Watchdogs are watching Star: what about that $2.6 mill?

Dateline: Mon 16 Feb 2009

Cory Shouten of Indianapolis Business Journal broke a hot oh-what-a-tangled-web-we-weave story Saturday, about the debt owed the city (in the form of the Capital Improvement Board et al) by, among others, the Indianapolis Star.

Here's the lead to Shouten's story that was published Saturday:

"A group of mostly local companies that made big investments to help launch Circle Centre mall soon could be asked to write off a portion of profits they agreed to redirect into the construction of Conseco Fieldhouse.

"The Capital Improvement Board has floated the possibility of asking the 13 investors, including Conseco, American United Life, Duke Energy, Clarian Health and The Indianapolis Star, to forgive $34 million they are owed by 2017.

"The request is one of several possibilities the CIB is considering as it seeks to address a host of financial challenges, including anticipated annual deficits stemming primarily from covering operating costs for both Lucas Oil Stadium and Conseco Fieldhouse."

My colleague/fellow blogger Gary Welsh over at Advance Indiana has been all over this story. Today he sent the following email, which I think cuts to the chase for the newspaper and its beleaguered employees:

"I'm wondering," Welsh wrote, "what Star employees are thinking about the news the IBJ broke that the CIB is asking the Star and other corporate investors to forgive the $34 million they loaned to the CIB to build Conseco Fieldhouse from their dividends from Circle Centre Mall. The Star's share is $2.6 million. Wouldn't it be something if they forgave repayment of that loan at a time when they are laying off and furloughing their employees?"

As I recall, at one time the Star had the ethical cajones to disclose the relationship between itself and the Circle Centre Mall, when this deal was first brokered. Everytime the newspaper wrote about the mall, there was a disclosure statement, with words to the effect that the newspaper was an investor etc.

At the time, many of us did not question this scenario because we all wanted to launch Indy into the national spotlight, and we were cheerleaders for the city (or, let's face it, too stupid to discern the handwriting on the wall, or to question whether a newspaper should be in the business of investing in a mall). At the time, we had that big hole in the middle of Washington Street downtown, and when former Mayors Bill Hudnut and Steve Goldsmith figured out a way to fill it, we all went along for the ride. Note to those who crabbed: good for you. I am confident there were newspaper people who raised questions about this's just that there voices were drowned out by the behind-closed-doors hoopla.

Now those debts are coming home to roost. The whole country is broke, and Gannett isn't doing much better.

What will the Indianapolis Star do? Don't look for exec editor Dennis Ryerson and Co. to address this hot potato on its editorial pages. This will be, similar to the furloughs and the impending doom at the paper, the little story that is slipped under the rug....

Thanks to Welsh for the tipoff. Much appreciated, and way-to-go to Shouten for doing his job.

(To read these stories/blogs in their entirety, follow Welsh's blog to IBJ etc)


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