Wednesday, July 26, 2006

The Newspaper's Business

It's none of yours, according to The Commercial Appeal.

Posted By on Wed, Jul 26, 2006 at 4:00 AM

So how's the newspaper business in Memphis these days?

Apparently it's not too shabby, although you wouldn't know it from reading The Commercial Appeal. The daily's parent company, E.W. Scripps, released its second-quarter earnings this week. In keeping with its long tradition of giving readers nothing of value in the way of financials or self-analysis, the CA kissed off the earnings report with a nine-paragraph AP story buried on the second page of the Business section. No local angle, zilch, and -- incredibly -- not a word about the profits in the newspaper division.

Scripps has as much interest in oceanography as it does in newspapers. It sees the Internet and cable television as giant shopping malls for its products such as Shopzilla, uSwitch, HGTV, the Food Network, Fine Living, and Great American Country. Scripps is selling its Nashville-based Shop At Home television operation. Blah, blah, blah.

Did someone say news? Print newspapers? Declining readership? New reading habits? Vanishing younger readers? More emphasis on local news? Bigger color pictures? The results of offering buyouts to older employees? Who gives a crap, Scripps and the CA seem to say. And it's none of your business anyway. You old fogeys who can't wean yourselves off of print newspapers can just shut up and keep sending in your checks for home delivery of the incredible shrinking newspaper. The brain trust in Cincinnati will take care of everything. CA editor Chris Peck would rather write about his new fascination with auto racing than the meat and potatoes of journalism.

As has become my custom in recent years, I turned to The Wall Street Journal and the Internet to get my local business news fix. There I learned that Scripps' wholly owned newspapers enjoyed a revenue rise of 4.8 percent to $182 million, and advertising revenue rose 6.4 percent to $147 million. Local, classified, and online advertising were all up anywhere from 2.3 to 14 percent.

Let me repeat that: Ad revenue and overall revenue in the newspaper division is rising, not falling, as the alarmists and budget-slashers at 495 Union Avenue would have us believe. Scripps, of course, does not release financial info for individual newspapers, and there is no one there with the guts to leak them, although there are plenty of anonymous whiners.

At, a Web site which is obviously unfamiliar to local reporters, I learned a little more. Newspaper segment profits were hurt by a decrease in earnings at the company's newspapers in Denver, Cincinnati, and Albuquerque -- all of which are published under joint operating agreements with other dailies. The CA, on the other hand, enjoys a monopoly. Let us assume, then, that its profits at least kept pace with the other wholly owned Scripps papers. If it ain't so, the Flyer will be glad to print a correction, if somebody will show us the evidence.

Scripps even got a nice little hurricane kicker of $1.8 million from an insurance settlement related to its Florida newspapers.

So I don't think we'll be printing any correction. All in all, it was "an excellent second quarter" at Scripps, said CEO Kenneth Lowe. He added, "At our newspapers, advertising revenue grew respectably during the second quarter, thanks to improved classified results, particularly in the real estate category, and rapidly growing online advertising."

It would be nice to have some local insight and perspective on this from Chris Peck and Joe Pepe or the editors and reporters on the business staff. What's the deal on the new sections and the zoned editions? How has circulation responded? How is daily newspapering different in Memphis than it is in the other 17 markets where Scripps operates? If profits are increasing, will readers also see an increase in the news hole and the number of local reporters? Was there a measurable "Wendi factor" when the popular columnist briefly left Memphis for Baltimore?

Those of us who religiously read newspapers care about such things. This spitting-in-the-wind rant aside, we have no desire to see the CA suffer. On the contrary, we'd like to see it get bigger. And we'd like to be treated like intelligent consumers capable of digesting a business story with some nuance, numbers, and analysis.

Thursday, July 20, 2006

A Century of Change

"Reinventing" city government has been marked by false starts, stability, and surprises.

Posted By on Thu, Jul 20, 2006 at 4:00 AM

Tinkering with city government is not new, and the results are not always the ones that were intended.

As G. Wayne Dowdy explains in his new book Mayor Crump Don't Like It: Machine Politics in Memphis, the city charter was amended in 1905 to limit the power of the mayor and increase the size of the City Council. Four years later, at the urging of a young fire and police commissioner named E.H. Crump, the charter was revised once again. Crump was elected mayor later that year by 79 votes in a disputed election, and he ruled the city as the political boss for the next 45 years.

Crump served only six years as mayor, but he found other ways to run things. The charter he pushed through was pretty much unchanged for 54 years.

Memphis voters approved the modern city charter in an election in 1963. It was adopted by the City Commission in 1966 and approved by voters in a referendum the same year. This created the modern Memphis City Council of 13 members. The first council took office in 1968. The current mixture of district and at-large positions was approved by voter referendum in 1996.

The minimum age to serve on the City Council is 23. The charter says council members must have been a resident voter for at least five years. The voting age is 18, hence 23 is the minimum age. The youngest Memphians elected to the City Council were current members Tom Marshall and Brent Taylor, both 27 years old when elected.

The minimum age to be mayor is 30, and at least five years as a resident of Memphis is required. And you can't owe any back taxes. The city mayor can serve as long as he or she wants to. Willie Herenton has held the job since 1991, which is a record. The Shelby County mayor is limited to two consecutive terms.

Pat Vander Schaaf served 28 years, the longest tenure of any council member. A member of the Ford family has served on the council since 1972, starting with John Ford and including James Ford, Joe Ford, and Edmund Ford.

The charter says, "The mayor shall be responsible to the council for the administration of all units of the city government under his jurisdiction and for carrying out policies adopted by the council."

The 1966 charter set the mayor's salary at $25,000 a year, starting in 1968. The current salary is $160,000. The salary for City Council members was set at $6,000 a year. It stayed there for 30 years. That was amended in 1995 and raised to $20,100 and later raised again to the current salary of $30,100. The amendment pegs the city council salary to the pay earned by members of the Shelby County Commission.

The 1966 charter provides for municipal runoff elections when no candidate gets a majority even though the mayor at the time, William Ingram, disapproved of the measure so strongly that he had his opposition written into the amendment.

The runoff provision kept J.O. Patterson Jr. from being the city's first black mayor in 1983. A federal judge overruled this section of the charter in 1991, and Willie Herenton was elected mayor that year with 49 percent of the vote. He was reelected in 1999 with 46 percent.

The charter of the Memphis City Schools Board of Education is part of the city charter. For practical purposes, so is the charter of Memphis Light, Gas & Water Division, which was established by charter amendment in 1939 and redefined in 1980.

The charter includes amendments prohibiting busing for school integration (enacted in the wake of massive busing in the early Seventies), distribution of obscene material to juveniles (enacted by referendum in 1968, long before cable TV and the Internet), and allowing parimutuel betting (approved by referendum in 1987). Today Memphis has busing and obscenity, but the only legal gambling is the Tennessee Lottery.

The charter commission was created in 2004 by certified petition signatures of less than three percent of the registered voters in Memphis. The ballot in the August 3rd election is the longest in Shelby County history, taking up 15-23 computer screens.

Wednesday, July 12, 2006

Flagrant Foul

Here's who dropped the ball in the FedExForum garage "misrepresentation."

Posted By on Wed, Jul 12, 2006 at 4:00 AM

"No harm, no foul" is no more.

For 20 years the Memphis Area Transit Authority has been a conduit for millions of dollars of federal funds for downtown projects like the trolley and Central Station. If they were wasteful and underused, they were also pretty to look at, welcoming to tourists, and catalysts for development. And they could always be rationalized by saying that if Memphis didn't take the money some other city would.

But the FedExForum parking garage, funded with $20 million in Federal Highway Administration funds, has produced a scathingly critical state audit, a demand that the city of Memphis repay $6.3 million, and an FBI investigation. Key players in the deal could be disciplined, fired, or indicted.

What's different about the parking garage? Three things.

• Deception, negligence, and carelessness at the local and state levels caused funds to be approved. The audit repeatedly uses the words "misrepresentation," "ineligible," "tailored to qualify," "contrary to regulations," "questionable," "did not notify," or "regulations not properly followed." A free-parking garage for downtown workers and bus patrons became a gift to the Memphis Grizzlies, earning them profits of $2.7 million in 2005 alone. So complete was the transformation of the garage from public to private that a card-carrying federal transportation inspector was denied permission to park for free in the facility by an attendant who insisted "everybody had to pay."

• The FedExForum garage makes no pretense of being an intermodal transportation facility (ITF). MATA doesn't even list it on its Web site, and the small MATA office on the south side of the garage has never been used. An alley behind Beale Street that was supposed to be a bus lane is a pedestrian walkway, and the plaza on the west side of the arena serves basketball fans, not bus passengers. An adjacent building houses basketball offices and a music museum. Central Station, on the other hand, is an Amtrak station, a police precinct, and sheltered waiting area where MATA buses make regular laps around an empty parking lot. MATA's east-west trolley on Madison Avenue is also little used, but it is undeniably a public trolley, as advertised. In the Alice in Wonderland world of federal transportation funds, the distinctions are important.

• Finally, to use a basketball expression, the refs are calling them closer these days. Former state senator Roscoe Dixon faces prison time for accepting less than $10,000 in bribes from a fake company in an FBI sting. Former school board member Michael Hooks Jr. is charged with taking a share of $60,364 in allegedly bogus consulting fees. And the feds also prosecuted football booster Logan Young Jr. on the theory that recruiting can be a criminal enterprise and a high school football coach is a public official. In this context, Mayor Willie Herenton's claim that a $20 million misrepresentation is not a big deal rings hollow.

Herenton supporters suggest the FBI investigation is pre-election posturing. Some of the City Council members who demanded an investigation might run for mayor in 2007. U.S. attorney David Kustoff is new to the job and a former Republican activist and friend of Shelby County district attorney Bill Gibbons who is on the August ballot.

But the Flyer has learned from sources that government officials in Nashville were aware of the FBI investigation at least two weeks before it was publicly acknowledged. In this context, the "Special Report" by the Tennessee Department of Transportation (TDOT) Office of Internal Audit, released in June and "conducted in anticipation of litigation," looks like a forerunner to firings and indictments. (No lawsuits have been filed so far. Attorney Duncan Ragsdale, who sued in 2001 to prevent public funds for the arena, said he has not filed anything.)

Details of the 22-page report, along with public comments and other documents, indicate which of the players in the parking garage story might be at risk.

Herenton has a better chance of knocking out Joe Frazier than separating himself from the city's $250 million signature project. His special assistant, Pete Aviotti, attended all the important Public Building Authority (PBA) meetings and is chairman of a MATA advisory committee on regional rail. Aviotti was absent from the City Council's session in June.

Herenton appointed Will Hudson as general manager of MATA in 1993. Hudson did attend the council meeting, but he wasn't grilled. It's impossible that Hudson was unaware of details of a $20 million building with MATA's name on it. MATA customers were getting the shaft when the Grizzlies took over the garage minus free parking, bus lanes, and shelters. If Hudson called a foul, nobody heard him.

The audit says Tom Fox, MATA's general manager of planning and capital projects, decided it was unsafe to send buses down Beale Street alley but apparently did not notify TDOT and the feds. Fox told auditors he noticed the PBA had made changes in garage drawings but he "did not feel strong enough about it to fight about it."

Robert Spence was city attorney until 2004. Spence suggested that the city could not profit from the garage, but the Grizzlies could. The audit doesn't support that view. Spence also told auditors that David Bennett, the former director of the PBA who is now dead, was responsible for executing an operating agreement for the garage with the federal agency.

But Charles Carpenter, the attorney who succeeded Bennett, said the PBA had no role in garage operations and its job was merely to "build it." Carpenter, who ran Herenton's 1991 mayoral campaign and has earned hundreds of thousands of dollars in legal fees for city business, assured City Council members last November that the city had "little or no exposure" if money had to be paid back for the parking garage. In June, Carpenter told the council that "for TDOT to say someone duped them" is inaccurate.

An engineer interviewed by auditors said Bennett ordered schematics or rough drawings to be used only at meetings and not for actual construction because they differed from the final drawings. Auditors called this "misrepresentation."

Sara Hall, the current city attorney, told council members last month she could not help them much because the garage was not built on her watch. But last November, Hall told a council committee she had reviewed Bennett's records "in detail."

HOOPS L.P., which owns the Grizzlies, signed an agreement with the city of Memphis on June 29, 2001, that gave them the parking garage 16 months before the TDOT agreement and before federal funding was approved. The audit says HOOPS made $2,773,237 on the garage in 2005, reserved 630 parking spaces (43 percent of the total) for employees and players and others, and made sure no one else -- including a federal investigator -- used them.

In Nashville, Don Sundquist, a former Memphian and congressman, was governor when the arena's complicated financing package was approved and, on October 30, 2002, when TDOT signed a contract with the city for an ITF. State assistance of some kind was seen as equitable treatment for Memphis because the state helped the Tennessee Titans build a new stadium in Nashville. The audit does not name Sundquist or his transportation commissioner, Bruce Saltsman.

Gerald Nicely, commissioner of TDOT, told The Commercial Appeal "there's plenty of blame to go around." The audit is more specific. TDOT's parking garage overseer was Dennis Cook. Like Nicely and Sundquist, Cook knew the Memphis powers-that-be wanted a basketball arena, not an ITF. He could follow the letter of the law and possibly delay the project or go with the flow. Cook told auditors he "did not ensure the plans were reviewed in detail to verify the garage contained features necessary to operate as an ITF but that he probably should have." Cook also said he reviewed payment requests but "did not notice" they included unallowable reimbursements.

At the federal level, Mark Doctor and Gary Corino were responsible for oversight. TDOT and the feds blamed each other. Doctor told auditors "we were looking for ways to say yes rather than to say no," and Corino said they "backed into eligibility" for the project. Doctor said he was unaware of the profit angle, but auditors said he "had access to knowledge" about it.

The next step proposed in the audit is, by TDOT's own admission, illogical: turn FedExForum's garage into an ITF, thus preserving its "public transportation purpose" and justifying the $14 million of the $20 million that does not have to be repaid. A few pages earlier, however, auditors state that an ITF so close to downtown and just five blocks from the "underutilized" Central Station ITF is useless and would increase congestion.

"Parking at the garage, walking to the bus stop while crossing streets and being exposed to the elements, waiting for a bus while minimally if at all shielded from the weather, and boarding a bus to travel a few blocks to the downtown area may not appeal to many customers," the audit states.

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Wednesday, July 5, 2006

"I love this country."

A sham-wedding planner nabbed by the terrorism task force is sentenced.

Posted By on Wed, Jul 5, 2006 at 4:00 AM

June 29th was sentencing day for Rafat Mawlawi, and the indicator was not good.

The Syrian-American "wedding planner" has been in prison for 15 months on immigration charges related to a scam to bring Middle Eastern men into the United States via sham marriages and engagements to Memphis women. On top of that, Mawlawi drew the attention of the FBI's Joint Terrorism Task Force, which seized pictures of Mawlawi shouldering a rocket launcher and a video of him preaching holy war to a roomful of mujahadeen. Mawlawi is an imam, or preacher.

Lorna McClusky, Mawlawi's attorney, entered the federal courtroom carrying a plastic bag containing civilian clothes for Mawlawi to slip into before the hearing began. But marshals told her that he would not be allowed to change and would have to make his appearance and hear his fate wearing his tan-colored prison-issued jumpsuit.

Outside U.S. district judge Daniel Breen's courtroom, Mawlawi's brother Nabil waited on a bench along with the prisoner's wife and four small children. For 15 months, Nabil has been raising his brother's children and five more of his own on the earnings from his sandwich shop in Bartlett.

At 2 p.m., the family entered the courtroom and sat on the wooden bench in the second row. Rafat Mawlawi sat at a table 15 feet away, mouthing words to them and blowing kisses to the children, who grinned back at him. Mrs. Mawlawi looked impassive beneath her headscarf.

FBI agent Robert Parker took the stand first to recount the search of Mawlawi's house near Craigmont High School on April 4, 2005. Assistant U.S. attorney Fred Godwin used a courtroom projector to show the photo of Mawlawi shouldering the rocket launcher. The picture was taken in Bosnia in 1996, a full five years before 9/11. Mawlawi was working for the Benevolence International Foundation, which the U.S. government has since identified as a terrorism support organization headed by Enaam Arnaout, a confidant of Osama bin Laden.

Breen said associating with Arnaout does not make Mawlawi a terrorist.

"I just don't see how you're connecting the dots," Breen said, although after some discussion he allowed Godwin to play the videotape of Mawlawi preaching to mujahadeen.

McClusky objected to no avail. In 1996, no one would have connected Mawlawi's macho posturing in Bosnia with terrorism, she suggested.

"It strikes me as a peculiar way to put religious beliefs in sentencing," she said.

Godwin countered that he was merely trying to show the judge who the defendant really is. A former police officer, the prosecutor said some people have a bad habit of always being at the wrong place at the wrong time, and eventually they face the consequences. Mawlawi was never charged with terrorism, however, and was instead facing 10 counts of immigration and weapons violations.

"This country is a welcoming country, but it needs to be done in an orderly manner," Godwin said.

The hearing had lasted more than an hour and the younger children were stretching out on the bench with their heads on Nabil's lap when Mawlawi got his chance to speak. He asked and was granted permission for McClusky to read aloud a letter from the children.

"If you let my dad free I promise you you will never see myself and my family in your court ever again," it said in part.

Speaking with a pronounced accent, Mawlawi said he had lived in the United States for more than 30 years and served honorably in the U.S. Navy. He had gone to Bosnia after the war was over to teach English. He had already pleaded guilty to organizing the marriage scam that involved, among others, singer Janet Netters Austin. He was not a terrorist and would not flee the country if he were freed. He had "suffered enough," he said, and needed to be home with his family. "I am proud to be American by choice," he said. "Your honor, I love this country."

Shortly before 4 p.m. Breen pronounced the sentence: 37 months in prison. With his plastic bag full of civilian clothes, Rafat Mawlawi was headed back to prison where he would spend the Fourth of July and most of the next two years.

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