by James O'Shea
Few believed that the Times could achieve Willes’ goal of increasing circulation by 50 percent to 100 percent. But circulation did increase under Willes, and he rewarded editors who went along with his ideas with the most important currency in the newsroom: people. “He had all of these ideas,” Wolinsky recalled. “Some were great. Some of them worked. The zoned sections worked. He created a section for small businesses. He gave people stock options. He would sit down with editors and at the end of a meeting give them five or six more people. This was probably not sustainable. I suspect it would have eventually fallen apart. But for a while we had this great feeling that somebody really believed in us.”
Willes launched the first brand advertising campaign in six years, increased weekend cultural coverage, published an eight-page bilingual section, purchased some smaller neighborhood papers in the market, created a “Reading by 9” program for kids, embarked on circulation-boosting campaigns with local non-English language papers like the Korea Times, did a bundling deal with the Spanish paper La Opinión, and shoved new sections in the paper covering subjects like health, transportation, and Southern California living. Under Willes, the Times recorded seven consecutive increases in circulation, although many gains involved adding gimmicks rather than readers. (The Times circulation jumped 17,000 thanks to its alliance with the Korea Times and about 90,000 when it was merely bundled with La Opinión.) Total gains fell far short of Willes’ ambitious goals, but he increased total circulation by 150,000.
The newsroom watched Willes cautiously. Meanwhile, his relationship to the family that hired him deteriorated rapidly, largely due to the turmoil he created on the business side of the paper. “He didn’t like the Chandlers,” Wolinsky explained. “He couldn’t understand why everybody thought Otis was such a god. . . . I think he was jealous of Otis.” It’s possible Willes might have thought the Chandler clan incredibly ungrateful.
In the first two and a half years of his tenure, Willes dramatically improved Times Mirror’s financial performance. Between 1995 and 1997, the company paid out $2.1 billion in dividends and stock repurchases, compared to $417 million in the three years before he took over. He handed over all of the company’s free cash flow to investors and the Chandlers, plus the proceeds of asset sales he engineered with a helping hand from Tom Unterman, the Chandler family financial sherpa. He sold off Harry N. Abrams, the nation’s largest art and illustrated book publisher; the National Journal, a respected public affairs magazine; health science publisher Mosby, Inc.; and legal publisher Matthew Bender in a $2 billion plus deal that would later stick Tribune with capital gains taxes the Chandlers should have paid. Efrem (Skip) Zimbalist III, a former Times Mirror chief financial officer under Willes, explained:Mark was very direct. He was a visionary. He felt viscerally and emotionally very strongly about the newspaper industry. He liked our other businesses but loved newspapers. He really wanted the Los Angeles Times to succeed. But we operated in a complex market and he was struggling for ways to make it work. He put his heart into it and sold off certain parts of the company that he didn’t think were core . . . to raise cash to funnel to the Chandlers. Prior to Mark, we had a great mix of revenue with some assets that were not cyclical like the newspaper business. When the newspaper business was poor, the results were balanced by [non-core assets that] provided revenue. But Wall Street didn’t like that. They wanted things to be real clear; they wanted clarity with nothing to confuse them. Mark started getting rid of [non-core assets] and that hurt our balance.
In Willes’ tenure, Times Mirror, thanks to the genius of financial wizard Unterman, who had a legendary reputation for hatching tax avoidance schemes, reorganized its capital structure twice, rewarding the Chandlers with huge financial windfalls. The first of Unterman’s efforts revived the dividends the Chandlers had sought, but failed to get in the 1994 sale of the cable business. In Unterman’s second reorganization move, two trusts that he’d created entered into a complex deal with Times Mirror. The alliance generated regular cash disbursements plus tax-advantaged depreciation deductions to the Chandlers. In effect, the deal between the company and the trusts allowed the Chandlers to diversify their Times Mirror holdings without actually selling the stock. In one fell swoop, they circumvented the provisions of the trust saying they couldn’t sell the stock, maintained control of Times Mirror, avoided any capital gains taxes, and got the dividends they so coveted.
Wolinsky watched the tension between Willes and the Chandler family bubble over when Otis retired from the Times Mirror board in March 1998: “They were going to have a going-away ceremony for Otis, and I went up there. I was kind of expecting him to make an inspiring speech about journalism.” Instead, at the last minute, Willes combined Otis’ final board meeting with a farewell party. “It was in the Chandler Auditorium,” recalled Harry Chandler, referring to a large room on the sixth floor of Times Mirror, “and it was really awkward.”
“Mark treated Otis like he was just another director retiring,” Wolinsky remembered. Instead of a tribute to his fifty-five years of service to the company and newspaper, Wolinsky said, Otis was thrown a few dismissive remarks about how he liked to hunt, lift weights, and surf:Afterwards I went downstairs and I saw a couple of copy kids wheeling a cart down the hall with a bust of Otis that had been removed from the Globe Lobby. I stopped them and said, ‘Hey, what are you doing? Where are you going with that?’ And they said they had been told to take it down and put it in a closet. I asked them who told them to do that and they said Mark.
In his housecleaning effort, Willes was eager to wipe the slate clean—if not to erase Otis Chandler’s legacy—to diminish his lingering presence, although he didn’t recall removing Otis’ bust.
Willes later acknowledged that his treatment of Otis was a mistake, particularly after Chandler left the board and grew more distant from the company: “In hindsight, because I’m not a politician and I don’t know how to play politics, I don’t even think that way and that would prove to be a mistake. I should have stayed closer to Otis because he became very critical. I honestly think to this day that, had I taken more time to fill him in, keep him informed, and get his reaction, we would have done better.”
Despite Willes’ best efforts, Times Mirror results started to lose their sizzle. By 1999, income from the company’s operations totaled $248 million, up only $2 million from the year before. The massive increases in circulation failed to materialize.
Willes removed people with newspaper experience from the corporate suites and turned to executives from outside the industry, such as Steven Lee, an executive from PepsiCo, a consumer products company. He put Lee in charge of overseeing circulation and marketing the newspaper, a product he had never sold. When Willes bowed to pressure to step down as publisher, he infuriated the Chandlers by tapping his number two, Kathryn Downing, a fellow Mormon and Stanford law graduate who had a long career in legal publishing but no experience in newspapers. He didn’t even discuss his desire to promote Downing with the Chandlers, who expected to have a voice in naming a publisher of the family’s flagship newspaper.
Willes’ decision to batter the wall separating the editorial department from the business side was, not surprisingly, met with deep skepticism. He appointed mini-publishers to work directly with editors, blending the marketing of the paper with its news coverage. To him, the alliance made perfect sense. Ad salesmen could tip off editors about good stories, and reporters could alert salesmen to potential customers. People in the newsroom protested, arguing that the wall that had existed precisely because such nefarious alliances had damaged the industry’s credibility in the past. But Willes ignored such cries and awarded editors who played ball.
“When I got there, I didn’t completely appreciate what the term ‘wall’ meant to journalists,” Willes said. He merely wanted journalists to think more about providing great reporting on subjects in which readers had an interest. “That is literally all I wanted to say. But I said it in the wrong way. I wanted to br
eak down the wall but keep the line there. I never had any interest in having business influence the journalism.”
Surprisingly, for someone interested in making a buck, Willes was not as interested in exploring new media as he was in building up the paper. Otis’ son, Harry Chandler, had come to the company a few years before Willes to craft an Internet policy. He wanted Times Mirror to invest in a fledgling company named Yahoo! (Meanwhile, in Chicago, Brumback had made a small investment in an online start-up company called Quantum Computer Services, that would later be renamed America Online. The deal would pay off big.) But Willes didn’t embrace the new media with the same zeal as other Internet advocates in the company, such as Unterman, at that time, his CFO. He slashed Harry Chandler’s new media division, angering and dispiriting one of the few people in the company with an eye on the future. Harry recalled:He [Willes] was a Luddite. . . . I’ve never told anybody this before. But there were three Chandlers still at the company then—me, Fred Williamson, and Susan Babcock. I was in new media and they worked in jobs on the business side. We were all pretty dismayed at what was happening at the Los Angeles Times and Times Mirror. About 30 or 40 percent of the business-side middle or upper management had left. So I made an appointment at Chandis Securities [the Chandler family holding company]. We met in a conference room in Pasadena above the accountants’ office on Colorado Avenue and Orange Grove. We told them that we didn’t know if they were aware of all the good people that were leaving, and we named many of them. We told them that we wanted to bring the situation to their attention. They listened and said thank you. Frankly I don’t know if we had any impact. The only communication you ever get from the family is business. There are no family calls. That never happened. People on the board run everything. They are very secretive.
Wall Street meanwhile took a look at the predicament facing the Chandlers of the world and saw an opportunity to make a buck. Investment banks like Goldman Sachs and Merrill Lynch had used their elevated status as strategic advisers to the corporate elite to unleash a wave of consolidation. Soon deals like AOL’s marriage to Times Warner Corporation would command headlines. In Wall Street’s view, executives like Willes had a simple choice: to “buy or be bought.” But the man who sanctioned sniff tests to ensure a better-smelling newspaper wasn’t easily convinced.
From time to time, Willes had initiated strategic planning exercises to determine if Times Mirror would be better off merging with another media company or remaining independent. They were mock exercises, not actual proposals, and he didn’t see any advantage to proposing a marriage of Times Mirror and Knight Ridder, or Tribune Company, or any other media company. “I felt we could take care of our shareholders just fine as an independent company,” Willes recalled. Then he got a phone call from a fellow CEO from Chicago who wanted to get together for a chat at an upcoming Newspaper Association of America meeting in San Diego. “I didn’t know John Madigan well, and thought it would be fun to get together, to get better acquainted,” Willes recalled. “I thought it would simply be a conversation. Very naïvely, I thought that’s all it would be, just a casual conversation. One of the things I have never been is politically astute.”
7
His Seat on the Dais
The white tour bus carrying John Madigan weaved through the streets of Havana. Once again, he and an entourage of Tribune Company executives had come to Cuba with the hope of interviewing Fidel Castro, and once again, Castro had stiffed them. Eric Ober, president of CBS News, had recently shown up in Havana with a group of network executives for a long, late-night session with Castro. So had many other lesser corporate luminaries. But for the second time in six years, the dictator gave the cold shoulder to the CEO of the Tribune Company, head of a widely admired Fortune 500 corporation and a group of executives who ran newspapers covering the world’s largest diaspora of Cubans. As his bus passed bicycles and aging cars plying the frenetic streets of Havana, Madigan muttered to a colleague disconsolately, “We just aren’t big enough.”
Madigan wasn’t the first Chicago Tribune loyalist to leave Cuba disappointed. Almost fifty years earlier to the day, Jules Dubois, the Chicago Tribune’s infamous Latin American correspondent, had been expelled from the island for his critical coverage of Castro, whom he had once portrayed as a young rebel commander and hero who ousted from power the cruel and corrupt dictator, Fulgencio Batista. On the surface, Madigan bore little resemblance to Dubois, a husky, blue-eyed correspondent who had braved pistol-whipping and violence to get his stories, once reputedly filed by carrier pigeon. But each man symbolized the ambition of the Chicago Tribune as more than just another local paper on the prairies of the Midwest. Dubois, a legendary correspondent, epitomized the Tribune’s commitment to foreign reporting by a free press in the 1950s and helped found the Inter American Press Association, an organization that the Tribune continued to support for decades. A half-century later, Madigan would assume his place in Tribune lore when he bet the future of the company on the largest newspaper merger in American history.
John Madigan was not the kind of man who wore his feelings on his sleeve. One got a clue to his thinking through a fleeting comment or a slip of the tongue similar to his “not big enough” comment on the bus. His cautious demeanor was no accident. Ever since he had been passed over for the CEO job in favor of Brumback, Madigan had labored in Brumback’s shadow, a treacherous arena reserved for men with something to prove. And Brumback made sure that Madigan had his work cut out for him.
To anyone schooled in reading the tea leaves at Tribune, Brumback became the CEO in waiting late in 1988, when Cook named him president and COO of Tribune Company, a promotion that relegated Madigan to runner up. True to form, Brumback hit the ground running, seizing control of Tribune Company and shaking it to its core much as he had done with the company’s flagship newspaper.
In his day, the Colonel had built a sizable and successful Canadian newsprint operation to ensure that his papers would always have an adequate, cheap supply of paper, a crucial commodity to a newspaper’s future. But paper mills consumed a lot of capital and produced pulp, a commodity. As Brumback assumed his new duties with Tribune Company in early 1989, he concluded that the Tribune Company shouldn’t be in the commodity business anymore. Canada’s political system bothered the rock-ribbed Republican, too. Brumback believed Canada’s “socialist tendencies” challenged the possibility of earning a fair return. So, over the next five years, he spun off the newsprint operation, eventually selling the whole operation to Donahue Paper Corp. of Canada.
Even more daring, Brumback, fresh from his victory over unions in Chicago, stuck his thumb in the eye of organized labor at the Daily News, the New York tabloid that had been founded by the Colonel’s cousin, Joseph Patterson, and had become a significant drain on the company’s bottom line. At the time, the Daily News was run by James Hoge, the Chicago Sun-Times editor who had quit his job across the street when Rupert Murdoch bought the paper in 1983. Cook had quickly hired Hoge to run the Daily News, a paper that had long been at odds with its unions. Hoge devised a phased plan in which the company would make some long-term strategic investments the New York unions sought in return for union concessions the company wanted. When Brumback came along in 1989, though, he rejected the phased approach, preferring to take on the unions directly as he had successfully done in Chicago. Hoge, who had grown up in New York but had spent much of his career in Chicago, tried to warn Brumback about the stark differences between unions and politics in Chicago and New York, where the mafia had much deeper penetration of the unions with which he had to deal. But Brumback would have none of it. He soon hired Robert Ballow, a notorious union-busting lawyer from the King & Ballow law firm in Tennessee, and by 1990 the Tribune found itself embroiled in the longest newspaper strike in New York City’s history.
Brumback’s in-your-face tactics and naïveté about Big Apple politics led to a walkout marked by torched newsstands and even more tortured politics. At one point, Brumback’s
mandate to fix the Daily News, sell it, or “shut it down” had Mayor David Dinkins, Governor Mario Cuomo, and John Joseph Cardinal O’Connor in the streets backing a union boycott of the newspaper. After losing some $250 million over eleven years, Tribune paid British press lord Robert Maxwell $60 million to assume the paper’s debts and take off its hands one of the nation’s largest newspapers in one of America’s greatest markets. Maxwell entered New York with much fanfare, but it soon became apparent he needed the $60 million badly; he was broke. Shortly thereafter, he fell off his yacht and drowned in an accident that many speculated was suicide, sending the financially strapped Daily News into the hands of Mort Zuckerman, the real estate developer.
When he picked his fight with the unions, Brumback didn’t think he’d have to walk away from the Daily News, but at the end of the day, he emerged as the darling of Wall Street. Despite the problems caused by the strike and its embarrassing headlines, Brumback’s decision to dump the Daily News extricated Tribune from a financial morass in New York, freeing the company to build a powerful multimedia corporation and sending its stock into the stratosphere. The company’s stock price jumped 1 percent on the news of the Daily News sales and continued to rise. In August 1990, Brumback became CEO of Tribune Company. He was named Chairman in January 1993.
In Chicago, Madigan had won a crown jewel as a consolation prize for losing out to Brumback—CEO of Chicago Tribune Company and publisher of the Chicago Tribune, the job that ambitious executives had always used to catapult themselves into the CEO’s chair. Tribune Company CEOs rarely had ever reached the top job without a tour in the Tribune publisher’s office. But Madigan also faced a daunting challenge: He had to emerge from Brumback’s shadow to demonstrate he had the competence, decisiveness, and ability to lead the parent company. Since everyone at Tribune Tower credited Brumback with turning the Chicago Tribune into a well-oiled cash register, Madigan had a hard act to follow, particularly after Brumback ordered the newly minted Tribune publisher to ship his top local talent to New York to help him fight the unions. Meanwhile, Brumback openly expressed doubts about Madigan’s ability to succeed him. At one point late in his tenure, Brumback stunned Chicago Tribune media reporter Tim Jones, during an on-the-record interview, when he said he wouldn’t completely relinquish his leadership role in Tribune Company because he wanted to see if Madigan had the chops to run the company.
