UPDATE: Here’s the reason why Michael Eisner is first choice among prospective candidates who could operate Tribune Co once it emerges from bankruptcy: John Angelo of NYC hedge fund Angelo Gordon & Co which is one of the Chicago-based media company’s biggest creditors. (See photo of Angelo, Eisner’s son, and Eisner.) Not only are Eisner and Angelo childhood pals who grew up together. “He was my sidekick from the age of 6,” Eisner said in his autobiography about Angelo, whose mother was in turn Eisner’s mother’s BFF. In the book’s acknowledgements, Eisner equates Angelo with his own sister because they “have been an important part of my life longer than almost anyone else”. Even now, the two men remain best friends and Angelo’s son Jesse (an editor at the New York Post) is Eisner’s godson. Eisner even devotes a chapter to Angelo Gordon & Co in his forthcoming book, Working Together: Why Great Partnerships Succeed and describes Angelo as someone who “I know as well as perhaps anyone, aside from my own wife and children.”

On Angelo’s advice, Eisner, 68, has been accumulating Tribune Co debt. Tribune Co and its creditors are still struggling to negotiate a settlement. But just last week, the latest round of talks surrounding the disastrous Sam Zell management collapsed. On Friday, Tribune Co is supposed to submit a proposed settlement plan which the court could approve. It’s clear that senior creditors like Angelo Gordon & Co will end up owning Tribune Co because of their $8.6 billion in claims. Meanwhile, Angelo Gordon Co has accumulated several newspaper holdings post-bankruptcies in the last year. Because of the Angelo connection, Eisner was first approached about becoming a member of a reconfigured Tribune board by him. Reports say those conversations led to discussion of a potentially larger role for Eisner with Tribune Co, and today he is being touted for the top job.

This is what circulated around the Los Angeles Times headquarters today in one email unofficially sent to staffers: “Tribune Co.’s largest creditors are in preliminary talks with former Walt Disney Co. Chief Executive Michael D. Eisner, who is being considered to replace Chicago real estate magnate Sam Zell as chairman, say several people with knowledge of the situation. Eisner would be joined by Jeff Shell, a former News Corp. executive who is in top management at Comcast Corp. Discussions about new management at Tribune are still exploratory, people close to one of the creditors cautioned. Senior creditors can’t make changes until a plan is in place allowing the company to emerge from its nearly two-year legal morass.”

Needless to say, I’m flabbergasted. Tribune owns the Chicago Tribune, Los Angeles Times, 23 television stations and other newspapers and media businesses — yet Eisner has a history of lying to the media when he was chairman/CEO of the Walt Disney Co. Many examples of this came out during the shareholders lawsuit against Disney because of Eisner’s hiring and firing of Michael Ovitz when attorneys compared his public statements about the company to his private memos detailing what was really happening. He also became infamous for putting together one of the most “insider” boards in corporate history while at Disney. When he finally left Disney in 2005, it was with his tail between his legs after receiving a resounding 43% no confidence vote from shareholders a year earlier and losing the chairman title. Presently dabbling in Internet content and television programming, Eisner is unquestionably a shrewd and successful businessman. But he is the wrong man to lead a newspaper of any integrity. The question is whether that’s what the LA Times is now…