The Deal from Hell (12 page)

According to Brumback, he made clear to anyone who worked for him, including Squires, that regardless of title, they were executives whom he expected to be professional managers. “Editorial executives don't like to be called managers,” Brumback noted. “They would
rather be called editors. This is a quaint distinction that appears be to universal in the newspaper business. But that didn't bother me. I looked on them—and they knew I looked on them—as managers and executives who had to manage their part of the business.”

Squires understood how to play the game; in Florida, he had cut a deal with Brumback that would dramatically affect the
Orlando Sentinel
and later the
Tribune
, one that Squires in retrospect described as a Faustian bargain: “[He] let me decide what goes in the newspaper, what its editorial opinions will be, what time it goes to press, and how it presents itself in the community, and I promised to run the tightest ship in the business. It was a deal designed to deliver both prizes and profits.”

Tribune Company had acquired the
Sentinel
from Martin Andersen, a high school dropout who lived large, enjoyed martinis, and idolized the Colonel. Brumback, who had been hired, fired, and rehired by Andersen, came along with the paper in what he described as a golden opportunity: “Orlando was a market in those days where our mistakes didn't show. It was growing so fast that even if we made a mistake or did something wrong, it generally would be covered up by the growth of the market. But overall the company was strong. We had good management. We had good people coming up in the ranks, and it was a very well run and successful newspaper.”

During the four years Brumback and Squires ran the
Sentinel
, they increased the paper's operating profit margins from the mid-teens, the industry average, to the low twenties, among the industry's best. Budgets were set in order for profits to rise by 15 percent to 25 percent a year, and soon, Squires noted, the
Sentinel
's contribution to the bottom line was nearly as much as that of the
Tribune
, which was three-and-one-half times its size. As editor, Squires became much more involved in the marketing of the paper than many of his contemporaries thought acceptable, but he also used the money he got out of Brumback to engineer an about-face in the
Sentine
l's journalistic reputation. He was a pioneer in creating zones to target local news and advertising, and he redesigned the paper into clean, well-organized sections that delineated main news from local, business, sports, and features. True
to his bargain with Brumback, Squires whacked the editorial department budget. At the time he assumed the helm, the editorial budget was 15 percent of the paper's overall revenue. It fell exactly 1 percent a year between 1976 and 1980.

The results turned heads in Chicago, where Cook was preparing to take Tribune Company public, and when, in 1981, he named Brumback CEO of the Chicago Tribune Company, the corporate arm of its flagship newspaper, Charlie decided to bring his editorial ace along. Brumback saw padded staff, retarded technology, and subpar revenues in Chicago, too. But, he also encountered unions—organizations that were decidedly hostile to his capitalistic instincts, and ones that he would eventually crush. The troubles that faced the
Chicago Tribune
in the early 1980s plagued many other big-city newspapers. The
Tribune
had substantial revenues, but they were not growing, particularly once inflation was factored in. Papers that tried to raise circulation or advertising rates to compensate for sluggish growth fueled counterattacks from new media—television, radio, free newspaper shoppers, and direct mail—all of which were growing, charged less for ads, or had greater audience reach. So, newspapers kept the prices low to prop up their circulation and the myth that they were a medium with a mass audience.

Meanwhile, costs at big-city newspapers had soared thanks to inflexible work rules, onerous labor contracts, and bloated payrolls. Brumback saw staffing levels as the root of most problems. Soon after arriving at the Tower, he started slashing jobs and taking on the newspaper's unions, arguing that the paper needed more efficient press runs and more flexibility in dealing with lifetime job guarantees, issues that rankled union leaders. Within a few years, the unions staged a strike, a dramatic miscalculation that the
Tribune
's new general capitalized on with a ruthless counterattack that broke their backs. “We had temporary replacements for all of the work necessary to produce the newspaper [when the strike started],” Brumback recalled. To compound the effects of this ready workforce, the drivers' union, the Teamsters Union, didn't honor the picket lines. As a result, Brumback could still successfully deliver the paper. Eventually, the scabs that had come in
as short-term hires were slotted into permanent positions when the strikers disregarded the call to return to work under the proposed conditions. Brumback said:

Brumback also forced significant changes in the newspaper's inefficient distribution system in a convoluted agreement that forced him to spend about $45 million to regain control over routes that the paper technically owned—a payment he labeled a “disgrace.” But the deal enabled the
Tribune
to create a system of independent delivery contractors that was more efficient, improved customer service, and, of course, cut costs.

Brumback was no entrepreneur. He was a manager, a hired gun, and an expert in numbers. Prizes and awards didn't impress him. But
Brumback and Squires both realized long before their peers that the computer and the technological advances it heralded would revolutionize the delivery of information. In Florida, Brumback had been deeply impressed with how The Walt Disney Company, owner of Disney World in Orlando, had used technology to enhance its entertainment business. He had also mastered the Apple computer at home and incentivized his managers to adopt the new technology by offering a free computer to anyone willing to teach himself how to use it on his own time. In 1981, when he made the same offer at the
Tribune
and no one bit, he lost no time in removing the paper's editor and ushering in Squires.

A gifted editor, Squires wanted to bring a more cosmopolitan approach to the
Chicago Tribune
's news reports, whether it involved foreign, national, or even fashion coverage. “He thought big,” remembered Lisa Anderson, a New York native and former reporter for
Women's Wear Daily
, whom Squires hired to write about fashion for the
Tribune
. “He told me he wanted to make the
Chicago Tribune
a world-class newspaper and to do that he needed sophisticated fashion coverage.”

The
Tribune
's journalistic reputation grew with Squires at the helm. The paper's parochial ways and tarnished reputation from the days of the Colonel and his successors were no more. As editor, Squires created the illusion of a paper with an expanding staff. For every two obscure middle-management editor positions he eliminated, Squires turned heads by hiring journalists with high-profile reputations, people like Douglas Kneeland, then the Chicago bureau chief for the
New York Times
, who then recruited fellow
Times
writer John Crewdson, a brilliant reporter from the paper's Houston bureau, and Nicholas Horrock, a combustible investigative reporter who had worked at the
Times
and
Newsweek
magazine. He changed the focus, purpose, and direction of the paper toward deeper reporting, more ambitious coverage, and a more sophisticated view of the world.

During Squires' initiative to beef up the Washington bureau, I landed my correspondent job in 1982. Meanwhile, he worked hard to open high-profile news bureaus in other cities across the nation and world. He folded the paper's suburban and local news inserts, replacing
them with a zoning scheme that could provide local news and advertising more efficiently and give the paper a more refined feel. “Brumback's goal,” as Squires explained in a book he wrote about his
Tribune
career, “was to make more profit than last year, not just a little more but the most possible. When these goals collided, our respective rank within the company decided the outcome. His always took precedence over mine, no matter what.”

But Squires underestimated the difficulty of sustaining a journalistic shell game in which his high-profile hires and new bureaus obscured a squeeze on the newsroom budget. “I [became] a ‘smoke and mirrors magician,'” he said, “juggling from the right hand to the left, robbing Peter to pay Paul, and lying to myself and my staff about how successful we were.” To help finance his journalistic sleight of hand, Squires implemented policies that subordinated the interests of the reader to that of the advertiser, and focused his gun sights on the
Chicago Sun-Times
, the scrappy tabloid that was the
Tribune
's only real competition.

Squires bragged:

Squires' strategy enabled Brumback to live up to his part of the bargain and more. “Productivity accelerated. Production costs decreased because we had fewer people,” Brumback said. “The productivity per
man hour skyrocketed, and within a couple of years, the
Tribune
became probably the most productive big-city newspaper in the country. And for several years, it was the most profitable newspaper in the country.” Thanks to the higher ad rates, revenue jumped, too, because the paper could charge for an audience that had the kind of demographics that advertisers loved.

The
Tribune
wasn't the only paper with plunging production costs. Across America, newspaper productivity soared as professional managers replaced humans with machines. Squires noted:

The decline in the cost of production of the newspaper was not as dramatic as it seemed. Technology enabled managers to shift work that was once done on the floor of the printing plant to the newsroom, just as editorial budgets came under equally intense pressure to be cut. The burden of producing the newspaper fell more heavily on the shoulders of editors, but it also made them more indispensable to the operation. Meanwhile, those coveted cash flow margins at publicly held newspaper companies jumped to the 20 percent range by the mid-1980s. Nowhere was the trend more evident than at Tribune Company. Brumback continued his string of thirteen straight years of improving profits, tripling margins at the
Chicago Tribune
in just eight years from the 5 percent to 10 percent range to the mid-twenties. Buoyed by the profits at its
flagship paper, Tribune Company's stock soared 23 percent a year, triple the average of the rest of the industry.

Although overall profits rose at a 23 percent clip in the five years after the company went public, revenues rose only 9 percent, putting pressure on Squires and others to squeeze their budgets to finance earnings growth. To Squires' credit, the situation didn't really affect me or most of my colleagues at the Washington bureau. When American sailors began escorting oil tankers threatened by Iranian missile attacks out of the Persian Gulf in the shadows of Iranian missile batteries along the Strait of Hormuz, I hopped on a plane bound for the Middle East to cover the “tanker war.” When the paper needed investigative profiles of George Herbert Walker Bush or Senator Robert Dole's campaign for the White House, no expense was spared. With Washington as a base, I traveled America, writing stories about everything from the financial scandal that drove House Speaker Jim Wright from office to budget excesses in the Pentagon's Los Angeles–class attack submarine program. Those kinds of stories brought the
Chicago Tribune
high-profile journalistic accolades, particularly a series of stories I did on the savings and loan scandal.