The Deal from Hell

by James O'Shea

  Baquet knew he had inherited a great staff at a paper that lacked direction. Like Carroll, he saw the need for focus: “I thought the stories were too long.... It was cacophonous, not a cohesive, coherent paper.” Baquet later recalled.

  Much has been made over the years of the failures of the Tribune–Times Mirror merger and of the conflicts spawned by the shotgun marriage of these two storied newspaper companies. Both parties made mistakes. But the complaints and recriminations overshadowed one thing: Initially, the deal worked. It not only worked, it worked well, particularly when it came to the reformation that took place at the Los Angeles Times under Puerner, Carroll, and Baquet, three people put in their jobs by the dreaded Tribune Company.

  “Overall, I had more time in the newsroom than any editor I know,” Carroll recalled. “Puerner [a longtime Tribune veteran] supported my request to spend nearly all of my time on journalism, not in business-side or corporate meetings. He covered my back so I didn’t have [to be on] patrol. That extra time in the newsroom made possible whatever journalistic success I had.” To bolster the paper’s features coverage, Carroll hired another New York Times veteran, John Montorio, an exceptionally talented editor who went to work upgrading the Los Angeles Times feature sections into some of the best in the country. To the consternation of many in Chicago, Fuller strongly supported the team he put in place in Los Angeles, despite carping from Chicago about the size of the Los Angeles Times staff, and the new editors and publisher delivered the results he wanted.

  Tribune Company had figured the merger would generate $200 million in cost savings. By 2003, Puerner had cut the number of Times employees from 5,300 to 3,400. Although he shielded Carroll’s newsroom from much of the carnage, he closed fourteen money-losing Our Times zoned editions, initiated $220 million in capital expenditures that boosted the Times color printing capacity, and built a new $50 million facility for preprinted ad inserts to offset the loss of classified advertising.

  Tribune had rebounded from the damage inflicted by September 11, 2001, posting 2003 operating profits that were up by 70 percent. It used its online assets to take on Monster.com, an employment website juggernaut that had come out of nowhere to ravage the classified advertising business of the Times and other newspaper companies across the country. Capitalizing on its national scale, Tribune created CareerBuilder.com, an online jobs site that competed head on for classified job ads nationally with Monster.com. Hiller, the onetime head of Tribune’s development arm who would become publisher in Chicago and later in Los Angeles, recalled:For years, the newspaper industry had been falling all over itself in these consortium efforts that went nowhere because the companies didn’t want to give up autonomy or control. We used the scale of the new Tribune–Times Mirror to break through that morass and go out on our own.... We invested heavily to create CareerBuilder. It was probably one of the most striking and successful new media stories . . . of a traditional company creating a successful online business. Everybody thought Monster had already killed the recruitment business, but we overtook Monster. We invested several hundred million in CareerBuilder and invested a lot in marketing expense.... We did the unthinkable for a newspaper company and even invested in Super Bowl ads for CareerBuilder. We overtook Monster in revenue, traffic, and job listings.

  Nowhere would the change be more dramatic than in the editorial department of the Times. Initially, Carroll and Baquet helped Puerner generate savings, slashing the paper’s so-called news hole—the amount of space dedicated to content after advertising was in place. “When I got there, the Los Angeles Times probably had more news hole than any other paper in the country. It was huge,” Baquet recalled. “We had editions in Orange County, Ventura, the Valley, they all had staffs and huge news holes.” As the news holes shrunk, reporters and editors were either bought out or transferred to other sections of the paper, and the size of the staff started to fall, although it remained far larger than in Chicago. “We probably cut too much in Orange County and the Valley,” Baquet said. “About 70 percent of what we cut was about right. We probably went 30 percent too far.”

  The managing editor at the Times had traditionally run page one meetings and didn’t spend time ginning up stories with reporters. But Baquet changed that, switching Wolinsky’s title to deputy managing editor and putting him in charge of page one so that Baquet could get his hands dirty working with stories and reporters. Carroll and Baquet refocused the Times to make it a national paper of the West, an alternative voice to the East Coast papers that dominate the news media, a strategy that made them vulnerable to charges that they shortchanged local news. Like Baquet, Carroll helped set a new tone at the paper, revamping its editorial pages and, sometimes, personally editing big stories that were destined to be candidates for prize contests, such as the Pulitzers.

  Much had been made over Carroll’s zealous pursuit of Pulitzers. David Simon, a former Baltimore Sun reporter who went on to create the HBO hit series The Wire, purportedly modeled the ethically challenged, Pulitzer-obsessed editor in the show after Carroll, who had been Simon’s editor at the Sun. There is nothing wrong with an editor coveting a Pulitzer Prize. At heart, that’s just what the prize is for—stimulating, promoting, and recognizing outstanding journalism that serves the public good. The top editors of all the Times Mirror and Tribune papers pursued Pulitzers before they were owned by the same stockholders; the deal merely enhanced the competition and made managing editors like Baquet and myself more determined than ever to show each other up with great journalism, the best of which often didn’t win Pulitzer prizes. Did our competitive instincts and zest for a better story spawn duplication and inefficiencies that would have made Brumback’s skin crawl? Sure.

  But so what if some nickel-and-dime corporate apparatchik could find instances of two reporters from Tribune family papers in the same town covering the same story. In reality, the duplication wasn’t that extensive or expensive. And the superior journalism promoted intangible benefits to the bottom line. Readers respect newspapers that take on powerful interests, expose abuses of power, and illuminate the dark corners of privilege where secrecy thrives. Good, solid, spirited journalism provides an invaluable, credible public marketplace of ideas and debate for readers and advertisers alike.

  Like the Chicago Tribune’s best coverage, the Los Angeles Times journalism had impact. Willman’s Pulitzer-winning coverage of Rezulin spawned three or four federal investigations of the FDA’s policies. Few other papers had the drive, resources, and guts to take on Walmart as Los Angeles Times reporters did in a 2004 series that exposed how the low prices touted by the Arkansas chain came at the expense of the workers in exploited factories far from the American public’s eye. In 2005, I was on the committee of journalists named to select finalists for the Pulitzer. Included in the three stories we selected as finalists was one that made me ache with envy and admiration for Baquet and his staff: a series of stories that documented how Martin Luther King, Jr./Drew Medical Center, a 233-bed hospital just south of the impoverished Watts neighborhood in South Los Angeles, had a long history of harming and, in the worst cases, killing the community members it was meant to serve.

  In 2005, the Los Angeles Times won the Pulitzer Prize Gold Medal for public service for its King Drew hospital coverage, but more importantly, the paper focused attention on deadly medical problems and racial injustice at a major public health institution. Carroll was proud of the paper’s work. So was Baquet. But there was one man in Chicago who thought journalists like Carroll and Baquet were more interested in pursuing Pulitzers than in winning readers and making profits. He was the first CEO of Tribune ever to come from the broadcasting side of the company and he didn’t share the journalists’ values.

  11

  Market-Driven Journalism

  In July 1982, a tall, athletic young man known for his crisp shirts and competitive streak had walked into Tribune Tower to start selling advertising for the company’s Chicago broadcasting flagship, WGN-TV. Dennis Joseph Fi
tzSimons had been recruited by Jim Dowdle, a burly white-haired ex-Marine who had started his career as an ad salesman for the Chicago Tribune but had left the paper in the 1950s to explore broadcast sales, where he’d worked himself ever upward through the ranks. Thirty years later, in 1981, Tribune rehired Dowdle, this time as president and CEO of Tribune Broadcasting. Tribune Broadcasting’s main asset, WGN, had begun broadcasting via satellite, and had become a national superstation—picked up by many fledgling cable stations across the country.

  In FitzSimons, Dowdle recognized what he needed to energize the underperforming ad operations at WGN. FitzSimons didn’t have the midwestern pedigree common to many Tribune executives—he was a native of Jackson Heights, Queens. But he possessed the up-from-the-bootstraps, free-market mentality that the corporate brass at the Tower championed. And he had the drive and determination needed to build a national broadcasting powerhouse.

  Despite his New York roots, FitzSimons belonged in Chicago. Like Dowdle, he was Irish Catholic; he’d been educated by the Jesuits—first at Fordham Prep high school and later at Fordham University in the Bronx, where he graduated with a bachelor’s degree in political science. The youngest of four sons of a beer delivery driver and stay-at-home mom, FitzSimons initially considered pursuing law but concluded after a tour in the army reserves that he needed a job more than another degree. He took a low-level job at a stock transfer company until he was laid off in a recession during the early 1970s, and then landed another job as a lowly assistant buyer at Grey Advertising in New York. When he learned that you made more money selling airtime than buying it, he jumped the fence to sales.

  At his core, FitzSimons had a fierce competitive streak. He often challenged fellow employees to basketball shoot-outs at the company gym, and usually won. He stood just over six feet tall, with neatly-parted gray hair and a well-trimmed mustache. In a profile of FitzSimons, Los Angeles Times reporter Tom Mulligan had compared him to a boxer from the bare-knuckled era. But FitzSimons also was a careful, detail-oriented, and determined worker who learned to capitalize on the growing pool of market research data to hone his sales pitches. He rose rapidly as a marketing representative for several broadcast companies, including TeleRep, where he was group sales director in Chicago.

  By 1981, at the tender age of thirty-one, FitzSimons accepted an offer to run the ad sales unit of Viacom International, where he developed a sharp eye for spotting TV shows with audiences that would appeal to the right advertiser. When economic commentator Louis Rukeyser developed Wall $treet Week, a popular stock advice show on public television, FitzSimons suggested that Viacom create a version for commercial television. When Rukeyser agreed to the deal, the road was paved for FitzSimons to sell American Express as the ad sponsor, a lucrative step for his career and his pocket. He was named director of sales and marketing at a Viacom station in Hartford, Connecticut, a year later. By 1982, he’d accepted Dowdle’s invitation to the Windy City.

  When FitzSimons arrived at Tribune, newly elected Ronald Reagan had recently installed FCC commissioners with a friendly regulatory attitude toward companies that wanted to acquire and own lots of television stations. Television syndicators, meanwhile, had dreamed up alternatives to the big-three networks’ national broadcast audiences by cutting barter contract deals. Instead of acquiring programming, or shows, for affiliate stations like television networks, syndicators bought talk shows and sitcoms and then swapped the programming with big independent television stations like WGN in return for designated commercial space that they could sell to advertisers.

  Syndicators hoped to sign up enough independent stations to create a mass audience and sell advertising space to big national advertisers. Stations like WGN got cheap programming, against which they could sell local advertising and make a bundle. With experience in local and national advertising, FitzSimons offered a wealth of knowledge and was an ideal fit for barter markets, which would prove extremely lucrative for Tribune Company.

  Within a year of arriving at Tribune, FitzSimons rejuvenated WGN’s ad sales operations and boosted local ad revenue by 5 percent, a steep jump in a highly competitive business. In 1983, when Tribune acquired WGNO in New Orleans, Dowdle sent FitzSimons to run it, but he was soon back in Chicago, where he was made vice president of operations for Tribune Broadcasting, the number-two job in Tribune’s television division. When Tribune bought Los Angeles station KTLA in 1985, FitzSimons coordinated the integration of the television station into the Tribune’s existing television line-up. It was a game-changing acquisition for the company’s broadcast division and one that reinforced its attractiveness to syndicators that could wrap up two big markets with one customer. Three years later, Dowdle selected FitzSimons to run WGN-TV, the Tribune’s flagship station, a post that FitzSimons described as “the best job I ever had.”

  Unlike Dowdle and Madigan, said Jim Kirk, a former Chicago Tribune reporter who covered him, FitzSimons didn’t rub shoulders with the North Shore blue-blood types who formed Chicago’s corporate aristocracy. His friends were more likely to come from the world of broadcasting or advertising. An avid sports fan, he befriended Jerry Reinsdorf, the Chicago real estate developer and sports impresario who owned the Chicago Bulls basketball team and the Chicago White Sox (the rivals of Tribune-owned Chicago Cubs). Soon after he took over at WGN, FitzSimons also capitalized on his contacts and skills as a negotiator to demonstrate that he was as capable of high-wire acts as any North Shore hot shot.

  WGN had been locked in a long feud with the National Basketball Association over who would control the televised basketball schedule of the Chicago Bulls. NBA Commissioner David Stern insisted that the NBA should control the schedule because WGN had a national audience. But WGN wanted control so it could dominate the local sports television market by televising the Bulls games, as well as games played by the Chicago White Sox and the Tribune’s Cubs. Once FitzSimons entered the talks, the court squabbles ended, and Stern agreed on a twenty-five-game schedule, a huge boost to WGN’s ability to attract national advertisers who coveted product association with Michael Jordan, the team’s superstar. The deal made Tribune Broadcasting a fortune.

  By the early 1990s, Dowdle had successfully turned the company’s TV franchise into a money machine. Brumback, meanwhile, had started pressing everyone to come up with ways to leverage the company’s print and broadcast talent and create “synergy” or “convergence,” his inspired goal of getting the most out of every dime he spent on a journalist. Dowdle had convinced the company it needed more television stations. Together, Dowdle and FitzSimons led Tribune on a trail-blazing acquisition spree: In 1996 and 1997, it added ten stations to the six it already owned. Six of the new stations were added in one fell swoop when Tribune bought Renaissance Communications for $1.1 billion in cash, a staggering sum that many analysts thought excessive.

  The combination of aggressive ad sales and cheap, rerun programming gave Tribune Broadcasting huge profit margins that overshadowed its poor cousins on the newspaper side of the company. But the broadcast business was in flux. Cable TV access broadened during the 1990s, and new, specialized stations emerged to bid for the same programs that syndicators had been offering to independent operators like Tribune. As cable and independent operators started bidding for the same programs, the prices they had to pay for TV shows jumped sharply upward. The result? Operating executives like FitzSimons had to squeeze costs out of stations to increase efficiency in order to afford new talk shows and sitcoms.

  FitzSimons made a great right-hand man to Dowdle, the visionary leader and source of inspiration in the broadcasting ranks. While Dowdle dealt with investors and others trying to mine Tribune’s broadcast strategy, FitzSimons, who’d become executive vice president of Tribune Broadcasting, effectively ran Tribune television stations and refused to be shoved around by the big boys. When TV syndication mogul Roger King of King World Productions feared that sensationalistic talk show hosts like Jerry Springer and the Tribune’s Geraldo Rivera threa
tened his prized property, the Oprah Winfrey Show, he tried to drive Springer and Rivera off the air. FitzSimons not only resisted, but invited King to join in the national syndication of Rivera with WGN, setting the stage for a popular show and a new format. “Once the sniping was done,” Rivera told the Los Angeles Times, “the show took off.”

  Thanks to a prime-time slate dominated by movies and sports, Tribune stations routinely posted enviably high profit margins. But Dowdle and FitzSimons knew the good times couldn’t last. Cable stations that emerged in the mid-1990s could easily duplicate Tribune’s successful formula. To stay on top, Tribune needed original programming. When Barry Meyer, then head of Warner Bros. TV operations, and Jamie Kellner, a recent refugee from Fox Broadcasting, approached Dowdle and FitzSimons to gauge Tribune’s interest in a new network, they were all ears. Eventually, Dowdle convinced Tribune to acquire a 25 percent interest in what became known as the WB Network, an operation that he saw as the answer to the company’s need for original televised content.

  Investing in WB was a gutsy move that put Dowdle’s and FitzSimons’ careers on the line. The soaring profits that Tribune TV stations delivered had spotlighted both men as rising stars. But acquiring a share in WB in 1995 was a bet on an unknown entity with an uncertain future in a highly competitive industry. Dowdle and FitzSimons were convinced by Meyer and Kellner’s pitch. WB would give Tribune stations less programming to sell ads against, but they figured they could probably squeeze more revenue from the shows because they would be first run. Instead of stale, old I Love Lucy reruns, subscribers could watch new programming like Buffy the Vampire Slayer on WB.