Tight credit kills sale of Channel 5

The impact of a national credit crunch and the collapse of a major Wall Street investment bank have managed to scuttle the pending sale of Nashville's WTVF-TV, NewsChannel 5, to a New York media company.

On Wednesday, Bonten Media Group, Inc., said it notified Norfolk, Va.-based Landmark Media Enterprises, LLC, that it would not be able to "close on the acquisition on time" because financing had evaporated with the collapse of now-bankrupt Lehman Brothers, which failed amid $600 billion in bad debt this fall.

"It's just a terrific TV station and we're very disappointed," said Randall D. Bongarten, Bonten's chairman. "Sometimes things happen that are beyond your control."

After receiving word from Bonten, Landmark ended the July agreement to sell the highly rated CBS network affiliate here. The sale was originally announced in July as Landmark moved to sell virtually all its TV, newspaper and cable broadcast holdings.

Landmark President Decker Anstrom said there are no other potential buyers lined up, and that Landmark would continue to operate WTVF as it has been.

"It's a premium property, we have a great leadership team there, and we're happy to keep running the good businesses we have," he said from his Norfolk office.

At WTVF, it will continue to be "business as usual," said Debbie Turner, president and general manager. "The economy is out there for all of us to worry about, but Nashville is a great market to be in, and we're having a great year."

WTVF is Nashville's top-rated TV station and one of the top stations among CBS network affiliates.

Credit markets around the world have "seriously deteriorated after the failure of Lehman Brothers, through whom we had arranged financing for the acquisition," Bongarten said in a statement. "Despite vigorous efforts, we have not been able to replace the Lehman Brothers commitment."

Lehman was among the first major Wall Street firms to drop as toxic loans and other problems ripped through financial markets earlier this fall.

Tough year for media

Bongarten would not speculate as to whether Bonten might revive its bid for WTVF should the economy and the credit markets improve to the point where financing could be obtained.

"I really don't know what the future will bring," Bongarten said. "It's been a tough year all around for the media business."

Bonten, founded in November 2006, owns a chain of 16 TV stations in eight markets. Nashville would have become the biggest market in the chain.

Channel 5 is one of two TV stations owned by Landmark; the other is in Las Vegas. The company also has a chain of daily and community newspapers, and was the founder, in 1982, of cable TV's The Weather Channel.

Landmark, owned by the Norfolk-based Batten family, said in January that it was exploring the sale of all of its businesses, including the TV stations, newspapers and The Weather Channel.

The Battens have not said why they decided to sell the business but in July, The Weather Channel and its popular Web site, weather.com, were sold to a group of investors led by NBC Universal for a reported $3.5 billion.

No buyers have been announced for the other Landmark properties, including its large daily newspapers — the Virginian Pilot and The Roanoke Times in Virginia and the News & Record in Greensboro, N.C., and about 50 community newspapers.

"We are in discussions and negotiations on some of our properties, but it's a tough market for everybody in terms of credit," Anstrom said.

Landmark's chairman is Frank S. Batten Jr., who took over that position from his father in 1998. Frank Batten Sr. assumed control of Landmark in 1954 from his uncle, Tennessee native Samuel L. Slover, who started the business in the Norfolk area after moving there in 1900.

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GM to lay off 1,600 at 3 plants to cut inventory

DETROIT — An additional 1,600 workers at three General Motors Corp. factories will be laid off indefinitely over the next few months as the company tries to control its inventory amid a worsening U.S. sales slump.

About 700 workers at GM's pickup truck plant in Pontiac, Mich., will be furloughed starting Feb. 1, while 500 at the Detroit-Hamtramck sedan factory will be laid off starting Jan. 12, spokesman Chris Lee said Thursday. In addition, 400 workers at a two-seat sports car assembly plant in Wilmington, Del., also will be out of work starting Dec. 8.

Workers were notified of the company's actions Sept. 29, Lee said.

The Detroit-Hamtramck plant, which makes the Buick Lucerne and Cadillac DTS full-size sedans, is down to one daily shift.

GM will reduce its assembly line speed from 56 to 38 cars per hour to achieve the layoffs, Lee said.

The Pontiac plant, which makes the Chevrolet Silverado and GMC Sierra pickups, also is operating on one shift and will see its line speed go from 55 trucks to 24 trucks per hour.

In Wilmington, the plant that makes the Pontiac Solstice, Saturn Sky and Opel GT roadsters will go from two shifts per day to one, Lee said.

"We don't need excess inventory out there," Lee said. "We adjust up and down to the market. Pickup trucks, as you know, have been impacted, and in this case our large luxuries have been impacted and the small two-seater niche products as well."

The automaker announced Monday that it would shutter its metal parts stamping factory near Grand Rapids by the end of 2009, costing 1,520 jobs. It also sped up the end of SUV production at its Janesville, Wis., plant to Dec. 23, eliminating 1,200 positions.

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Seasonal jobs outlook is dim

Ronald Williams pulled his children out of day care in the spring after he was laid off from his cable installation job and could no longer afford it.

His wife works full-time during the day, so the Nashville resident became a stay-at-home dad until he could find work that would help pay the bills.

But a suitable job has been hard to come by.

Williams found himself Wednesday with dozens of people in similar situations at a place he's never had to go: a job fair for temporary work.

"I've never had trouble finding a job," said Williams, whose four children range in age from 4 to 11 years. "We were accustomed to two incomes, and now we have one. You have to make life changes. You have to cut back on everything, cut down to basic essentials."

Competition is tough

Companies hiring for the holiday season are attracting job candidates like Williams, who are looking for work to help make ends meet. But seasonal jobs are not as plentiful as in past years, and the competition is greater.

Williams' story has become all too familiar to Juliet Mason, a work-force development facilitator for the Urban League of Middle Tennessee. She helps candidates polish their resumes and interviewing skills and find jobs that match their qualifications.

"Jobs seem like they are drying up," said Mason, who organized Wednesday's mini-job fair at the Urban League office on Rosa L. Parks Boulevard in Nashville. "It's becoming harder and harder to get people placed. We are seeing a lot more people out of work."

The Federal Reserve Bank confirmed Wednesday what Mason already knew.

The Reserves' Beige Book, a report on current economic conditions released eight times a year, reported a bleak outlook for holiday hiring. Fewer seasonal jobs will be available, but temporary employment agencies will continue to see an increase in applications.

Vance Willoughby, a store manager at the TJ Maxx in Murfreesboro, said jobs fairs give employers a chance to meet potential employees face-to-face, in place of shuffling through mounds of applications.

Some of the temporary jobs can lead to permanent positions.

"My application flow is a lot heavier," said Willoughby, whose company was one of eight to recruit at the fair over two days. "It feels like there are a lot more people looking for jobs out there."

Debra Roberts filled out an application on Wednesday for TJ Maxx, hoping that there would be a position at one of 10 area stores. She had to leave her job as a cashier when she gave birth to her daughter three months ago.

"It's really hard to find a job," said Roberts, another of the 80 or so who came to the fair.

"I would do anything right now. No one is really hiring. The businesses need help, but they don't have the money to hire."

David Penn, an economist at Middle Tennessee State University, said a slow economy, falling home prices and low consumer confidence could influence the hiring situation for the holiday season.

Expectations are low

"Employment will depend critically on what (businesses) will be able to sell, beginning the middle of November and lasting for about six weeks," said Penn, director of the Business and Economic and Research Center at MTSU. "You have to think the expectations are going to be pretty low. It's going to be a pretty tough Christmas."

That's not good news for Williams.

He wants to find a night-shift job so he can be with his children during the day while he wife works. But he knows at this point he can't be picky.

He's discouraged by what he sees happening on Wall Street and with the job market.

"I have seen my 401(k) dwindle. It gets very stressful when you're talking about money. It's all very discouraging," Williams said. "You just have to be open to anything, and try to do your part."

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Bridgestone restructures, renames unit

Nashville-based Bridgestone Americas Holdings Inc. said Tuesday that it will restructure and simplify its business operations as of Jan. 1, combining its U.S., Canadian and Latin American tire businesses into one unit, and change the assignments of some key executives.

The changes will be transparent to consumers, but "should make the company more efficient in the long run," said Christine Karbowiak, vice president for community and corporate relations.

One key change is the renaming of the holding company to Bridgestone Americas Inc., and removal of the Firestone name from the company's tire unit, now known as Bridgestone Firestone North American Tire LLC.

That division will be part of a new unit known simply as Bridgestone Americas Tire Operations, which will also include the Canadian and Latin American tire businesses, Karbowiak said.

The company's Americas headquarters will remain in Nashville.

"Nashville and Tennessee have been very good to this company, and we're glad to be here," Karbowiak said.

In a related move, Karbowiak will join the Bridgestone Americas board of directors as of Jan. 1, becoming the first woman named to a Bridgestone Group board, said Mark A. Emkes, chairman and chief executive officer of Bridgestone Americas.

Asahiko "Duke" Nishiyama will lead the new Bridgestone Americas Tire Operations, which also will include the company's U.S., Canadian and Latin American consumer tire businesses, as well as the U.S. and Canadian commercial-tire businesses.

Nishiyama will report to Emkes.

Streamlining cited

The renaming of the company will "clearly define Bridgestone Americas and its subsidiaries as members of the global Bridgestone Group," Emkes said.

The company is not abandoning the Firestone name, which will remain on its line of value-oriented tires, as well as its chain of retail tire and automotive service centers and its diversified products lines, which include roofing products and synthetic rubber, Karbowiak said.

Bridgestone, the Japanese-based tire company that bought Firestone Tire & Rubber Co. in 1988, will continue to market tires in North America under both names, she said.

The Bridgestone brand will continue to be positioned as the premium product, while Firestone tires will continue as the value brand, Karbowiak said.

"Firestone is a 108-year-old brand with great name recognition," she said. "What we're trying to do is continue to support this iconic tire and service brand, even though the tire companies will no longer carry the Firestone name."

She said the changes have nothing to do with the bad publicity the Firestone brand received from the massive Ford Explorer-Firestone tire recall seven years ago, and the fact that Ford Motor Co. no longer equips any of its new vehicles in the United States with Firestone tires.

"All we're trying to do is streamline corporate identities," she said.

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Federal hand in big banks irks Nashville counterparts

Local and regional banks aren't to benefit directly from any government rescue package, leading some in the industry to criticize the latest plan from Treasury Secretary Henry Paulson and the Bush administration to buy stock in the nation's banks.

"I don't think the community banking segment is what the government is trying to save,'' said Kevin Reynolds, a bank analyst with Janney Montgomery Scott in Memphis.

Peyton Green, a bank analyst for FTN Midwest Securities, said the government rescue package is mostly geared toward the top 25 financial institutions.

Richard Herrington, president of start-up Franklin Synergy Bank in Franklin, said Main Street banking is much healthier than the Wall Street variety.

"I don't think the government should own stock in companies,'' said Herrington, who did well by raising $26 million in capital last year before bank stocks plummeted.

Memphis-based First Horizon National Corp., the parent company of First Tennessee, which has lost 62 percent of its value in the last year, may want to sell some bad assets back to the government, but its chances of survival don't depend on it,
said Reynolds, the stock analyst.

The company sold $690 million worth of stock in the spring and is well capitalized, he said.

Still, the government's lifeline, together with projections that the stock market may have reached its bottom rung last week, helped the Dow Jones industrial average shoot up 936 points Friday, a record point total.

Financial stocks in general benefited from the Dow's biggest gain since the Great Depression.

First Horizon stock was up 13.44 percent to $9.20 per share in trading Monday on the New York Stock Exchange. Pinnacle was up 12.06 percent to $27.97 per share. A handful of bank stocks actually were down, including Regions Financial Corp., which lost 3.28 percent to $8.84 per share on the New York Stock Exchange.

Big banks meet Paulson

The huge rally on Wall Street came as Paulson summoned the CEOs from the five largest banks for discussions on details of the government's $700 billion financial rescue package. It has rapidly expanded in recent days from buying up distressed mortgage-related debt from banks to also include the government taking partial ownership in banks themselves, a radical departure for the free-market Bush administration.

That led to Monday's scene: Federal officials crafting a plan for government ownership that Paulson until recently had resisted. And the CEOs of Wall Street powerhouses like Goldman Sachs Group Inc. and Citigroup Inc. sitting down to discuss with Treasury and Federal Reserve officials the partial nationalization of banks.

"It certainly is a momentous intervention," said Henry J. Aaron, a senior fellow at the Brookings Institution, quickly adding that few expect the government's ownership to remain over an extended period.

Yet from the bankers' perspective, there could be anxiety over how much control the government may wield in return for its capital injection into struggling financial institutions.

"When government money is involved, the government sets the terms," said Ken Mayer, a professor of political science at the University of Wisconsin in Madison.

Looking to history

A historical parallel for the bankers' meeting in Washington occurred more than
70 years ago in Franklin D. Roosevelt's administration during the Great Depression.

While the government has used taxpayer money to bail out large corporations and banks in recent decades, intervention on the scale that has occurred since early September had not been seen since the 1930s.

In Middle Tennessee, even some community banks that have seen steep declines in their profitability aren't keen on the Wall Street bailout details.

Greeneville-based Green Bankshares saw its profits fall 80 percent to $1.46 million during the second quarter, mostly on bad real estate construction and development loans in Middle and East Tennessee. But the bank's chief financial officer, James Adams, doesn't see a need to sell bad assets or stock to the government.

"We can dispose of the majority of those assets on our own,'' he said. "The government taking ownership in those institutions doesn't make sense. Why put the taxpayer at additional risk?"

Nashville-based Pinnacle Financial Partners president and chief executive officer Terry Turner agrees.

"I'm an advocate of the government being proactive and taking action to increase confidence in the U.S. financial system,'' he said. But the government owning stock in financial institutions "effectively puts the government in the banking business. It's the government's job to regulate banks. That's a classic conflict of interest."

He said depending on how it was structured, the government's rescue plan could help some small community banks struggling under the weight of large amounts of bad real estate loans.

But, in large part, the community and regional banking industry won't need such a lifeline, Turner said.

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Goodwill plans to build new Nashville headquarters

The local chapter of Goodwill Industries plans an overhaul of its headquarters and training center in North Nashville.

Goodwill Industries of Middle Tennessee Inc. has decided to replace its current offices on Herman Street with a new 29,000-square-foot facility. The building will let the organization add new training courses and enroll more students in its popular computer classes, said David Lifsey, the Middle Tennessee chapter's president and chief executive.

Construction could begin as soon as January, depending on economic conditions.

"We're going to do this eventually, but we're monitoring things and looking at whether it's prudent or not," Lifsey said. "The need's there."

Board approved proposal

To make room for the new building, which will stand at the corner of Herman and 9th Avenue North, one block from the Nashville Farmers' Market, Goodwill plans to tear down a one-story brick warehouse built more than a half-century ago that has housed Goodwill since 1968. "It has served us well," Lifsey said, "but it's time to get with the neighborhood."

The building would be backed by $4.7 million in bonds issued through Metro's Industrial Development Board and repaid using revenues from Goodwill's used clothing sales, the organization's dominant source of revenue.

The Industrial Development Board approved the proposal at a hearing earlier this week.

The bonds are to be purchased by SunTrust Bank through a private placement. That deal was arranged in August and could be postponed if the credit markets remain frozen, Lifsey said.

The project could also be put off if the nation's economic downturn drives down clothing sales, Lifsey said.

The new building would be two stories tall, with a skeleton strong enough to support a third level. The building, which would take about 11 months to build, would give Goodwill the capacity to double its computer programs, which currently attract about 50 people to 75 people a week.

The building would have space set aside for Goodwill's forklift operation and security guard training programs. The organization's main offices would remain at the location; the new building would not have a clothing store.

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Rework of bailout plan revives hope

WASHINGTON — The Bush administration rushed to revamp the largest U.S. bailout plan in history Monday, working with executives of the nation's biggest banks to shift and shape new pieces and get desperately needed credit flowing.

Stocks soared around the world in response to dramatic efforts here and overseas, and the possibility of even bolder American action.

Scrambling to catch up with events, Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke and the bankers were modeling many parts of their revamped program after strong initiatives in Europe, where governments put $2.3 trillion on the line Monday in guarantees and other emergency measures to save banks there.

Elements being considered for the overhauled U.S. program included not only the details for purchasing banks' bad assets, the major feature of the $700 billion bailout bill that sped through Congress, but also direct government purchases of stock in banks, an idea that Paulson surfaced only last week.

Another initiative under consideration is providing government guarantees for the short-term loans banks make to each other, a vital credit avenue that has come under severe stress as fears have mounted over the hundreds of billions of dollars of losses that began with the meltdown of the subprime mortgage market in the United States more than a year ago.

Major stock markets around the world surged higher after last week's market disaster as traders began to hear of Europe's actions and the possibility of further steps in the United States.

On Wall Street, a record 936-point increase in the Dow Jones industrials far surpassed the previous one-day mark of 499 points, set in the waning days of the dot-com boom in 2000.

But the surge came after the staggering losses of the worst week ever, and economists said more rough days can be expected.

World markets rally

European markets rallied following Asia's lead in response to the widespread government initiatives.

"These are tough times for our economies; yet, we can be confident that we can work our way through these challenges and America will continue to work closely with the other nations to coordinate our response to this global financial crisis," President Bush said following a meeting with Italian Premier Silvio Berlusconi at the White House.

Investment experts in Nashville said the stock market was due for a big bounce Monday because many panicky investors had done their selling, and there was nowhere for Wall Street to go but up.

Bruce Bittles, the Nashville-based chief investment strategist for Robert W. Baird & Co., said the 936-point rally had little to do with central bankers' pledge to shore up ailing financial institutions.

"There wasn't really a change in psychology," Bittles said. "It's just the level of fear had gotten to the level where … they had collected all the sellers." Other advisers said the market is likely to hold onto at least some of Monday's gains.

"It won't be until this has passed that we'll know if we saw a low on Friday, but there's a good chance that this is a low," said John Burch, president of Nashville-based Capital Markets Advisors.

"We'll almost certainly see a retest of this low in the next several weeks, but by then, the $700 billion that they're making available through the Federal Reserve should start to show an impact."

Democrats in Congress, while supportive of Paulson's desire to expand the bailout program, complained that not enough strings were being attached, such as restricting excessive compensation for Wall Street executives who raked in millions of dollars in bonuses by pursuing risky investment strategies that have now helped push the U.S. financial system to the brink.

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