The Deal from Hell

by James O'Shea

  I had decided that I would make a statement to the staff and to the community once the news of my departure broke. I felt I had an obligation to explain what had happened and that I had not abandoned the newspaper, particularly given the initial speculation that Tribune had, in the words of former editorial page editor Andrés Martinez, “sent me to the provinces to quell a rebellion by the natives.” Besides, I had given my word that I was there for the long haul; they deserved an explanation from me and not some baloney from the PR department. But no matter how the news broke, I knew this wasn’t going to be pretty. I was the third editor in three years and the second to be fired by Hiller in less than a year and a half.

  I told a few trusted friends what was about to happen, including Ann Marie Lipinski. Lipinski wanted to phone Bill Pate, with whom she’d been in regular contact during the negotiations leading up to the sale. But Pate was traveling in the Middle East, and I was wary of running to someone in the Zell camp at the first sign of trouble. I finally called Nils Larsen myself and told him what had happened. “Well, I’m not for that,” he said. He wanted to take up the matter with Zell. But I told him that I had called because I didn’t want him to be blindsided by the news, not because I was hoping for an appeal. I urged him to give Hiller his day in court. When Pate returned to the United States, he wrote to Lipinski asking her if things were OK. When she replied that everything was OK in Chicago but there were “storm clouds out West,” Pate never responded.

  When he assumed control, Zell had emphatically told everyone that the publishers and CEOs of individual papers would be responsible for their operations, not some bureaucrat in the Tribune Tower. I didn’t hold high hopes that he would countermand the first major decision that Hiller had made, even if he wanted to. But I also figured that my situation would force everyone to show their hand. I contacted my lawyer, Marty Cohn, in Chicago and was contemplating when I would leave, when Hiller called and asked me to come to his office.

  Even in the best of times, Hiller rarely revealed his true thoughts. He desperately wanted to be liked and usually adopted his inquisitive, lawyerly manner in uncomfortable situations, using questions to make his point rather than uttering an opinion. He was doubly uneasy in my presence that day, arousing my suspicion about how he would handle any compensation I was due, particularly since he had never raised the subject. As I sat down, he asked my advice on my successor. I gave him my recommendations (which he would ignore) and asked him to call my lawyer to arrange details of my departure.

  I had always been up front with Hiller. I told him frankly that I was going to make a public statement when the news of my departure broke. As usual, he asked if I would provide him my remarks in advance and, as usual, I declined. I had no problem openly disclosing what I intended to say, but I would not allow Hiller or anyone else to censor the words I chose. I assured him I would not be critical of him personally, but would comment on my disagreement with the way the company allocated resources to its newspapers, an issue that I considered central to our disagreement and one I hoped Zell would change. Visibly nervous, Hiller pressed for exactly what I would say. But I wouldn’t agree to share my statement before I issued it. At that point, I hadn’t yet drafted my remarks.

  The next week was extremely uncomfortable. I had not told anyone at the Times about Hiller’s decision, and I sat through meetings, responding to questions with comments or observations that I knew to be irrelevant. I hated it. The newsroom gossip mill cranked out rumors that Hiller and I had deep disagreements on the budget, the kind that had led to Baquet’s dismissal. I dreaded the appearance of a story in LA Observed. Finally, I phoned my friend Howard Bragman, owner of Fifteen Minutes, a public relations company that specialized in crisis communications, and consulted him about what to do. By the Friday before the Martin Luther King, Jr., holiday, rumors had escalated into speculation that Hiller wanted to replace me with Stanton. Several journalists dropped by my office to ask if the rumors were true; others, like Aaron Curtiss, a friend of Stanton, walked by me in the hallway and avoided my gaze. Finally, I approached Hiller and told him we needed to do something before we had a leak.

  Although he acted as if he was still considering who would be editor, I knew Hiller wanted to appoint Stanton because Stanton would commit to the sort of deep newsroom cuts that Hiller felt were needed. But Hiller feared the blowback from members of the editorial department who supported me or didn’t like Stanton. We talked for an hour or two about the situation and discussed several scenarios. In closing, Hiller said he was traveling to Chicago for the long weekend and would announce a decision when he returned on Tuesday. As I left that afternoon, I advised Hiller to have a plan in place in case the news leaked over the weekend. He agreed that he would. Once again, I asked him to call my lawyer.

  On Sunday morning, a reporter from the Wall Street Journal called me at home. The reporter wasn’t a regular on the media beat, and I figured she must have been put on the story by an editor who had received a tip. She allowed that the Journal would not publish a paper on the Monday holiday, but that her editors intended to immediately put a small item about my impending dismissal on the Internet. From her questions, I could tell the paper had solid information. I told her I couldn’t comment publicly. As soon as I hung up, I called Hiller in Chicago. Hiller assured me that he didn’t intend to comment, either. “So,” he said, “if you don’t comment and I don’t comment, no story.” I explained that that was not the way it worked, and that the Journal would probably have something online soon. Moments later, my BlackBerry buzzed; a friend had sent me a link to the small story that the Journal ran on its webpage.

  I refused to talk to any reporter before I talked to my staff, which I planned to do on Tuesday morning. When the Wall Street Journal reporter called me back, I talked to her on the condition that the story wouldn’t run until Tuesday, a commitment the paper honored. I then told her how to contact Hiller and spent the rest of the weekend ducking a flood of calls from other media reporters hot on the trail, as I worked on finalizing the remarks I would make to the staff.

  The coverage in Tuesday’s papers was heavy; newsroom sources told me that Hiller, who had made some less than flattering comments about me, objected strongly to placing the story on page one of the Times, but finally relented and apologized when editors convinced him it would look worse if he didn’t. I called the newsroom and arranged to deliver my remarks at 10 a.m. on Tuesday and half wondered whether I would be locked out of the parking garage when I drove into the city that morning.

  I walked into the building through the ad department (where I got some nice words and hugs from some of the sales reps), told Ross to get some boxes so I could pack my belongings, and was preparing to make my remarks when Hiller strode into my office. “Well,” he said, “when things start flying, they really fly, don’t they?” I replied that I was about to address the newsroom and reiterated that I wouldn’t criticize him. It was my intention, I told him, to leave the Times after my speech. Again, I urged him to call my lawyer. After Hiller left my office, I walked to the same spot where I had spoken some fifteen months before and bid farewell to a great staff that had given me my chance to earn its respect.

  After confirming that I was leaving, I told the staff why:In discussions about current and future budgets, it became clear that Publisher David Hiller and I didn’t share a common vision for the future of the Los Angeles Times. In fact, we were far apart. So David decided he wanted a new editor. Had we been able to agree on a way forward, I was ready to commit to stay longer. But we couldn’t and we decided it would be better to make a change now. It was his decision and I accept it.

  We had accomplished much in my tenure and, after, highlighting our successes, I thanked everyone, apologized for not spending more time in the trenches, and said it was time to move on. In closing, I addressed the issue at the core of the disagreements between Hiller and myself, the allocation of resources that relied too heavily on accounting acrobatics and marketing
clichés and not enough on the creativity and resourcefulness of journalists, who were often wrongly dismissed as budgetary adolescents.

  As I explained to the assembled crowd,The biggest challenge we face . . . is to overcome this pervasive culture of defeat, the psychology of surrender that accepts decline as inevitable. This mind-set plagues our business and threatens our newspapers and livelihoods. I believe that when Sam Zell understands how asinine the current budgetary system is, he will change it for the better because he is a smart businessman and understands the value of wise investment. A dollar’s worth of investment is worth far more than a barrel of budget cuts.

  I made it clear that I hadn’t quit. I refused to embrace a strategy that we would survive long term by diminishing the newspaper, not the printed product, but the values it represents and the quality of its news reports. When I finished and headed back to my office, Wolinsky congratulated me on my speech, but warned me, as he put it, that it was “going to cost [me] some money.” By noon, I had packed my car, shook many hands, and said goodbye to the Los Angeles Times. I had taken my stand, said my piece, and referred all other calls from journalists to my departing remarks.

  The next morning I arose early to a clear sky, a bright sun, and a story in the Los Angeles Times quoting Zell saying that he backed Hiller’s decision. No surprise there. I e-mailed Zell and said I understood his thinking and that I would be glad to discuss my views of the paper and industry with him. He wrote back thanking me: “I think you can understand that if I’m going to autonomate the business units, I also have to give them responsibility. I therefore support David in his decisions and will continue to do so in the future. Having said that, I’m going to miss you and I very much appreciate your offer to help; don’t be shocked if I take you up on it.” As I sat on my front porch drinking a cup of coffee and watching the waves of the Pacific crashing down on Manhattan Beach, I suddenly realized something frightening: For the first time since I’d been a teenager, I didn’t have anywhere to go that day. I didn’t have a job.

  I had been a journalist my entire adult life and didn’t want to do anything else. My daughter was still in school, and I had her tuition bills to pay; my son was working on his PhD and needed support from time to time. Thankfully, my wife still had her job, so I didn’t have to worry about health insurance. I had just been fired in a headline-grabbing incident that announced to the world I was in my sixties. I truly didn’t know if the paper would continue my salary; it canceled my free subscription the day after my remarks.

  I decided to stay in Manhattan Beach until the weather in Chicago improved. By mid-February, I received an e-mail from Tribune Company. When I had agreed to become editor of the Los Angeles Times, I had secured a two-year contract outlining my salary and benefits, including a provision that guaranteed my pay if I were “terminated without cause.” One of their attorneys informed me that the terms of my contract would be honored only if I signed a “mutual non-disparagement agreement” that would prohibit me from saying anything negative or create an unfavorable impression “in any manner whatsoever” about “Tribune Company, its parents, subsidiaries, predecessors, successors, affiliates, officers, directors, agents, shareholders, attorney and employees or any of them” from here to eternity.

  I had traveled the globe as a reporter and followed events closely as an editor; I’d seen a world where powerful people muzzle those who speak out. I had seen how dictators or despots immediately seized the press when they took power. I’d seen it happen time and again, the world over. Even in places like Guatemala, where authoritarian governments barely tolerated the press, newspapermen like José Zamora at el Periodico risked their lives to publish, to maintain a free press, to amplify the voices of the dispossessed. I was hardly on a par with a dissident in Moscow, or Nelson Mandela, or Zamora, but I now had a lawyer for a company that sponsored an institute dedicated to honoring freedom of speech trying to silence me or force me to voluntarily surrender my right to speak out. Agreeing to don a muzzle violated everything for which I stood. Handily, the company also read my contract in a way that would deny me extra money due for dismissal without cause.

  We were not talking about a lot of money. The difference between my reading of the contract and the company’s was at most around $50,000. I didn’t leave Tribune with a huge bonus and stock holdings, either. Journalists at Tribune Company were not paid nearly as much as those on the corporate side, and few walked away with bonuses and stock holdings anywhere near the levels of FitzSimons and his allies. I was happy about my choices; I’d made more money as a journalist than I ever dreamed I would, and was able to provide for my family. But I didn’t have enough to live off the income from my savings. And there was no way I would sign a “non-disparagement” clause, and voluntarily give up a right that people literally died for. My lawyer assured me he thought all of the financial issues in the dispute could be settled by giving up just a little, but that the company felt strongly about the muzzle clause. “When I tell them you won’t sign it, they get real cool and say that’s a real problem,” Cohn explained. “The guy I’m dealing with over there says this is way above him and someone at the very top is calling the shots.” There was only one man at the top at Tribune now—Zell.

  I soon learned that Zell had demanded that the Tribune human relations department give him my contract. Zell had also started the company road show that Randy Michaels had advocated in his memo and, as one colleague at the Los Angeles Times reported, “he’s trashing you.” In a question-and-answer session at the Times, Zell told his audience I had “pissed all over” the company where I had worked for nearly thirty years, “shit all over the place,” embarrassing the company and him. I didn’t see things that way, and, profanities aside, I thought he was saying some of the same things I had said—that the company needed to worry much more about revenues, still had a lot of cash, and had great assets, a message that contrasted sharply with propaganda perpetuated by bloggers who liked to portray the Los Angeles Times as broke and Tribune Company as a failed operation. In 2007, the Times generated nearly $200 million in cash flow, off a troubling amount from the $240 million the year before, but hardly the results of a paper that was “broke.”

  It was hard to set aside Zell’s profanities, given his frequent use of sexual metaphors and foul language on his road show. In Los Angeles, Zell compared the Times, which had survived for 126 years, to an old man in need of Viagra who now had to “get it up.” He peppered his public remarks with “fuck this” and “fuck that” and told employees he didn’t care if they watched porn at their desks, as long as they produced, adding, “let me know if you find any good sites.” He defended his decision to allow strip-club ads in the Times with the quip that it was “un-American not to like pussy,” and admitted to one group of employees that perhaps he needed to “go to language class to de-fuck my language,” but that he was too old.

  The whole exercise seemed like a scene out of a juvenile locker room until Zell got to Florida, where he tacked a very public “fuck you” onto his response to a young Latina photographer who had challenged his views about public service journalism. His meeting with the staff of the Orlando Sentinel had been videotaped and posted on YouTube for the world to see. More significantly, Zell, who had encouraged people to challenge the status quo, displayed thin skin when he himself was challenged and abruptly rejected suggestions from journalists, whom he pointedly and repeatedly characterized as arrogant elitists.

  By the time Zell and Michaels showed up at the Tribune’s Washington bureau, media reporters were chronicling the tour, and the resulting leaks and publicity were ugly. He zeroed in on a story that had run in the Los Angeles Times during my tenure as editor as an example of the arrogance of the paper. The piece involved a controversy about Zell’s attempt to jack up rents at a California trailer park owned by one of the companies in his fold. He told Doyle McManus, the Times bureau chief, that one of the reporters who challenged him was an “asshole” who should be gone b
y midnight and that the bureau should be downsized since the paper doesn’t contribute as much money to the company as the Chicago Tribune. By the time the tour was done, it was clear that Zell’s views of the future mirrored Michaels’.

  Theatrics aside, Zell’s performance revealed his fundamental misunderstanding of the business he now controlled. At a Los Angeles Times printing plant, Zell said newspapers were like any other business. “I am not a newspaper guy,” he said. “I am a businessman and I know that all that matters is the bottom line because if we have a bottom line, we have a newspaper.” While he’s right to be concerned about a healthy bottom line, newspaper executives also must take into account their status as a public service business. Readers who care and remain loyal don’t judge newspaper executives on profits alone. They look at integrity of the work, the quality of a news report, the journalists’ ability to rise above the rabble of daily life and deliver facts in a credible, nonjudgmental format. Newspapers are also in the business of exposing the fallibility of others, so you had better be ready to place your own conduct under a microscope.

  Zell’s crude comments, his denunciation of journalists and journalism, and the stupidity of the industry’s leadership got wide exposure in the media. In the lingo of the ad markets, he trashed “his brand” and came off as an uncouth clown. He destroyed whatever credibility he and the company had accrued in the months leading to the close of the deal. Roderick at LA Observed was understandably thrilled with Zell; he was a headline machine. But many others recoiled at a billionaire with a potty mouth and a megaphone. For my part, I was truly saddened by Zell. In his other business ventures, he had never encountered the obligations shouldered by those who lived by virtue of the First Amendment and the special role of journalism in society. In my dealings with Pate and Larsen, I felt they understood the unique nature of the businesses they had acquired. But Zell’s conduct shattered the credibility of his entire organization.