The Deal from Hell (29 page)

W
hen the
Newsday
scandal broke, Fuller walked into FitzSimons' office to offer his resignation. Not only had Fuller promoted Sito, the man in large part directly responsible for the nightmarish circulation fudging, he had failed to rein in Sito's boss, Jansen, who had stubbornly resisted Tribune's efforts to place controls on
Newsday
.

I felt particularly bad about the fallout from
Newsday
. George de Lama, my top deputy, was Sito's cousin. De Lama is a man of unparalleled honesty and character. I rarely made a decision I didn't first discuss with him, and he saved me from myself more times than I can mention. I knew Sito and liked him, with the kind of affection you reserve for your most devious sources. Sito admitted circulation fraud in federal court, but he didn't invent it. Jansen insists that he knew nothing about Sito's “rogue” operation, but that was not true. Sito had openly disclosed bogus circulation numbers in a letter written to Jansen prior to the scandal. U.S. District Court Judge Jack Weinstein, who presided over the prosecution, didn't buy the rogue operation defense either.“In going over the papers and records of the case, I decided it was highly unlikely
that all of this could have occurred without the knowledge of the publisher . . . who had a reputation of running the place with a strong hand, or higher-ups at Tribune. This was a fraud that totaled over $100 million. So I insisted the U.S. Attorney make further inquiries,” the judge noted. In court, he publicly challenged prosecutors, demanding, “Why wasn't the publisher prosecuted along with the underlings?”

Fuller said that he didn't know about the fraud at
Newsday
, but admits he should have. Had he not promoted Jansen and Sito, the scandal probably would have been discovered much sooner. Rather than accept his offer to step down, FitzSimons placed Fuller in charge of the company's response to Banar's investigation, for which Fuller rightly felt responsible. As a former Justice Department lawyer, Fuller was up to the task. In short order, he started an internal investigation designed to bring the whole controversy to an end. But Banar was just getting started. She and her Brooklyn colleagues were highly suspicious when Fuller hired Tribune's long-term outside law firm, Sidley Austin, to conduct an in-house probe—particularly when the internal investigation contradicted Banar's witnesses, who had told her that the fraud was not limited to
one
small department. If Banar's witnesses were to be believed, Sito and Brennan, who'd been dismissed by Tribune, hadn't acted in isolation. And Banar didn't trust the auditors from ABC, which was financed by the newspaper industry: “The ABC guys were all paper folks.” Banar noted. “There was no way they were going to blow the whistle. This was an industry regulating itself. They didn't want to do anything that would cause the fall of newspapers.”

Federal prosecutors routinely cut plea and sentencing deals with cooperating witnesses in return for testimony, and once Banar corralled as cooperating witnesses the men who had been dismissed by Tribune, she saw a pattern emerge, not unlike the one that Giaimo outlined in his lawsuit: “From the lower-level folks, we started to get a sense of a scheme in which sales agents are pressured to inflate the numbers. That's when we really started to think there was something there.” With encouragement from public statements of Judge Weinstein, Banar shifted her focus toward executives high up at Tribune—including
FitzSimons, Fuller, and Hiller. The Feds had concluded that Solomon was telling the truth when he said he'd alerted his superiors to the scheme. But prosecutors felt those same superiors had done their best to mask the extent of the problem.

For FitzSimons, Banar's investigation couldn't have come at a worse time. He had inherited the reins of a company that had consistently delivered strong financial results. Over time, Wall Street had come to expect high returns from Tribune. FitzSimons was under enormous pressure to cut costs while maintaining profitability north of 20 percent. The constant pressure to keep profits at a steady rate of increase invariably resulted in culture clashes—between Wall Street and Tribune's business operations; between the business side of the paper responsible for generating revenue and editorial; between TV journalists (whose already lean budgets had come under increased scrutiny) and newspaper journalists; between web journalists (who viewed their counterparts in print as dinosaurs) and print journalists; and, notably, between Fuller and FitzSimons.

Relations between Fuller and FitzSimons had never been smooth. Fuller had labored long and hard to educate the business side of the paper about the importance of editorial integrity, which he outlined in his book
News Values
. He had gone so far as to mandate mock page-one meetings for business executives to educate them about the thoughtful process editors went through to select top stories for page one. The sessions changed the way many business executives viewed journalists, but not FitzSimons. Fuller had given FitzSimons a copy of
News Values
when the company named him CEO. But FitzSimons, by Fuller's account, later told him he kept the book on his bedside table so he'd have something he could read—when he wanted to fall asleep. In 2004, when the Pulitzer board announced that Tribune papers had won five Pulitzers for news coverage in 2003, the awards provided Fuller a moment of respite from warding off critics and recent charges in the
Newsday
case. At a management meeting following the Pulitzer announcement, Fuller was incensed when FitzSimons dismissed the prizes as rigged, ego-driven rewards that journalists used to impress
their friends in the business. The chasm between the president of Tribune publishing and its CEO was too great to sustain.

Fuller announced his resignation on October 28, 2004, six months after Giaimo had filed his lawsuit. For severance, Fuller received a “consulting fee” of $51,500 a month, for a year, plus office space in Tribune Tower. As an editor and journalist, I disagreed with Fuller on a number of things—chief among them, his libertarian politics and his lack of enthusiasm for investigative journalism. But I respected Fuller. He was someone who could embrace his critics, and he had the ability to truly inspire people. He promoted journalists with whom he routinely disagreed to positions of power and influence because he believed in the power of journalism. He knew a good newspaper editor needed independence as much as ink and paper.

On his last day at Tribune, Fuller dropped in on the
Chicago Tribune
's page-one meeting. He said he wanted to leave the building from the newsroom, his point of entry at a newspaper he had helped build into a respected institution of which he was justifiably proud.

Although his skeptics didn't believe him, Fuller said he didn't leave because of the circulation scandal at
Newsday.
And I believed him. He could have weathered a circulation scandal; he simply couldn't stand FitzSimons.

I felt the impact of Fuller's departure and the impending sea change almost immediately—the same way my Irish Setter used to duck under the porch before anyone knew a storm was brewing. FitzSimons replaced Fuller with Scott Smith, the publisher of the
Chicago Tribune
and a man I had come to respect despite his waspy North Shore pedigree and soulless belief that doing more with less was one of the Ten Commandments. Hiller, the lawyer who had been in charge of due diligence on the Times Mirror deal, was named the publisher of the
Tribune
. My gut told me that things had changed more fundamentally than these new appointments might suggest, and as a reporter I had learned to trust my gut. At meetings with business colleagues, I felt a cool shift. I detected a sense of empowerment in the irreverent questions that flourished about why editors put depressing news of the Iraq
war on page one instead of “what readers wanted”—frivolous celebrity gossip and less serious news. The business side of the paper began to look at editorial differently, with less respect and with less intimidation. It was painfully clear that we no longer had a powerful advocate in the upper reaches of the Tower.

Following Fuller's departure, the culture clashes that had begun to brew only intensified. It was notably apparent at the
Los Angeles Times
, the company's largest source of revenue, which had a staff nearly double the size of the
Chicago Tribune.
The
Times
newsroom resented the Chandlers' sale of the paper to Chicago, even though Willes and the Staples incident had smeared the paper's reputation to the rest of the publishing world.

Lipinski had been promoted to editor of the
Tribune
after her boss, Howard Tyner, had been given a high-level job in the publishing group to help devise ways that the newspaper, television, and Internet operations could work together. During Tyner's first editors' meeting at Tribune Tower, which included editors from all the Tribune papers,
Los Angeles Times
editor John Carroll made it clear that he could care less about
synergy
, the buzzword that everyone used to describe collaboration among Tribune business units. Carroll was paticularly caustic on the subject and made remarks that
Chicago Tribune
editors considered insulting, comparing
Chicago Tribune
stories to advertorials. Commenting upon the
Los Angeles Times'
tendency to run long stories that often “jumped” (continued to different pages of the paper),
Newsday
editor, Tony Marro, whose tabloid was known for much shorter stories, quipped: “If I wanted to run
Los Angeles Times
stories in
Newsday
, I'd have to jump them into the
Hartford Courant.
”

I had always envied the sheer size of the
Times
editorial staff. In Chicago, my staff and I fantasized about what a difference it would make in our ability to compete in the marketplace if Fuller would take just a hundred jobs from the
Times
and give them to the
Tribune
. But I knew cooperation between the papers was no game-changing strategy
and that it had its limits. Tyner had not been given any real authority to make people cooperate. So he relentlessly tried to jawbone the papers into working with each other, although none of the champions of synergy could really articulate exactly how cooperation would help with anything other than to lower costs.

Tribune's headquarters in Chicago was known as “synergy city,” but in truth the idea of working together had never really worked. We had created newsrooms in television studios and broadcast outlets in newsrooms, but most television journalists privately thought interviewing a print reporter on air was simply bad TV. Some newspaper reporters willingly participated in interviews, but many balked. Most KTLA broadcast journalists castigated the
Los Angeles Times
on air as arrogant because the paper looked down its nose at KTLA's celebrated morning news show, which Baquet described to me as “the gong show.”

The company's effort to place correspondents and reporters from various Tribune papers near each other also backfired. The
Chicago Tribune
probably had more in common with
Newsday
than with the
Los Angeles Times.
But synergy with
Newsday
didn't work either.

To save on rent, we had moved the
Chicago Tribune
's four New York correspondents into 2 Park Avenue in New York, where
Newsday
and the
Los Angeles Times
also had bureaus. But Jansen soon engineered a renovation in New York, erecting a wall that made it physically impossible for
Tribune
correspondents to go to the bathroom unless they exited the bureau space, walked down a hall, and reentered the bureau through another door. When New York–based
Tribune
reporters had chance encounters on the elevator with journalists from
Los Angeles Times
, they were often ignored. When the
Times
sent a platoon of reporters to New York to help out with coverage of the terrorist attacks on September 11, 2001, Lisa Anderson, the
Tribune
's New York bureau chief, couldn't help but notice that the
Los Angeles Times
bureau catered meals from Eli Zabar's lavish Madison Avenue deli.

No one really had the guts to say what synergy was really about until Tribune Company promoted an ambitious corporate aide
who would expose the whole scheme for what it really was: the desire to cut staff as much as possible without readers catching on. Gerould W. Kern came to the
Chicago Tribune
in 1991 as a deputy editor on the metro desk. Unlike many
Tribune
editors, Kern had never worked as a correspondent, covered a war, or distinguished himself as an investigative reporter. Prior to the
Chicago Tribune
, the biggest job he'd ever had was as managing editor of the Arlington Heights
Daily Herald
, a suburban Chicago newspaper where he helped drive up the circulation by strengthening the paper's zoned local news and mimicking the more sophisticated coverage of the
Chicago Tribune
. The
Tribune
hired him in a drive to improve its zoned coverage: local news sections targeted to a narrower audience of readers and advertisers.