Re: Fwd: FW: Auctioning Radar's Paper

rich should calculate morts cash flow loss versus mine
please

--- DKIESQ@aol.com wrote:

Larry Marcus (in-house Counsel for DN) wants our
confirmation that the paper
inventory may be sold as described in the attached
e-mails because he is
concerned that if DN ultimately buys some of the
paper, we might claim
self-dealing. Larry's insistence only serves to
make me more suspicious of Mort in
his dealings with you.

1. 178,000 pounds of paper is not paid for. Why

are we even considering
paying for the paper only to sell it at a deep
discount at auction? Only
reason I can think of is to make it easier for Mort
to continue to deal with the
Suppliers on Mort's other businesses.

2. Cyna said that DN would not buy the paper

because it is the wrong size
and type, but might be inclined to use it if DN
could purchase the paper at
a cheap enough price. I have to wonder if Mort's
insistence on selling the
paper immediately, instead of in an orderly fashion
over some period of time,
is not aimed at establishing zero interest in the
paper at auction, so as to
justify a ridiculously low purchase price for some
of the paper by DN. I
have asked Cyna to ask Mark White whether there is a
particular period during
the year when publishers tend to buy more paper.
Rich is also asking Adam
Bly's people if the paper business is seasonal for
purchasing publishers. I just
want to make sure that Mort is not rushing us to
auction the paper before
the beginning of the purchasing season.

3. Mort had MJ LLC lease 16,000 square feet of

space, when Seed needed
less than half that space to produce its magazine.
Consequently, whether or
not Mort was renting the space to MJ at a market per
square foot rate, Mort
laid off an excessive amount of space on MJ LLC and
derived a benefit which you
did not. In addition, Rich believes that Mort's
per square foot rent charge
was in excess of what was being paid in the
over-lease. Why did Mort not
simply charge us at cost?

4. Mort continues to bill MJ LLC for rent on this

space. Mort billed for
January rent and I have no reason to believe that
he won't bill for February
until he re-leases the space.

5. Mort charged MJ LLC for the use of Mort's

USN/DN staff. When Mort's
staff came to work for Radar, Mort did not need to
hire additional staff for
USN or DN, which means that some of Mort's USN and
DN staff were
underutilized. Radar presented Mort with an
opportunity to lay off some of his existing
and necessary personnel expenses on Radar (plus an
additional administrative
charge) with the result that Mort derived another
benefit from the deal that
you did not.

At the very least, I request your permission to tell
Cyna that the paper can
be auctioned with reasonable reserves provided to
us in advance. But, if
some or all of the paper remains unsold after the
auction, we would like to
revisit the issue on how to sell the unsold paper
before immediately lowering
or eliminating the reserve prices.

Please advise how you want me to handle this.

Darren

Subject: FW: Auctioning Radar's Paper
Date: Wed, 15 Feb 2006 12:04:30 -0500
From: "Alderman, Cyna" CAlderman@nydailynews.com
To: dkiesq@aol.com
CC: "Marcus, Larry" LMarcus@nydailynews.com

Darren-

I spoke with Yucaipa yesterday and they informed me
that they are not
interested in purchasing the Radar paper inventory.
Mort has indicated
that he would like the paper sold as soon as
possible.

As I have mentioned to you previously, our
production team has
recommended proceeding with the sale through
go2paper.com, which is an
auction site. We would list the sale through U.S.
News & World Report's
existing account (since it is unlikely that MJ LLC
could satisfy the
credit check required to obtain an account on the
site at this point).
Theoretically, the Daily News could bid on the paper
being sold, but
would only be able to buy if it was the high bidder.
Further details on
this process are included in the attached e-mail.

Please respond to let me know if you and Jeffrey are
in agreement with
this plan.

Thank you-

Cyna

Cyna Alderman
Assistant General Counsel
Daily News, L.P.
450 West 33rd Street, 3rd Floor
New York, New York 10001
tel: 212-210-1555
fax: 212-210-6305
calderman@nydailynews.com

---

From: White, Mark [mailto:MWHITE@usnews.com]
Sent: Wednesday, February 15, 2006 11:44 AM
To: Alderman, Cyna
Cc: Armstrong, Mike; Maheshwari, Neil
Subject: Auctioning Radar's Paper

As we have discussed, I recommend selling Radar
Magazine's paper via
Internet-based auctions using the Web site
www.go2paper.com. The site is
used by many major printers and paper brokers to buy
and sell excess
paper, both via auctions and via listed prices.
Auctions are the best
way of establishing the market value of the paper.
We would notify
Radar's printer, Quebecor World, which is still
storing the paper at its
Lincoln, Nebraksa plant, of the auctions because it
may be able to use
the paper in Lincoln. We would also notify several
prominent paper
brokers that specialize in buying and selling excess
inventory. All are
current clients of go2paper.

Approximately 178,000 pounds of the paper has not
been paid for and
therefore cannot be sold yet. The rest of the paper
would be auctioned
in multiple lots based on brand, weight, and roll
width. We would
consult with go2paper staff regarding how best to
conduct the auctions
-- for example, how long the auctions should last,
whether all should be
conducted simultaneously, and whether to set
reserves.

U.S. News & World Report has an account with
go2paper and would be
listed as the seller because we do not believe MJ
LLC could pass the
required credit check to open an account. U.S. News
would not be able to
bid in the auctions. New York Daily News could bid
in the auctions but
would buy some of the paper only if it is the high
bidder. U.S. News
would pay go2paper's 3% commission and deduct that
from the proceeds,
which would otherwise be turned over to MJ LLC.

If some of the lots do not meet their reserve, I
propose auctioning them
again with a lower reserve or no reserve. Once the
178,000 pounds is
paid for, I propose auctioning that through go2paper
as well.

---

Mark W. White
Vice President, Manufacturing
U.S. News & World Report/Radar Magazine
450 W. 33rd St.
New York, NY 10001
(212) 916-8713

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