The Deal from Hell (30 page)

Although I rose to lofty positions at the
Chicago Tribune
, I looked at my job as more than a job. I was well paid; I made more money at the
Tribune
than I ever thought I would as a journalist. But I would walk out before I'd do something that would compromise my journalistic principles. To me, journalism was a calling, something I did because I loved to chase a story, to report, to tell readers what people in power didn't want them to know.

When he worked in the newsroom as an editor in charge of the features department, Kern viewed what he did as a job that needed doing. When I ran the news operations, he would arrive in my office agonizing over why Lipinski didn't seem to view us as equals. He desperately wanted to become the editor at a Tribune paper because, he would say, “These are such wonderful jobs.” Kern was an adept manager; he helped the
Chicago Tribune
refine its zoning strategy for local news, and Blair Kamin, the
Tribune
's architecture critic, won a Pulitzer Prize while Kern ran the features department. But Kern was crushed in 2000 when Lipinski passed him over to make me the managing editor of the
Chicago Tribune
. He seemed to think Lipinski had chosen me not because I was a better journalist, but because she, for some inexplicable reason, didn't like him. He thought you needed to be much more than a strong journalist to effectively manage a newsroom. When the
Chicago Tribune
didn't promote him, he landed a job in the Tribune corporate offices.

First as the associate editor and later as editorial director of Tribune Publishing, Gerry became known to me as Count Kern. He started counting: how many journalists Tribune papers used to cover Hurricane Katrina, how many reporters
Tribune
had in its Washington bureau, how many
Chicago Tribune
stories ran in the
Los Angeles Times
. Kern wrote up elaborate reports full of color-coded pie and bar charts that championed what would become a creeping centralization of editorial decision making in Chicago. He distributed them to Smith and FitzSimons, spoon-feeding the most ardent critics of the journalists in the company with the kind of “research” that FitzSimons loved. Kern noted how one journalist from each of Tribune's largest papers would be sent to cover a major event instead of “working together” and relying on just one paper to cover a story. Eventually, Kern advocated for key centralized desks to be responsible for the lion's share of news content—which they'd drop into pages and distribute to smaller Tribune papers around the nation. In effect, everyone would be reading the same news story, whether you lived in Los Angeles, or Orlando. Kern was careful to couch his reports with language about not wanting to diminish Tribune Company journalism. But the broader message being championed by terms like co-location, shared content, duplication of content, family paper content, “news that readers value” (local), and nondifferentiating content (foreign) was synergy. Synergy was the Trojan horse with which FitzSimons and Kern attacked the values of journalists, cut costs, and set their focus on local news because it was often cheaper to produce.

Kern raised a legitimate question about whether the Tribune Company really needed such an extensive network of correspondents stationed around the nation and world. Did the
Chicago Tribune
and the
Los Angeles Times
each have to send a correspondent to cover the same event, as sometimes happened? Couldn't one reporter do a story for both papers, saving half the costs?

The answer, of course, is yes in some cases but no in others. At the
Los Angeles Times,
John Carroll argued that every story in the
Times
should originate with an editor based in Los Angeles where he or she
is closest to the reader and the needs of the paper. An editor in New York, Chicago, or Washington might not have the same tastes or make the same judgments as one in Los Angeles, the city the
Times
is supposed to serve. But there is an even more fundamental justification for news organizations such as the
Times
and the
Chicago Tribune
to maintain expensive foreign and national news staffs. At its core, a news organization with journalistic values exists to cover the news for its readers and provide insightful, meaningful journalism, the kind that educates and gives citizens the kind of information that empowers them, facilitates good decisions about the public's business, and scrutinizes the political and civic institutions crucial to a democracy.

When news breaks, you can always get the story of what happened from the Associated Press or some other wire service. That's what you currently get on most of the Internet sites that aggregate the news. But the Associated Press exists to give customers a quick and superficial story. If an editor in Chicago or Los Angeles who is conversant with the needs of the local community wants a writer to dig deeper, explain, investigate, or tell the reader of the wider implications of a breaking story, he or she can't simply pick up the phone and ask for a better story from the AP. You get what you get and not much more.

If, on the other hand, an editor has a correspondent nearby, the journalist can develop the sources and information to provide readers with a better, deeper, or more insightful report. In my own experience, people around the country in the 1980s knew when the federal government swept in and closed their local savings bank. The AP reported the closure. Left unanswered was the question why? Was the bank simply poorly run or were deeper, more systematic problems afoot, ones that could jeopardize the nation's financial system and cost the government agency that backed its deposits a bundle? As a reporter in the
Chicago Tribune
's Washington bureau, I dug into those problems and discovered that hundreds of savings banks across the country were failing, not because dozens of bank examiners simultaneously discovered they were poorly run but because deregulation of the industry had spawned corruption, mismanagement, self-dealing, and
sloppy banking practices that would eventually threaten the nation's financial system and cost taxpayers billions in a bailout needed to prevent the system from collapsing. The
Chicago Tribune
exposed the scandal
before
it made headlines elsewhere and helped create public pressure for federal officials to take action. Two decades later, history would repeat itself in the subprime mortgage scandal, but few papers reported on the extent of the debacle until
after
the damage, which plunged the nation into a recession that has thrown millions of Americans out of work and will cost taxpayers billions. The industry simply didn't have as many journalists watching what was underway.

The examples of excellent reporting from correspondents at the
Chicago Tribune
,
Los Angeles Times, Baltimore Sun, Newsday, Orlando Sentinel, Sun Sentinel
in Southern Florida and most other Tribune newspapers would make an extensive list. Was there duplication of effort on certain occasions? Yes. But was the price of that duplication worth it if it resulted in superior journalism that these papers routinely gave their readers? Yes again, particularly since the cost of duplication was relatively little. Puerner noted that the
Times'
entire foreign and national news budget didn't equal what Tribune Company, which owned the Chicago Cubs, paid Sammy Sosa to swing a baseball bat. It really comes down to values. What, in your soul, are you as an editor and the newspaper company that employs you trying to do—report the news needed to sustain a democracy or make and save money? If the latter is more important, then you have an identity crisis. And if you can no longer afford to cover the news because of mismanagement or a social and technological revolution, then the problem doesn't stop at the door of Tribune or any other company around the country. The community has a problem, and so does America.

The intense scrutiny that Kern and FitzSimons began leveling on the newsroom in their desire to expose duplication wasted a lot of time for editors throughout Tribune Company. While the entire industry was facing an impending revenue crisis, I—and editors like me—spent the better parts of our weeks writing reports to FitzSimons to prove that we had taken audience research into consideration when deciding
which stories to place on page one, and attending Kern's endless meetings to discuss how we could work together. The whole enterprise was a waste of time and money. When I ran into Kern at a party, after he'd been moved over to Tribune publishing, I noticed that he'd assumed the same disparaging tone that business executives used to address us lowly editors. The clash of cultures had arrived and the
Los Angeles Times
was ground zero.

Wolinsky started to worry when he heard rumors of tension surfacing between people in Chicago and
Times
editor Carroll and managing editor Baquet. Then Kern showed up in Los Angeles and began counting the paper's editors, several of whom overheard the phone call he made to Chicago in which he caustically reported the outrageous levels of staff at the
Times
, which faced far more difficult deadline and delivery problems than the
Chicago Tribune
. Wolinsky recalled:

Puerner, who had gone to work for Tribune Company fresh out of college, saw the decline in revenues that had decimated classified advertising start to infect display ads—the kind that the Hollywood studios in the
Times'
backyard ran to trumpet their latest films and the kind that big department stores ran. To prosper, he thought the
Times
had to generate unique content to justify a higher newspaper cover price and a fee for Internet access, a method known in the industry as paid content. Puerner didn't think the
Los Angeles Times
could succeed by providing better local news coverage than the
Long Beach Telegram
: “There was just no way that you could out Long Beach, Long Beach. I looked, and in every market where we tried to do that, we were number two.... You had to look at the big topic areas—public safety, health care, the huge issues the
Times
was uniquely positioned to cover.”

But investing editorial resources to provide superior coverage meant building up the expensive foreign, national, and business news staffs, a strategy that the Kerns and FitzSimons of the world strongly opposed. They knew cutting prestigious foreign and national news staffs set editors' teeth on edge, but they were counting on the reductions to generate costs savings. “Jack [Fuller] and I didn't agree. We had long, honest conversations about this. But he was the buffer,” Puerner said, “he was a big buffer. When he left, there was increased corporate presence in Los Angeles. Frankly it made things more difficult for us to manage.... It became clear that our philosophy collided with the need in Chicago to cut costs . . . and that these two differences in philosophies were irreconcilable.” Puerner left the
Times
in May 2005, and Jeffrey Johnson, another Tribune veteran and smart executive who had earned his stripes reducing the cost of the
Times'
backward production process, filled the publisher's seat. FitzSimons had effectively placed people with little publishing experience at the helm in Los Angeles, Chicago, and New York, his three largest properties and the source of more than half of the company's revenues. And then there was a whiff of a rumor—this time about the
Times'
circulation numbers.

Newsday
had gotten newspaper executives around the country to take stock of the risks involved in lying about the numbers. In July 2002, Congress added to the industry's woes by passing the Sarbanes-Oxley Act, which mandated that top corporate officers sign off on the accuracy of all internal reports. Congress also had passed legislation creating a “do not call” list, which hurt newspapers' phone
circulation sales. And then there was the Internet—a fabulous, fast, free alternative to delivering news and advertising to hordes of willing readers.

As newspapers began to look inward, the
Dallas Morning News
and the
Chicago Sun-Times
preempted the Banars of the world by publicly announcing they had discovered bogus circulation—announcements that triggered internal investigations, scrutiny by ABC, and more headlines. Many of the industry's circulation chiefs started to squirm. Newspapers had to figure out how to prune any questionable circulation from their ABC books without making a bad situation look worse.

Even industry stalwarts like Brumback, a former chairman of the Newspaper Association of America, admitted that the numbers in ABC audits left a lot to be desired: “They aren't worth a damn,” Brumback later noted,“You just give them [ABC auditors] the numbers you want and they put them in a nice, fancy little booklet.” But even a cursory look at some audits shows that newspapers, particularly major metro dailies like the
Los Angeles Times
, used the ABC's flimsy rules to obscure the extent of dubious numbers. Just after he took over, Puerner decided to scrap much of the circulation Willes had added through joint distribution deals with Spanish language papers and the local news sections called “Our Times.” He saw the Internet as the answer. “We were discounting deeply, and I wanted to get down to a number we could justify to advertisers,” he said. “I wanted to go the other way and start a paid content strategy; start creating value for online content and get away from relying on those huge numbers.” In other words, he wanted to create the kind of journalism that would justify a higher price for the paper, in print and online.