years ago, if memory serves me correctly. I believe it was founded in Aurora, a Chicago exurb. Its focus became San Diego later. Matt Potter's excellent cover story of recent vintage tells that story. Best, Don Bauder

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Don Bauder Aug. 2, 2009 @ 9:02 a.m.

Response to post #15: Inflation. The federal government and Federal Reserve cause inflation, and then reap benefits from it. Best, Don Bauder

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Don Bauder Aug. 2, 2009 @ 9:03 a.m.

Response to post #16: Agreed. Best, Don Bauder

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Don Bauder Aug. 2, 2009 @ 9:05 a.m.

Response to post #17: The government prefers inflation to deflation. So do almost all economists. Best, Don Bauder

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Don Bauder Aug. 2, 2009 @ 9:07 a.m.

Response to post #18: Fred: I truly did not know that. My productivity should be rising. Best, Don Bauder

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Don Bauder Aug. 2, 2009 @ 9:08 a.m.

Response to post #19: The filing had a byline on it. Best, Don Bauder

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Don Bauder Aug. 2, 2009 @ 9:10 a.m.

Response to post #20: Hopefully, PeoriaPundit and I will keep in close contact in the future. Best, Don Bauder

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SurfPuppy619 July 31, 2009 @ 10:39 p.m.

GateHouse wants actual and compensatory damages of $63,791,

They paid hundreds of millions and is suing for $64K? Doesn't make sense-they will spend twice that on the lawyers.

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classico Aug. 2, 2009 @ 1:19 p.m.

Response to #22: On April 1, Copley terminated retiree health benefits until age 65 that were promised in many Midwest buyout agreements and put those people on COBRA. Some were informed that if they signed a waiver of all claims and agreed not to sue, they would be given taxable lump sums NOT equivalent to promised benefits even without the taxes.

I know several people who sent the waivers back to La Jolla and were promised a countersigned copy of the waiver would be sent back. That was months ago, and I am not aware that any of the waivers has been returned to the retirees.

The lump-sum payments are due by year-end. I am not aware that any has been paid.

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Don Bauder Aug. 1, 2009 @ 7:50 a.m.

Response to post #1: Suing for such a small sum does not seem to make sense. However, GateHouse wants to recover all legal expenses, etc. and may feel it has a rock-solid case. Best, Don Bauder

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Don Bauder Aug. 2, 2009 @ 3:08 p.m.

Response to post #31: I am not aware of this. Please keep me informed. Best, Don Bauder

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Visduh Aug. 1, 2009 @ 9:21 a.m.

Someone at GateHouse may be overly emotionally invested in getting what is right. As in, "It's the principle, not the money." Seems a foolish thing to do anyway.

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Don Bauder Aug. 1, 2009 @ 9:57 a.m.

Response to post #3: Remember, GateHouse got taken to the cleaners in this transaction. So some noses may be out of joint. Also, the company is on the brink financially. A big block of stock (not as much as formerly) is controlled by Fortress, the big private equity/hedge fund operation, which is also in deep trouble. There could have been pressure from there. Another possibility is that GateHouse thinks Copley has reneged on more matters than this, and this is the first shot across the bow. Maybe it is to appease GateHouse shareholders. (GateHouse stock was around $17 when the deal was consummated and is now 20.5 cents.) Copley was astute to get that price for those newspapers, but I still don't know that it came out ahead -- for that time. It had paid $175 million (too much) for the Peoria paper. But it had owned the Springfield, Ill. paper since the 1920s. In any case, in hindsight, Copley got a great price. After all, only two years later, it had to pay Platinum Equity to take the Union-Tribune by selling about $110 million worth of real estate for $50 million. If it had sold the Union-Tribune in early 2007, it would have received far more money. Best, Don Bauder

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SurfPuppy619 Aug. 1, 2009 @ 10:16 a.m.

As in, "It's the principle, not the money."

By Visduh

I have mixed feelings here, because many times when I get screwed over I have gone to war over peanuts (and less)-and I do it not for the money-but to prove a point.

It may sound juvenille, but it is not. I value standing up for and vindicating rights in spite of the cost factor.

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Burwell Aug. 1, 2009 @ 10:18 a.m.

The $64K amount probably represents only 2 or 3 months of missed payments, and will likely increase over time if Copley does not resume making monthly payments to terminated employees. There could ultimately be several million at stake, not just $64K. If the former employees lose their health insurance because Copley fails to pay the premiums, Copley could potentially face additional millions in liability. If Platinum agreed to pay the terminated employees under the terms of the sales agreement, Copley may have to sue Platinum to force them to reimburse Gatehouse.

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Anon92107 Aug. 6, 2009 @ 12:05 p.m.

SOME THINGS NEVER CHANGE:

Interesting story on Abraham Sauer, San Diego Herald publisher and editor in late 19th and early 20th centuries, who ran a headline:

"Brainless Mayor and Spineless Council Take Orders from Greedy Merchants"

So it is no surprise that today in 21st century San Diego is suffering the consequences of another historical lesson never learned with three brainless, spineless and corrupt mayors in a row.

Golding, Murphy and now Sanders still continue the San Diego political tradition of selling out quality of life in San Diego to "Greedy Merchants."

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