The Deal from Hell (49 page)

In Chicago, Zell had turned his attention and his remaining billions to his other far-flung investments, admitting that his foray into newspapers had been a mistake. Not only was he out the $315 million he had invested in “The Deal From Hell,” his reputation as a man with the Midas touch was in tatters as the company slogged through bankruptcy court. The company's creditors couldn't agree on a plan to reorganize Tribune—a necessary step for the business to emerge from bankruptcy and begin to repay its bank loans. Zell placed Tribune Company and the
Chicago Tribune
in the hands of Michaels, who implemented the steps he first laid out in his hundred-day plan for Tribune.

With Kern at the helm, Abrams was given access to the newsroom, which elevated his status in the newsroom and the industry. The paper cut its staff and the space allotted to news, while Abrams engineered a redesign of the paper at Michaels' behest. Kern closed the paper's foreign and national news bureaus and replaced them with his brand of cookie-cutter coverage that was centered in Chicago. Heavily promoted stories about fake food, taxi strikes, or American Girl's new digs
replaced serious front-page national and foreign news at the
Chicago Tribune
. In line with Abrams and Michaels' formula for market-driven news, sports stories about the White Sox or the Chicago Cubs also got prominent play on page one. Before long, the
Chicago Tribune
began to resemble a splashy tabloid. The paper still contained serious news, but it was usually relegated to stripped-down wire reports on inside pages. Luckily for the
Los Angeles Times
, all Tribune papers started relying on the
Times'
national and foreign staffs for global coverage.

When one
Tribune
editor pitched a story on the city's troubled public housing program for page one, Hirt, Kern's managing editor, rejected it for not being in the paper's demographic, an editor at the meeting recounted. Representatives from the newspaper's marketing department started “helping” editors select news coverage, and a far more repressive atmosphere took root in the newsroom. Kirk, the paper's associate managing editor for financial news, saw a change soon after Lipinski stepped down when he objected to a company plan that he thought would damage a business columnist's credibility. Michaels summoned him into his office with Kern in tow, told him that he knew how to deal with “troublemakers,” and warned Kirk “that he hadn't heard the last” from Michaels. Kirk left the paper soon thereafter.

Many decent, committed, and talented journalists remain on the staff of the
Chicago Tribune
, and they continue to pursue great journalism, particularly investigative series on local issues. Michael Oneal also continues the difficult job of covering the company's bankruptcy with skill and precision. The
Tribune
launched a crusade against people and politicians who used their political clout to get their kids—or friends' kids—into the University of Illinois. But the reporters didn't get the kind of leadership they deserved, and they still don't. The coverage of the University of Illinois lacked the context a good editor would have demanded to document the true scope of the problem, not just at the University of Illinois but in other states and at other schools. As a reader, I felt the paper's news judgment became sophomoric, parochial, and superficial. In January 2011, when Chicago's own President Obama gave a moving speech in Phoenix, Arizona, after
congresswoman Gabrielle Giffords had been shot in the head by a disturbed young man, the
Chicago Tribune
barely mentioned the story on its front page. But at the end of the day, Michaels' conduct overshadowed the paper's dubious news judgment.

In my days at the
Chicago Tribune
, the Colonel's former office on the twenty-fourth floor was hallowed ground; the Colonel's massive Italian marble desk, his huge globe, and rare books all stood as symbols of the company's legacy and of his dedication to the First Amendment. When he became CEO, Madigan opened up the twenty-fourth floor for use as a company conference center, but most of the time, the offices were as quiet as a church sanctuary.

Michaels used the Colonel's office for a poker party. “ We are in the office of the guy who ran the company from the 1920s to 1955,” wrote John Phillips, the Cincinnati traffic reporter Michaels had installed as building manager of Tribune Tower, on Facebook. “We pretty well desecrated it with gambling, booze and cigars. Good thing we know the guy that runs the building,” Phillips noted. His favorite trick in the poker room? Covering up the smoke detectors with Saran Wrap.

A terrace on the twenty-second floor of Tribune Tower became Michaels' coveted real estate. The space, with its expansive view of Lake Michigan, was big enough to host a small party. Michaels ordered picnic tables to be placed on the patio so he and his guests could enjoy the open area. But fresh air wasn't the only thing that Michaels enjoyed on the terrace. Michaels had been warned not to leave the french doors leading outside ajar, because an open door would trigger an alarm at the security office downstairs. One warm day in 2008, a Tribune Tower security guard noticed something had triggered the alarm and sent a colleague up to the twenty-second floor to investigate. Seeing the door open, the guard stepped out onto the terrace and later reported to his superiors that he had stumbled onto Michaels, standing with his arms extended as if on a cross, receiving fellatio from a young female
Tribune
employee. The guard abruptly returned to the security office. But Randy Michaels was now the man at the top of the Tower and he could do as he damn well pleased.

Michaels, who was married, compounded his boorish conduct at Tribune with open disregard toward Chicago Tribune journalists, so much so that one employee wrote anonymously to the company's board: “I feel compelled to report on some things that speak to the competency and qualifications of senior management at Tribune and the potential litigation risk they pose to an already fragile balance sheet.” Michaels' dalliance with the young woman on the balcony was, the employee wrote, a lawsuit waiting to happen. When Zell took over in 2007, he had replaced everyone on the board except for Osborn and Betsy Holden, a former Kraft Foods executive. Zell became chairman and installed a new board composed of William Pate; Brian L. Greenspun, president and editor of the
Las Vegas Sun
; Jeffrey S. Berg, chairman and CEO of International Creative Management, a talent and literary agency in Los Angeles; Mark Shapiro, a former CEO of Six Flags Entertainment; and Frank Wood, CEO of Secret Communications, a Cincinnati venture capital company. Michaels was also named to the board later. But the investigation of his behavior and the rampant cronyism at Tribune Tower went nowhere. The author determined that at least one member of the board became aware of the substance of the letter and that the board authorized the Jenner & Block law firm to investigate the allegations. But the lawyers said no one had complained to the human relations department, an office that Michaels had belittled in his hundred-day plan. Instead the board and senior management at the company and the newspaper tolerated Michaels and the fraternity house atmosphere he brought to Tribune Tower for more than two years until David Carr, a media reporter at the
New York Times
exposed the lurid conduct and cronyism in a front-page story that shamed the board into seeking Michaels' resignation. He resigned on October 22, 2010. But many of the people he had placed in charge of the newspaper remain in their jobs and have collected more than $50 million in management bonuses.

Kern and the board publicly expressed dismay at the conduct exposed by Carr and ordered his reporters to cover the situation aggressively. But as Robert Feder, a Chicago columnist pointed out, “not one
of them spoke up about what was going on inside their own company until the
New York Times
slapped it on its front page twelve days ago.”

While I was at Harvard, I received reports of the off-putting atmosphere at the Tower from friends and former colleagues seeking recommendations for jobs in news organizations or, more frequently, jobs outside the industry. Midway through my fellowship, journalism jobs were disappearing all over the country, and the trend showed no signs of changing. I felt terrible for journalists who had to tolerate Michaels and his antics. But the
Tribune
and the
Times
were not the only victims of the economic carnage. I felt for several of the Nieman fellows I had befriended, including Dorothy Parvaz, a columnist and editorial writer at the
Seattle Post Intelligencer
. Soon after my talk, she had asked me to lunch to pick my brain about the future of journalism. I could see desperation in her eyes. She was smart, talented, dedicated, and committed to journalism, but suddenly she, like many other journalists I knew, faced something far worse than the prospect of losing a job. Critics of the so-called mainstream media, credible people and kooks alike, were saying what Parvaz, one of the best in her craft, had done for decades no longer had any value. She was like someone in the auto or steel industry whose plant had been shuttered. The pervasive mantra was “information is free.” In the new paradigm, information could be gathered by ordinary citizens and bloggers working for free, not just by professional journalists. Parvaz's job had been outsourced to people who would work for little or nothing just to get a byline.

A professor at the Harvard Business School invited me to a workshop on the problems facing the newspaper industry. At the workshop, I suddenly realized the role that I had played in the crisis roiling the industry. In our quest to remain above the fray and deliver the news objectively, journalists had become so remote that our readers didn't appreciate the difference between reporting and simply gathering information. The seminar included some of the brightest students in America. Yet most of them clearly didn't understand what reporting,
the backbone of journalism, was all about. One student offered that anyone could be a reporter—all he had to do was hold up an iPhone, record an event, and put it on the Internet. When the professor asked me to comment, I pointed out that if all I had ever done as a journalist was tell people what had happened at some event or meeting, I would never have given anyone the real story. Reporting involved digging through records, interviewing numerous sources, double-checking facts, and learning about deals cut behind the scenes. After the class, the professor thanked me for giving his students the perspective that journalists assumed everyone understood. My defense of our craft didn't help Parvaz, though. Before her fellowship ended, the
Seattle Post Intelligencer
folded its print edition to publish online. They offered Parvaz her job back at a far lower salary. She declined and moved to London.

At Harvard, I began wrestling with the question of how news organizations under duress would be able to sustain public service journalism, the kind of stories that exposed perilous conditions at King/Drew Hospital in Los Angeles or abuses of laws governing the death penalty in Illinois. In a research study, Thomas E. Patterson, a professor of government and the press at the Shorenstein Center, had documented how news organizations faced with shrinking audiences often turn to soft news or superficial negative reports that rely on dubious sources rather than careful investigative journalism. The result, particularly for young adults, was the kind of diminished interest in public affairs and news that I had witnessed at the business school. But Patterson's study was published in 2000 when newspapers were relatively healthy. Most newsrooms now faced steep cutbacks and had more to do as reporters and editors were called on to feed understaffed and underinvested websites trying to compensate for revenue drains. Public service journalism was hard and expensive work, and I wondered just how it would be done in the future and who would pay for it. In other words, while everyone offered their opinions and bloviated on the Internet for free, who was going to cover the courthouse?

Midway through my fellowship, I gave a talk at the
Harvard Crimson
, the student newspaper. Afterward, the
Crimson
's editor told me
that he wanted to be just like me, to do just what I'd done. I, of course, questioned his sanity. After all, almost everyone I knew had been—or worried that they soon would be—laid off, as the business model that journalists had relied on for decades crumbled. But the young editor told me that my remarks to his staff showed how I had spent my life providing people with information they needed, that I had made a difference, something that he, too, wanted to do. I was humbled but also sad that idealistic young men and women who wanted to be journalists faced a much bleaker future than I had at their age.

A few weeks later, I went home to Chicago for the weekend and received a phone call from Peter Osnos, founder and editor-at-large of the house that published this book. I assumed he was checking on the progress of my work, but I was wrong. Osnos, who had a family retreat in Lakeside, Michigan, a small town across the lake from Chicago, and a group of neighbors alarmed at the decline of local media in Chicago wanted to start a public service news site online, and he asked if I could help. Osnos had two partners, Newton Minow, a former Tribune board member and leading civic figure in Chicago, and Martin (Mike) Koldyke, a businessman and education activist, both of whom were on the board of WTTW, the local public television station. Their plan was to piggyback on WTTW's nonprofit status and start a news organization that could legally accept tax-deductible donations. We didn't have any money, and we didn't really have a journalism plan laying out exactly what we would do with the funds we would raise to get us off the ground. Frankly, the last thing I wanted to do was run another news organization, particularly one that would compete against my old newspaper where I still had many friends. I also pointed out that I still owed him a book. But I told Osnos I would think about it and get back to him.