by James O'Shea
A string of publishers and corporate politicians would follow Otis, only to get lost in his shadow. Tom Johnson, the affable Georgian Otis handpicked to succeed him as the first non-family publisher since 1882, came under immediate pressure from Robert Erburu, a lanky lawyer with Basque roots who would eventually play a hand in ousting Otis from the Times Mirror chairman’s office a few years later. Doing the Chandler family’s bidding, Erburu started to chip away at the wall Otis had erected to protect the newsroom from the pressures of the business. So skillfully had Erburu removed Johnson as publisher that some eleven years later, Johnson admitted to McDougal that he still didn’t know, “why he was ‘promoted’ to the vacuous position of chairman of the Times Mirror Management Committee.”
Johnson had named his own editor when Bill Thomas, the papers’ longtime editor, retired in 1988. He was Shelby Coffey III, a handsome, glib young southerner from out East who ran marathons, pumped iron, and got credit for bringing a breezy wit to the Washington Post’s style section. “His deal was literary journalism,” said Wolinsky. “Internally, he was seen as something of a dilettante. He quoted obscure poets, things like that. He loved Hollywood, and created literary teams. Column One really thrived while he was here.” Under Coffey’s tenure, the Times continued to excel, but hard-edged investigative reporting took a backseat to spot news coverage and the artful turn of phrase. Soon after he became editor, Times Mirror promoted another Washington Post refugee as publisher of the Times, David Laventhol, a highly regarded journalist who had run Newsday with a flourish. Coffey and Laventhol couldn’t have been more different in appearance. Coffey was neat and preppy, while Laventhol was unkempt and always seemed to walk around with his shirttail out of his pants. Both generated controversy in the newsroom, too. Coffey, for a redesign that unfairly drew comparison with Gannett’s USA Today, and Laventhol, for pulling back the Times’ efforts to build circulation outside Los Angeles and eliminating first-class air travel for the staff.
“When Laventhol came in, it was the beginning of a slide in a way,” Wolinsky said. “I stupidly offered to debate him on the first-class air travel. He started pulling circulation out of San Francisco and the Central Valley; he paved the way for the New York Times’ national edition in California.” Soon after they got their jobs, Laventhol and Coffey both confronted a poor economy that Erburu handled by imposing cutbacks, creating a drift in the paper’s fortunes marked by relatively flat circulation and financial performance.
By 1992, Times Mirror reported its first net loss in a century: $66.6 million in red ink, a glaring number that was blamed on the recession that hammered California’s defense industry and real estate markets and on costs incurred in a buyout. But the real reason for Times Mirror’s fading fortune was the way in which Erburu and Laventhol ran the place. They opened the door for Willes.
Even though the ownership of the paper gave the Chandler family unprecedented power and influence in Southern California, the family had a hard time extracting cash from their controlling block of stock in Times Mirror. For years, they erroneously assumed that the trust created by Harry Chandler, which mandated that control of the Los Angeles Times would remain in Chandler hands, barred them from selling any of the stock they owned in Times Mirror. Dividends became particularly important to the Chandlers, since the payouts represented how family members could generate actual income from Times Mirror. As a result, the Chandlers closely monitored the company’s dividend policies and made sure that anyone who ran the company understood the family’s plight.
Initially, Erburu found it relatively easy to placate the Chandlers. Early in his tenure as CEO, Times Mirror paid about 39 cents in dividends for every dollar it earned, a policy that generated about $30 million in income for the Chandlers. But as the years passed, growth in Times Mirror dividends failed to keep pace with its corporate peers, and the company’s earnings became erratic. By 1990, dividends consumed 77 percent of the company’s earnings, generating $45.1 million in income for the Chandlers. By 1992, Times Mirror paid out $139 million in dividends, while it earned a mere $56.8 million before extraordinary expenses, a dividend deficit of $82.2 million. To cover the shortfall, Erburu, in concert with the Chandlers and the Times Mirror board, raised cash by getting rid of star reporters, shuttering editions of the paper, and selling about $1.7 billion in assets, a ploy that’s like selling the family car to make your mortgage payments. Between 1980 and 1994, thanks largely to Times Mirror’s dividends, the company racked up a cumulative cash flow deficit of $740 million. More critically, the ill-conceived policy diverted into dividends much of the cash the company needed to reinvest in its operations to keep its newspapers and television stations competitive in a rapidly changing media market.
In 1994, Laventhol announced he was stepping down as publisher because of debilitating Parkinson’s disease. Richard T. Schlosberg III, a former air force pilot whom Erburu had brought to Los Angeles from Denver, replaced him. The health of Times Mirror fared no better on Wall Street. The company posted results that were so bad it faced the prospect of a dividend cut. Erburu, who was scheduled to retire after fifteen years at the helm of Times Mirror, rode to the rescue. To feed the beast, he and his management team suggested Times Mirror swap its sizable cable television division, which generated 36 percent of its operating income, for $2.3 billion in cash and stock, the largest asset sale in the company’s history. Proceeds from the sale would generate an immediate cash infusion of $1.3 billion.
At first, Wall Street loved the idea. Times Mirror stock jumped nearly 12 percent to $35.75 a share on the news that Cox Enterprises of Atlanta, Georgia, was paying top dollar for the property. But not for long. Allan Sloan, then a reporter for Newsday, exposed the devil in the details: The company would not use the cash infusion to increase everyone’s dividends, nor would the proceeds be passed along to investors. Erburu had structured the sale to create a special class of preferred stock carrying a payout that preserved and enhanced only the Chandlers’ dividends. All other shareholders faced a dividend cut of as much as 80 percent to help the company generate the cash necessary to invest in technology to strengthen assets dedicated to news delivery. The Monday after Sloan’s report ran in Newsday, Wall Street bid down the price of a share of Times Mirror to $32.75, as shareholders cried foul and stock analysts turned thumbs down on its proposed investments, which were the only element of the sale that made sense. The failure to invest in its future would continue to doom Times Mirror. Things only got worse after non-Chandler shareholders filed suit, alleging that the deal had been structured to benefit the Chandlers at their expense.
By early 1995, shares of Times Mirror were changing hands at about $18 a share, nearly half the value they’d held just after Erburu announced the sale. Embarrassed by reaction to the furor and public exposure of their greed, and forced to settle the suit with minority shareholders on less than generous terms, the Chandlers expanded the executive search to replace Erburu beyond the two internal candidates he had recommended.
In Minneapolis at General Mills, Willes had just discovered he would not be named CEO of the food maker when he heard about the Chandlers’ search from a headhunter who asked if he might be interested in running a media company. “I think literally in about six weeks, we went from ‘no, I don’t want to even think about it’ to being offered the job,” Willes recalled. “What really intrigued me was the ability to play a role in helping the world be a better place.”
After hearing of Willes’ reputation as a financial disciplinarian who knew how to wield a budgetary axe, the Chandlers hired the buttoned-down industry outsider in May 1995, and he lost no time cleaning house at Times Mirror. Shortly after assuming his post, he earned the moniker “the cereal killer” when he made a trip to New York, to visit the offices of New York Newsday, which was headquartered in New York City and was the sister paper of Long Island-based Newsday. He listened to employees in Manhattan wearing “Newsday too smart to die” buttons and, with one day’s notice, sh
uttered New York Newsday, a Laventhol pet project that had turned into a money pit. “We had a fiduciary duty to shareholders that was as important as our duty to readers,” Willes said. “We had lost $100 million on New York Newsday. That seemed like a lot of money to me. To their credit, they really fought hard to keep it alive.” But Willes said all he could see for New York Newsday was a future swimming in red ink, and he pulled the plug, leaving the New York metropolitan area with only one Newsday, the paper on Long Island.
He also stunned the Times newsroom by slashing journalist jobs in Los Angeles and, just as Brumback had in Chicago, launched an intense attack on the wall that separated the editorial and business operations of the Times, famously stating that he would use a “bazooka” if necessary to knock it down.
A practicing Mormon with an evangelistic streak, Willes meshed a strong commitment to family and the gospel with the ambition of a one-time B-minus student who climbed his way to the top of a major corporation. In the tradition of his church, he spent every Monday night with his family in something the Church of Jesus Christ of Latter-day Saints refers to as “Family Home Evening”—a time for families to come together as one to strengthen its bonds and to pray.
Willes speaks in a deep resonant voice like a preacher, resists the temptation to speak ill of others even if he feels victimized, and believes equally in “tearing down to build up.” He approached the unpleasant side of running a big company as if he were an undertaker, for whom death is just another day’s work. He bloodlessly delegated the dismissal of underlings who didn’t share his view and quickly burned through the Times executive ranks. In Willes’ first three years in the executive suite, nearly thirty executives were replaced or fled top management jobs at Times Mirror. In the past, the paper’s masthead, a list of the top editors whose names appear on the editorial page, could go a decade or more without change. Under Willes, the staff began to see a number of alterations, prompting newsroom wags to nickname Willes’ executive corps “The Flying Wallendas.”
Willes skillfully played to the Times newsroom’s sensibilities. “I really believe in the role of the newspaper,” Willes said years later. “I believe in the fact that people having well-reported information is critical in having a civilized society. I believe if you don’t know in some detail, not only what is happening in your neighborhood but also around the world, you can’t have the kinds of conversations we need to have to make sensible political, economic, and education judgments.” And, unlike many other news industry executives, Willes didn’t treat readers as people you could take for granted because they had nowhere else to go. He mixed a message of consulting industry clichés (“We have to think out of the box”) with a teary devotion to the apostles of print and ink. In his zeal to raise circulation, he cut the newsstand price of the Los Angeles Times from fifty to twenty-five cents, making the paper available to a broader segment of Los Angeles. He created new sections and editions designed to appeal to Latinos and targeted hyper local audiences. He sold off several lucrative properties, bolstering the Times Mirror’s bottom line with one-shot surges of profit that he used to feed the Chandlers’ voracious appetite for dividend income and the newsroom’s equally gluttonous budget. Some of the most skeptical newsroom critics pinned their hopes on the new messiah in the making. At least he had the potential, many journalists hoped, to ensure their jobs.
When Willes arrived on the scene, Tim Rutten, an acerbic Times writer and critic, noted of the Los Angeles Times: “Not since the battle of the Somme have troops been so badly led as they have been led here in the past ten years. Now we have someone whose life every day has been a Darwinian struggle for shelf space. Maybe we’re there, too. If he can bring his marketing skills in to save the newspaper, it will be a blessing to the whole industry.”
And, indeed, Willes’ initial results were good. Within months of his appointment, his opening moves had paid off. The price of a share of Times Mirror stock rose from $18 a share to $30, and then climbed to more than $70 a share. Dividends rose, a factor that appeased the Chandler clan, and operating income started to increase at a compound rate of 25 percent. Business Week named Willes one of its “Managers to Watch in 1996,” and Wall Street brokers once again began recommending Times Mirror stock as a good investment. The newsroom watched with a mixture of fear and awe. At the same time that he was shaping up the paper’s profitability, Willes was becoming somewhat of a star among the Hollywood stars. Newsroom stalwarts like Wolinsky noticed that Willes was really enjoying his job—maybe a little too much.
“I feel a little responsible for what happened to Mark,” Wolinsky later admitted. “When he first got here, before he was publisher, he was looking for a place to take a vacation. I have a house up on the Central Coast and I told him he should go up there and visit Hearst Castle [at San Simeon]. He came back and told me he loved it. I think he decided he wanted to be William Randolph Hearst. He started acting like a dictator, like he was Idi Amin.” Willes rarely applied the financial discipline he exhibited as a CEO to himself, or many of his executives, and soon he started to show the newsroom how to spend money.
Not long after Willes arrived, Wolinsky met with the new boss to tell him about a plan to revive the Times’ Washington edition, which had been scrapped under Coffey. The new CEO listened to Wolinsky’s idea and then told him he wanted to have a big party in Sacramento, and he wanted to meet the governor and legislators. Wolinsky recalled:I was supposed to set up the trip. So I got tickets on commercial airlines and lined up taxis to take us to the Statehouse bureau. But Mark had other plans. He rented a private Gulfstream [jet] and took us up there. It was Arnold Schwarzenegger’s plane. We had limousines take us to the airport and pick us up in Sacramento. When we got to the bureau, first Dick Schlosberg [then publisher of the Times] got up to talk. He gave the troops a pep talk. He said he knew a lot of people were unhappy that we had to close the Washington edition, but that was the decision and we had to move on. Then Mark got up to talk. He said it wasn’t a question of how to revive the Washington edition but a question of how quickly we could do it. He did it to stake his claim; he completely undermined his publisher. That’s when I knew Dick’s days were numbered.
Willes then hosted a splashy party in the lobby of the building that housed the Times Statehouse bureau, a grand space near the State Capitol where he could rub shoulders with senators, legislators, and the governor. Not long after, Schlosberg suddenly stepped down as publisher at the age of fifty-three, with the explanation that he wanted to spend more time with his family.
Although he had only been at the Los Angeles Times for a short period, Willes realized that being publisher of a big newspaper like the Times was a lot more fun than simply worrying about generating the earnings the company needed to pay the Chandlers’ dividends. So, in September 1997, he replaced Schlosberg, adding to his CEO title the job of publisher of the Los Angeles Times, in a secret board meeting held while Otis, probably the only person who could have stopped him, was on an Alaska hunting trip. Soon Coffey stepped down, and Willes named his own editor—Michael Parks—an ace foreign correspondent at the Times, but someone who was not widely viewed as management timber. “I loved it,” Willes recalled of his time as a publisher. “Even with all the criticism, I loved it, primarily because of the intellectual excitement of being able to talk to people who were really finding out about what was going on—from the people who were doing the gritty work in the courts in Los Angeles to the foreign correspondents. And the second thing I loved was making a difference.”
Willes found some aspects of the newspaper publisher’s job baffling: “The first thing that surprised me, and it shouldn’t have, I just found it astounding that there was no such thing as a private meeting. So I’d have what I thought was a confidential conversation, and I’d read about it in someone’s paper and I’d say, ‘holy cow.’ The second thing [was that] reporters were very bright people who understood that newspapers were a business and had to make a profit.” But Will
es found reporters reluctant to even discuss papers and profits in the same sentence. He said, “Well then, what are we missing in the idea that it’s not possible to have a conversation about that without people assuming we’ve just broken down some sacrosanct separation between the journalism and the business side. What surprised me is that was a problem for journalists. I mean how can you report on the world and not be able to look at your own world realistically?”
The Chandlers who had brought Willes to the paper were not a small group in Pasadena that “meets at ‘the club’ on Sundays,” pointed out Harry Chandler, Otis’ son and one of the few members of the secretive family who talks publicly about his relatives. The extended family represents some 170 descendants, many of whom live outside Southern California. Most are not named Chandler; only eight of them sat on the board that appointed Willes; only seven (including Otis’ son) worked for the Los Angeles Times; they are a fractured assembly. Yet they controlled Times Mirror through the family’s considerable stock holdings and treated the company as their own. The family had hired Willes to be the CEO of Times Mirror, not the publisher of the Times. His decision to appoint himself publisher angered the family, particularly Otis. As CEO and publisher, Willes was his own boss, and there were no checks on the one man in charge of the day-to-day operations of the newspaper.
For editors like Wolinsky, Willes was a mixed blessing: “On the down side, Mark saw no reason that editorial should be treated any different than anyone else. I would argue that maintaining a wall between editorial and the business side was a matter of credibility. But he didn’t accept that. In his experience, every department in a company should be going in the same direction. But he also saved the Washington edition with a flourish.”
