The Deal from Hell (47 page)

Lipinski was sorry to see de Lama go, but she remained determined to see the paper through a historic election in which a black man from Chicago was running for president of the United States. A gutsy and strong editor, Lipinski had done some unpopular things. I had watched her fire Bob Greene, a nationally known
Tribune
columnist, because she felt he had abused his position at the paper. She came under incredible pressure to back off, but she wouldn't. She did what she thought was right. She had also displayed backbone by traveling to the Sudan to demand that one of her reporters, Paul Salopek, be released from prison for entering the country without a visa. Now she confronted a problem of a totally different nature, one she had never
encountered at Tribune Company. Zell had placed his alter ego, Randy Michaels, in charge of day-to-day operations, and Lipinski had already found his conduct alarming and offensive.

Michaels, whose real name was Benjamin Homel, seemed to generate controversy wherever he went. One of his associates described him as a man who could take one look at a radio tower and recite its vital statistics. Michaels had a similar reputation for assessing women. Complaints of sexual harassment, crude jokes, and boorish behavior dogged Michaels wherever he went. Zell's organization, including Larson and Pate, seemed mesmerized by Michaels, though, and to be fair, he was not without talent. He was a brilliant radio engineer, had made millions in the media and had helped Zell turn the 1993 acquisition of an ailing radio company named Jacor into an industry juggernaut. He and Zell peddled the company to Clear Channel Communications just five years later for $4.4 billion, a price tag that netted Zell a $1 billion profit. Within Zell's Equity Group, Michaels was considered a creative force who could impose brutal cost cuts with the crack of a joke.

The hundred-day Tribune plan Michaels provided Zell was a remarkable document. In nine pages of single-spaced bullet points about what to do with a company that owned America's best collection of daily newspapers, Michaels never mentioned the word
journalism
. If anything, he ridiculed the values for which Tribune once stood and targeted anyone who doubted his vision. “Empower opinion leaders who buy into the new vision,” the document said. “Eliminate negative resistance and counterproductive team members immediately. Hang the turf Gods publicly.” Michaels set out to rewrite the employee handbook and strip it of any policies that he viewed as politically correct. “Eliminate most of the HR Department,” he proposed. “Ratings, contributive circulation, revenue and expense control are the new politics.” And he advocated short, entertaining news stories focused heavily on attracting ad dollars. “We live in a ADD [attention deficit disorder] world,” he said, where news stories should be short and newspapers scannable. Tribune Company should emulate Matt Drudge and Fox News and
discontinue stale sections like “Tempo” in the
Chicago Tribune
.“Tempo,” he said, “is so sixties. How about a section called ‘Strange'? What's wrong with a section that holds news up to a funhouse mirror: ‘Knuckleheads in News'?”

To implement his policies, Michaels began searching for opinion leaders within Tribune ranks who could sign on to policies to close news bureaus, eliminate middle management, downsize the staff, and create a news report that gave readers what they—and not some editor—wanted. Although Michaels' plan contained strongly worded policies that treated “middle management” as a scourge to be scrubbed from the Tower, he didn't highlight the replacements he had in mind—a platoon of cronies he recruited from his days in the radio business. In all, in less than a year, Michaels hired into senior positions more than twenty former associates, ranging from Marc Chase, a senior vice president of programming at Clear Channel Communications whom Michaels placed in charge of Tribune Interactive despite his dearth of Internet experience, to John Phillips, a traffic reporter for Michaels in Cincinnati who took over as building manager of Tribune Tower. When Tribune, which once had a strict policy on nepotism, hired Phillips' fiancée, Kim Johnson, as a senior vice president for local sales, the press release jokingly described her as “a former waitress at Knockers—the Place for Hot Rocks and Cold Brews.”

“They tried to purge from the building and the company anything about the company's legacy or history, all of the Colonel stuff,” recalled Mary Jo Mandula, who managed Tribune Tower until she was replaced by Phillips. “They started trying to get rid of the [First Amendment] Museum right away. I think they screwed up because they were getting a lot of rent for the museum.... Randy . . . wanted to get rid of everything that had anything to do with what we were.”

Michaels' most celebrated hire was Lee Abrams, a fifty-five-year-old white-haired radio industry hotshot who was named chief innovation officer at Tribune. Abrams became known for his frequent, rambling stream-of-consciousness memos that declared news the new rock and roll. To his credit, some of Abrams' observations—such as
news organizations didn't do enough to promote their unique content—were on the mark. But his uneven, randomly punctuated and capitalized notes invited ridicule. He wrote, introducing himself to the company's staff:

Few knew what to think of Abrams. Lipinski had her doubts and didn't invite him to any meetings involving an impending redesign of the paper.

Abrams, Michaels, Zell, and his team loved to portray themselves as iconoclasts who wore blue jeans to work and ridiculed anyone in a necktie. Yet they succeeded in creating an intimidating atmosphere for anyone who didn't follow their dress code or their thinking. Shortly after he walked into Tribune Tower, Zell created a “Talk to Sam” e-mail box for employees to communicate directly with the boss. He told employees to “challenge authority” and speak out about the company's weaknesses. “Talk to Sam,” of course, drew the inevitable sycophantic messages from people like Margaret Holt, who worked in the public editor's office of the
Chicago Tribune
and who had heard Zell go after “arrogant journalists.” In her note to the big man, she suggested, “Ban—or sharply limit—journalism contest entries by Tribune newspapers.... This is heresy, of course, and would get me bounced from the fraternal order of journalistas if word leaked.”

But Zell's “Talk to Sam” initiatives also courted notes from professionals like Jeff Coen, the
Chicago Tribune
's solid, federal courts
reporter who commended Zell for the shake-up he'd stirred. One of his more frequent correspondents was Jane Hirt, an editor at
Redeye
, the Tribune's youth paper, who suggested that the company could increase revenue with a “Second Life for Cats” feature wherein the feline pets of readers could “ live out lives online, have alter egos, get married, get jobs, run businesses, etc.” Of course, most of the correspondents didn't realize Zell was passing on their remarks to their bosses and they penned long rants complaining about career setbacks or rejection of their ideas by “arrogant newsroom leaders,” ratting out their colleagues in an atmosphere that soon turned crude and ugly, particularly once they started steep layoffs.

Within six months of the close of the Tribune deal, the economy started to nose-dive in earnest, and Zell, in a near panic, began talking of a crisis. He had acquired big papers in Florida and California, two states hit particularly hard by the subprime mortgage debacle, and the company's cash flow suffered along with the rest of the industry. He had built a financial cushion into the deal in case projections fell short, but his cushion disappeared as the slump in the economy devoured spare cash, forcing him to order deep budget cuts and layoffs, a sharp contrast to his optimistic forecasts made just months before.

Tribune Tower had been a pretty buttoned-down place that Michaels promised to change so people could have some fun. He commissioned jukeboxes, pinball, and air hockey machines. Mandula couldn't believe the company was spending $40,000 to $50,000 on games when Tribune was laying off people, but she soon got a taste of the kind of morale-building exercises Michaels and his team intended to offset any bad news. While at the company's Freedom Center printing plant, Mandula received a call that a beer truck had shown up wanting to deliver twenty cases of beer:

It was hard to believe she was talking to the top corporate officer at one of America's largest media companies. But the bizarre incidents continued, she recalled, “They wanted people in Tribune Interactive to come up with $1 million revenue ideas. So they told me they wanted me to get $1 million in cash so they could put it on the floor and people could roll around in it and get their picture taken. It was stupid, and a stunt. It was expensive, too. I had to get a Brinks truck to deliver it, get extra security.”

The good times didn't roll for people with long and solid ties to the Tribune Company, though. They had reason to fear for their futures, unless, of course, they swore allegiance to Michaels and his cronies from Clear Channel, which Michaels had left after clashing with the family that controlled the company. Even Kern called Lipinski and said he was sick of the foul language and compared them to Brownshirts, using words like “evil” and “stupid.” But it didn't take long for Kern to realize he had already developed a policy that fit right into Michaels' playbook. The new boss embraced Kern's plans for a centralized news desk that produced cookie-cutter foreign and national coverage for all Tribune papers with far fewer “journalists” than those Kern had counted as they ran around the nation and world covering stories for Tribune papers, particularly the
Los Angeles Times
. Kern's star soon began to rise and those Brownshirts seemed more like khaki. Bob Gremillion, the transformative change czar under
FitzSimons, began championing Kern's ideas, and both became fixtures of Michaels' team.

The antics spawned disbelief and guffaws on the blogs following the doings in the Tower, but they were not funny. Michaels created an atmosphere of fear. At one point, Michaels installed a sign in the lobby outside the
Chicago Tribune
newsroom headlined: “The Perils of Modern Journalism: Should Political Correctness Trump Accuracy.” The line on the sign, “A customer is the most important visitor on our premises,” was attributed to Mahatma Gandhi. To most people, the idea that Gandhi was into customer service was a stretch. The pep talk about the customer continued, “He is not dependent on us. We are dependent on him. He is not an interruption of our work. He is the purpose of it. He is not an outsider to our business. He is part of it. We are not doing him a favor by serving him. He is doing us a favor by giving us the opportunity to do so.”

Of course, in a building full of journalists, someone quickly checked whether Gandhi had ever uttered these words and found experts who debunked the notion. When someone with a magic marker came along and put an (S) is front of every reference to “he,” Michaels went into orbit. A huge blue banner was draped over the sign, relocated to the Tribune Tower lobby. It read: “This poster was defaced shortly after it was placed outside of the
Chicago Tribune
newsroom.” As the bizarre become commonplace, Lipinski started wondering how long she could tolerate the situation.

Even before phase two of the deal closed, the banks had pressed Zell to sell assets, particularly the Chicago Cubs, a team then valued at $1 billion that didn't generate a lot of cash flow. The banks figured the sales proceeds could be used to reduce debt without hurting the cash stream needed to pay down the rest of the loans. Zell soon figured out a way to structure a deal in which he could maximize the price and get favorable tax treatment by selling the team to interested buyers, and Wrigley Field, its historic stadium, to the state, using tax-exempt
bonds to finance the deal, creating a situation similar to that of U.S. Cellular Field, which the state had built for the Chicago White Sox.