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From AJR,   January/February 2000  issue

Continuation of Down and Out in L.A.   

By William Prochnau
William Prochnau, a former national reporter for the Washington Post, is a contributing editor of Vanity Fair.     

Los Angeles: The modern towers of the Mitsubishi Bank and the Bank of Korea elbow the Bank of America and Wells Fargo for a panorama of gray-green palms amid the low-slung stucco sprawl of a dusty subtropical megalopolis stretching as far as the eye will carry. Or until the eye hits brown desert mountains or ocean or loses focus in the haze. One passes from neighborhood to neighborhood named Little Salvador or Koreatown or Little Honduras or Hmongtown.

I've made the trip downtown to the Times Mirror Building a dozen times now, but have yet to make it to the sixth floor. The executive branch--Willes, Downing and Parks--has been stiffing me from the beginning. Too busy, not interested, we've had enough ink, we're in the middle of a redesign, come back later when we've had a chance to finish the job we've started. Willes has been at one helm or both for more than four years and I've come too soon? Their reasons are so limp I almost feel embarrassed for them. Parks had agreed to a lunch interview during September, then felt compelled to call me back and cancel after Willes and Downing turned me down. "What could I say to you?" he asked. "Whatever you asked, I would have to say 'no comment.' " This is a July 1999 phone conversation, three months before Staples.

"They are in their defensive crouch," an executive with one of their Eastern papers tells me. David Shaw, the Times' Pulitzer Prize-winning media correspondent, thinks the rejection is wrongheaded and says he has told his bosses as much. But, never at a loss for an interesting take on a situation, he states the devil's-advocate obvious from the heights of the executive suite.

"I can understand the feeling they might have that they have nothing to say at this stage," Shaw observes. "If a reporter comes in to talk to Willes now the reporter is going to say, 'Well, OK, you told me you were going to increase circulation by half a million and Kathryn says a million and basically it's gone down. And you put in all these general managers and almost all of them have quit. Promised all of these new revenue streams and none of them are there.' "

Shaw did indeed make it sound unpleasant. But they make their millions sending out hirelings to ask the same questions of others. Finally, the key Times executives relent. The interviews lay a few days ahead.

Meanwhile, the time waiting has not been wasted. The chaos of the Willes years has been so great that the arroyos are littered with former Times employees, enough vice presidents alone to get up a sandlot ball game with short and long relievers. More than a dozen executives who once graced the masthead have talked, most asking not to be identified so they can continue to earn a living in Los Angeles. And many other interesting folk, too.

One of the latter is Eric Malnic, 62, gray, balding and lithe as a cat. Too old to chase fire engines, he chases airplanes instead. Malnic does crashes--from Lockerbie to Peggy's Cove. In the elite corps of reporters occupying that particular specialty, he is considered one of the best. He has been at the Times since 1957, longer than anyone in the newsroom.

Malnic takes me out the art deco lobby of the Times Mirror Building, turns left and then down Broadway, a street that has changed far more than the Times in the past 40 years. Broadway is now all open-air shops, blaring trumpet music and hawkers, a transplant virtually in toto from south of the border. Malnic loves the street; change doesn't bother him. A man on the sidewalk is handing out flyers and he starts to offer one, then pulls it back, not just its Spanish but its culture presumed to be wasted on gringos.

We look at each other, the same thought passing: How does the Times sell 500,000 or a million more newspapers against those odds?

The Times itself, after sifting through computer data on white flight, has reported that Los Angeles County is turning Latino at a rate of one percentile a year and that Hispanics likely will become a majority sometime in the first decade of the next century. But the polyglot is more remarkable than that. In one 10-square-block area of the city, 140 languages and dialects are spoken.

A few days earlier I walked the cops beat in Santa Monica with Gina Piccolo. Technically, Piccolo does not work for the L.A. Times, although her bylines appear regularly within its covers. She gets her paychecks from a subsidiary called Times Community News, which publishes 15--going on 40 to 50, according to Publisher Downing--local news packets called Our Times.

The paycheck is a bone of contention almost everywhere except among the bean counters. Piccolo, 30, an English major with eight years' experience, is paid about $450 a week--less than half what a comparable job would pay in the main office. She left Georgia last year for a shot at the "big time," likes her job but is so embarrassed about her salary that she refuses to tell her parents or her friends how much she makes.

The Our Times idea is part of an attempt to "grow" circulation by giving readers what focus groups say they really want--local news. Whether the dependence on endless focus groups produces more hocus than focus may get one of its cleanest tests in this experiment. Our Times is going so local--PTA sessions, police blotters and Little League scores--that Parks describes the content of his paper as foreign news, national news, local news and local-local.

Santa Monica is the largest of the Our Times productions and not quite what Kathryn Downing had envisioned. In the local cop shop, the Pacific Division headquarters of the L.A.P.D., Piccolo finds no reports of stolen lawn mowers. Her front-line news decisions center on where to cut off the reports on activities of local gangs--the Venice Shoreline Crips and the Culver City Boys. The gangs are so organized that Culver City recently sent an emissary to the police station to protest the insistence on calling them "boys." They want to be known as the Culver City Gang.

In an effort to jam them up, a judge recently issued a restraining order to stop gang members from talking to each other. The police use mug shots to ID them. "It's kind of silly," says Piccolo, thumbing through the reports. "They all wear identical black clothes and now they've just added ski masks. See, here's a typical one."

She is about halfway through 3 inches of reports. Two Culver City Boys, one with a pit bull, are spotted 10 feet apart. The officer reports that he saw them make eye contact. That is enough. He serves them with notice that they have violated the injunction. "Talk to my lawyer," says the 15-year-old as he accepts the complaint, turns his back and walks away.

This is not the Los Angeles the controlling Chandlers want to recapture. They are like the Miami Cubans who want to return to the lost dream of Havana. Los Angeles is no longer a Cary Grant movie. It's a Robert Altman movie. It is the modern American megalopolis. And it's one devil of a tough place to peddle a newspaper under any circumstances.

"I think you have to take into account that Southern California is the most difficult market in the country," says David Shaw. "The geographic spread is greater. The sense of identity more fragmented. Orange County. Ventura County. Riverside County. People who don't speak the English language are the predominant ethnic majority. All that. It's scary and it's one of the reasons that I was not quick to cast Willes as the devil."

The Los Angeles Times now is delivered to about one in five homes in its circulation area, a drastically low figure, the lowest of any major newspaper in the country except the New York Times, which has made a command decision, so far very successful, to go national. Newsday, for example, is delivered to half the homes in its area, the Washington Post almost half. Shaw and others believe that solving this Southern California Rubik's Cube is the most fateful of all of Times Mirror's challenges.

So fateful that Shaw is willing to give Willes the "apparition" of goals of 500,000 or 1 million if he needs it to jar people's thinking to new levels.

Keating Rhoads, a former senior vice president for operations and technology, is blunt about it. "A lot of people seized on these numbers as evidence of insanity," he says. "But Willes is saying, 'For crying out loud, quit trying to figure out how to get from 1,000,050 to 1,000,051. It causes you to continue thinking about the teeny things you get into every day. Think big. Think globally. Let's get excited about the power and the mission of the Los Angeles Times.' "

If you had to pick a day when tumult turned to chaos, it would be October 9, 1997. On that day Shelby Coffey commanded the headlines and most of the buzz by resigning as editor, giving way to Michael Parks. But outside the glare of that news, so many dramas played out in the Times Mirror Building that day, affecting the newspaper in such extraordinary ways, that years later even people in the middle of it still couldn't believe that it had all happened in a matter of hours.

Coffey's resignation came almost exactly one month after Richard Schlosberg had quit as publisher with the same abruptness. The departures gave rise to widespread speculation that the two men had been elbowed out. And to a large degree, intentionally or unintentionally--for Willes is complex enough for it to be either or even both--the speculation almost surely is true. It is quite possible he wanted neither man to leave but elbowed them anyway until they could take it no longer.

Neither Schlosberg nor Coffey has said a definitive word about it since--although Coffey, inimitably, offered me an enigmatic yarn from André Malraux. During World War II, Malraux and a priest had been sent out in the forest one night with orders to dynamite a German convoy at dawn, an almost certain suicide mission. At first light Malraux turned to the priest and said, "You've heard a lot of confessions in your life, Father. What have you gathered from all that?" "Two things," the priest replied. "One, there are far more unhappy people in the world than we think. And, two, there are no grownups."

The tension between Schlosberg and Willes had been slow to start but then became obvious to all around. "They both had smiles on their face," says the former circulation chief, Jack Klunder. "But they seemed to be grinding their teeth at the same time. You could tell not all was well in the Land of Oz." A former senior vice president, who would not speak for attribution, says, "Mark started doing the publisher's job. He humiliated Dick."

For Schlosberg, it became intolerable; for Willes, it was a golden opportunity. Jack Nelson says Schlosberg told him immediately after he quit that Willes' first response was, "I want to be publisher."

"You have to understand two things," one of the now many former publishers of the Times tells me. "First, the Times drives Times Mirror. It's the flagship and it has to drive revenues. Once Mark had done the cutting and tinkering in the rest of the corporation, what was left? Second, being publisher of the Times simply is more fun than being CEO of Times Mirror. Mark acknowledged that right up front."

Whatever, Willes took the job. And once again he went with his credo: You only get one chance to make a first impression.

Up to that time he had spoken about circulation in relatively conventional terms. We can raise it 5 percent, he said. If we raise it 5 percent, we can raise it 10 percent; if we can raise it 10 percent, we can raise it 20 percent. But less than two weeks into the new job, he dropped his first revolutionary bomblet on a Times middle-management group: It was, he said, the newspaper's "civic responsibility" to increase circulation by 500,000.

Beyond that, Willes had scheduled October 9 as the day for the real nuke, the mainstay in his manifesto. He would deploy the organizational structure for his assault on the church-state wall--the shot that would reverberate through the sanctum sanctorum of the newspaper world like abortion in the Vatican. Breaching the wall was the linchpin in his belief that, through branding and modern marketing and a proper understanding of the Madison Avenue world of niches and silos, newspapers could be sold the way anything could be sold. Two years earlier he had carried this belief to the extreme: Latinos had taken to Cheerios as a brand-name favorite, he told the Wall Street Journal, and he saw no reason why they couldn't flock to the Los Angeles Times brand in the same way.

By coincidence, the Times Mirror board of directors had scheduled its regular executive session that same morning. It would be followed by a farewell lunch for Schlosberg. Both events, one shrouded in the usual corporate secrecy and the other open and emotional, would take place just strides apart on the sixth floor. The board meeting would be the first since Willes had, with a bare telephone quorum, made himself publisher, the first since Otis Chandler's bear hunt in the Aleutians. It also would be Chandler's last. He was about to reach the mandatory retirement age of 70, a rule that later would be overlooked for Spud Williamson, the new Chandler family powerhouse. Four other board members were retiring with Otis. Willes, who had a majority before, would have a lock afterward.

Emotions ran the gamut downstairs in the newsroom at the news of Coffey's resignation. But behind the closed doors on the sixth floor, they immediately ran quick, hot and heavy--perhaps hotter than ever in the paper's 125-year history. There are 17 members of the board of directors, but only about 10 attend executive meetings. Otis was livid, by far the angriest. "It's simply not what we hired you for," he told Willes. He said it several times. John E. Bryson, CEO of Edison International, was calmer. But his position was clear. He didn't think it was a good idea for Willes to be his own boss. He carefully suggested that Willes should step down as publisher immediately. Donald R. Beall, the retired chairman of Rockwell International, seemed to agree. Willes was shaken but adamant. He had gathered a quorum of the board when he gave himself the job and he had one now. "I like the job," he said. "I'm going to continue." C. Michael Armstrong, about to leave the board because of his duties as CEO-designate of AT&T, was smiling and conciliatory, attempting to mediate. But his views were clear, too, as would be shown later. Not a single member of the other side of the family spoke.

(Later, Willes acknowledged the basic description of the meeting but added, "I'll give you that with quite a different perspective. The board was just doing its job." He said the contention was not over whether he should be publisher. "When I appointed myself, there was some general concern about whether I should try or can I do two jobs at one time." He said that he told the board members that since the Times was the biggest part of his job as CEO of Times Mirror, he didn't see why not.)

Meanwhile, the meeting dragged on and on, well past the starting time of the farewell lunch. Elsewhere on the sixth floor, Schlosberg and other executives fidgeted. The executive suite is largely a collection of glass offices facing in on an atrium--and each other--and the executive dining room, known as the Picasso Room until Willes removed the Picassos, where the lunch was to be held. The boardroom and Willes' office are closed off with the windows looking out over the city. With everyone outside the boardroom able to see virtually everyone else, eyebrows began rising. The lunch went a half hour, then an hour late, a notable event in itself in an institution where being five minutes tardy for a meeting was cause for speculation. The place ran on time.

"I think it was clear to everyone there that blood was running," says one masthead executive still with the Times. "It was awkward."

Another top executive, since departed, remembers just how awkward. "Things were already confused enough, with Shelby suddenly out the door and a major reorganization announcement coming... Then they finally came out and Mark was ashen."

The board went back behind closed doors after the lunch and wrapped up the contentiousness quickly with the first word out of the other side of the Chandler family. Their lawyer, William Stinehart Jr., rose. "I speak for the family," he said pointedly, "and the family like this move." Hostility hung in the air as Stinehart continued for a few moments. But it was over. There are no coups in a boardroom. Coups take place in the hallway. And, from the beginning, Willes had all the votes he needed and soon would have more.

As the board meeting finally ended, the newspaper's public relations department churned out the press release that announced Lenin's arrival in Moscow:

"LOS ANGELES, October 9, 1997--The Los Angeles Times has initiated a top-level reorganization that will focus its business functions, such as advertising and marketing, around the sections of the paper in order to help the Times grow and connect more effectively with readers."

Jeffrey S. Klein, senior vice president for marketing, would become general manager of news, with five new "general managers" under him. (Willes and his lieutenants had toyed with calling them "mini-publishers" earlier but discarded the title as too controversial.) Janis Heaphy, senior vice president for advertising, would take a new 28-word senior vice president's title and oversee three other general managers, including one for a new section that would "broaden the paper's appeal to women." Titles and functions changed for three other masthead executives, the Wallendas soaring high and wide.

Meanwhile, the press release noted a sister release about an "editorial reorganization at the Times."

Michael Parks, moving up from managing editor, was as corporately reassuring as Willes. "Our high journalistic standards and the integrity of everyone involved in publishing this paper allow us to discuss section planning issues with people on the business side without compromising our editorial judgment." Parks had found out about his promotion the night before. So had four new managing editors named to replace him.

Leo Wolinsky, who was to become the new managing editor for news, remembers being called to a meeting in Coffey's office. He sank deep into a leather couch across from Coffey and Parks before realizing he was the only other person there. Rumors had been flying, but "I was completely shocked," Wolinsky says. "I must have looked like I was drooling. My mouth fell open, catching flies. I felt numb. I didn't say a word. It was scary. It wasn't like there was a training period. Shelby was leaving. I didn't really want the job. It is a terribly annoying job. Actually, I got kind of angry about it later. I went home pissed off."

Almost everyone went home in some high state of emotion that night. Later, as I reconstructed that day, it became clear that no one had a full sense of its extraordinary drama, so personal and commanding had its individual events been.

Mark Hinkley Willes had been publisher for 28 days.

There was a footnote to the events of October 9. Six months later, in the spring of 1998, Times Mirror gave a farewell party to the five departing members of the board--Dave Laventhol; Mike Armstrong; Harold M. Williams, chairman of the J. Paul Getty Trust; Robert F. Erburu, the powerful CEO of Times Mirror before Willes; and Otis Chandler.

Mary E. Junck, president of Times Mirror's Eastern newspapers, introduced the main speaker, Armstrong, who had tried to be so conciliatory in that brutal board meeting. He looked out at several hundred members of management and their spouses and expressed surprise. He thought, he said, he would be addressing members of the board and had prepared his speech for them. But he'd give it anyway. According to various people there, Armstrong then proceeded to critique the performance of the board he was leaving. He warned that the new board should use "due diligence" in watching over the affairs of Times Mirror. Using careful but clear language, he restated his earlier position given in private: It was unwise for the CEO of the corporation to also be the publisher of its largest entity. The CEO's job is to keep an eye on the publisher.

"It got the room quiet in a hurry," says Mark Sande, a 19-year Times man excited about his new job as a spearholder in the revolution, the sports general manager. "Nobody got up and said, 'Hear! Hear!' " Just sober applause, then silence. "I recorded it as a most interesting moment in the life of the corporation. A theatrical moment. An uncharacteristically honest one."

All eyes in the room, another Times executive says, were trained on Mark Willes. He sat through it clench-jawed. But life is never quite what it seems. As usual, there were plots among the subplots at the battered L.A. Times. No more than a handful in the room knew this irony:

Three months earlier Willes had offered the publisher's job to Mary Junck. She turned him down for personal reasons, just as she had nine months earlier while Schlosberg still held the job. Now head of Lee Enterprises, a medium-size newspaper chain based in Davenport, Iowa, Junck would make no comment. Willes, though caught by surprise, confirmed to me that he had made the offers.

Why Junck passed up the chance to be the first woman publisher of what then was the largest metropolitan newspaper in the country is anybody's guess. But others in the Eastern organization of Times Mirror thrived on their "splendid isolation." After his first death-dealing foray through the "colonies," Willes had mostly left the Baltimore Sun, Newsday and other Eastern papers--the company also owns the Hartford Courant, Greenwich Time and Stamford Advocate in Connecticut and Allentown's Morning Call in Pennsylvania--to themselves. The Eastern papers had no general managers and no hyperbolic circulation goals. They maintained themselves and actually outperformed the chaotic Times in most regards. Analysts began to note that Newsday and the Sun were carrying the Times Mirror newspaper division. The journalism they performed was considered among the best in the country.

Newsday, as if it had a score to settle after the humiliation of losing New York, won more Pulitzers than the Times in the '90s. It had less than half the newsroom staff. The Sun turned out some stunning news coups. In one memorable example, the newspaper's highly regarded editor, John Carroll, sent two reporters to the Sudan to prove claims, denied by the Sudanese government, that slaves were still bought and sold in that African country. To do it, his reporters bought two slaves.

Carol Stogsdill, a former Times senior editor who walked out the same day as Coffey, remembers that the Easterners often caught early planes home from meetings in L.A., ostensibly because of the three-hour time loss flying back. But Stogsdill, Chicago-born, recalls a high Eastern executive asking her one day, "How can you stand it in L.A.? They are all here."

There was another major subplot working that March night. Otis Chandler was furious. He had been told about the party only hours earlier, and he had thought, with terribly mixed feelings, OK, here comes the gold watch--or, as was the case at the Times, a replica of the paper's silver eagle emblem. He thought back to what he had done at the retirement of significant old codgers--a private lunch in the executive dining room and then an arm-around walk through the building to say goodbye to old friends. That's what Otis wanted.

"Instead, I walked in and there are 400 people there and we are a footnote to a management meeting," he says. And while the memory may be warped by the hurt of it all, his recollection of the speech bidding him farewell is: Otis is here and Otis is a wonderful hunter and he's a good surfer and he's leaving the board. "They wrote me off as a jock," he says. Chandler, who had been wrestling internally with his sense of obligations to family, newspaper and self for the past 20 years, remembers thinking, "OK, I'm out of here. This is the current culture of this man and I'm glad I'm not around."

In the audience these subplots went almost unnoticed. But Armstrong's speech sank in with all, Otis' departure with almost all, and the continuing tumult with most.

This is the way one attendee, a top-ranking executive who had given his life and, he thought, his future to the Times, remembers his feelings: "The whole night was melancholy. People were confused and down and it clearly was the end of an era--maybe their era--and the beginning of another--probably someone else's."

Willes' new crew surely did not understand what Otis Chandler, perhaps the legend of him more than the man, meant inside this building--as would become so painfully clear when Kathryn Downing fired off her angry response to him a year and a half later. Her words would show a greater misunderstanding of that than of newspapering.

John Arthur, another of the new managing editors and speaking in a totally different context, tried to explain the phenomenon: "Otis is Zeus."

But by that time, just six months into Mark Willes' foray into publishing, his revolution, too, already was foundering. He had, in many ways, started before he was ready. So chaotic were the beginnings that his new and revolutionary general managers had neither staffs nor desks for the first six months.

Still, publishers watched Willes with fascination--and surely some sullen hope. If he were a new-age California messiah, with an unseen path to double-digit profits and hot-market stock prices, he would have no trouble gaining a substantial following. Publishers are a fretful bunch, and many would follow Willes into a new future as readily as the industry's old owners had stampeded into the gold rush of Wall Street.

Meanwhile, Willes' troops, while smart and mostly supportive of his goals, just couldn't deal with the chaos and the alien nature of it all. "You cannot understand," one of them tells me, "what those huge circulation goals did down at the grunt level. They are scratching, clawing, for 20, 30, 50 subscriptions at a time. You throw that number at them and they were instant failures. Tell them to get 100 and they might get them and they would be instant successes. Morale plummeted."

At the higher levels Willes was unyielding with his executives. He came up with so many new ideas so often that middle management began asking, "What is the strategy du jour?" They didn't know what he wanted that day, but they felt he would be on something else the next anyway.

One former executive says that beyond the general chaos, a more fundamental problem was happening, "what psychologists call cognitive dissonance--doing something that is not in line with your head." He remembers two incidents that finally persuaded him that he couldn't stay.

One was a circulation study, done in Willes' first months as publisher. It lay the paper's actual subscriber base against Los Angeles demographics and the qualities of likely newspaper readers: people who speak English, earn $30,000 or more and have some college education. It turned out that the Times, the paper with a meager overall penetration in the low 20s, already reached 60 percent of this more select audience. Further study showed that virtually all those in the other 40 percent had tried the Times at some point and decided they didn't want it.

"It was extremely distressing," the executive says. "We all concluded that gaining 500,000, which had never been done before by anyone, was a pretty crazy, Herculean task. Then we took it into Mark. He looked at it and said, 'This is going to be easier than I thought.' We walked out as if we were in la-la land."

Some time later, close to the first anniversary of his regime as publisher, Willes called together the top executives of Times Mirror for a summit meeting in the Century Plaza Hotel. Electronic voting keys for instant tabulation nestled at every exec's side. The devices allowed votes on a scale of one to five. Willes then announced an array of financial goals and asked his troops to assess the likelihood of attaining them. The tabulator immediately announced results that were dominated by threes. Willes became visibly angry.

"How can we grow if the leadership doesn't think we can grow?" he demanded. "I've studied generals and we're gonna take that hill. I don't know how. But we're gonna. Strong leaders set a goal and don't waver from it."

In the hallway afterward the grumbling among the troops was louder than usual. There is another kind of general who figures out a strategy for taking the hill. Do we have to just charge? Can we go around the flank and up the back? A lot fewer people in the battalion would die.

In late 1998 Willes laid off another 850 Times employees, although only a handful came from the newsroom, minimizing the publicity. By that time, Willes' plans and his reputation for wizardry were badly wounded. The business-executive exodus had far outpaced the more publicized departure of top reporters to the New York Times and other papers. One of the first to go was Janis Heaphy, who had been given responsibility for almost half the new general managers in the original October 9, 1997, reorganization. She quit two months later--angry, her friends say, albeit for a very nice job: publisher of the Sacramento Bee. Her departure left the controversial assault on the church-state wall collapsing before the squad leaders could direct the attack. Her general managers were divvied up between Klein and another vice president. But soon it was clear that the pressure was affecting Klein. Around the office they began calling him "Sick Bay." By the end of 1998 he too had quit. Mary Junck left the company two months later. Of the eight general managers who would lead the revolution, six were gone, or soon would be, and have not been replaced.

At about that time Doyle McManus, chief of the Times' highly regarded Washington bureau, decided he should at least meet his general manager. He called Los Angeles and was told the man had left. "I felt deprived," McManus says. "Here we had had a revolution in journalism and I missed it."

Indeed, it became one of the great ironies of Willes' failed church-state revolution that, despite all the ink, the newsroom for the most part took the whole affair with a few yelps followed by yawns. It was on the business side, particularly in advertising, that Willes couldn't get any cooperation. "Can you imagine an ad man who wants even the hint out there that he can reach the newsroom?" asks one. "My God, every time he sold an ad he'd get hustled for a story on page one."

"There was so much turf stuff going on," says Kelly Ann Sole, who was the one star of the general manager system. Sole, a 41-year-old total believer, set the standard at the Times by working closely with Business Editor Bill Sing. The result was more advertising, more pages and more staff--although there were some newsroom grumbles about whether the quality of business coverage had gone up or down, and whether the success was transferable to other sections.

"In the final analysis," Sole says, "if the execution of brand management is not successful at the Times, it doesn't mean that it's not the right idea at the right time for this industry. It's dead right. It's what newspapers have to do to survive."

For her part, Sole has since moved on to become director of Western region sales for NBC's cable networks.

Meanwhile, one other general manager also hung on. Mark Sande was putting the finishing touches on his deal of a lifetime--a multimillion-dollar profit-sharing agreement with the new Los Angeles sports arena, the Staples Center. "It seemed like such a great idea," he says. "It just seemed like a terrific opportunity. There was no secret regarding the deal or the profit-sharing. Mark said this is a good deal. Kathryn said this is a good deal." He remembers the signing ceremony well. It was December 17, 1998.

"There was a sense of occasion about it. At the Staples Center office, overlooking the building site. Mark and Kathryn were there. Half a dozen Times senior vice presidents. [Timothy J.] Lelweke, the arena's executive vice president, was there. And some of his senior vice presidents. Mark said a few words. Tim said a few words."

Downing, as Times president and CEO, signed the contract for the paper. That night, Sande recalls, a group of them went down to watch the Los Angeles Kings' hockey game.

On May 17, 1999, New York Times media writer Felicity Barringer captured the story of Willes' 18-month reign as publisher. The headline on the story read, "The difficulty in being earnest: Efforts to reinvent the Los Angeles Times falter."

But an accompanying piece of artwork told the story better. The Times ran copies of two Los Angeles Times mastheads, one from September of 1997 and the other from May of 1999. The earlier mast had the executives who had left in 18 months crossed out in red. The later one had those who had arrived marked in yellow. The 1997 mast had 12 executives gone, 11 remaining. The 1999 masthead had 21 new executives and 11 holdovers, most of them in new jobs.

By most any count, it had not been a good season. In the one measurable year of Willes' stewardship, reported in March of 1999, circulation had grown by a mere 17,000. But almost immediately it was falling off rapidly, causing a tremendous scramble within the building to shore things up. Ad revenues had fallen $20 million below forecast in 1998, leading to a 3 percent cut in the paper's newshole for 1999. The Times Mirror stock price had moped more than leapt, hovering in the 50s. This led to a revival of an old line at the Times: "Never get between the Chandlers and their money."

Seventeen days after Barringer's article, Mark Willes retreated. He gave the publisher's job to Kathryn Downing.

It is October now, a time when Los Angeles is almost what it used to be, the smog blown out, the temperature in the shirtsleeve low 80s, actually nippy at the beach. It has been a cool summer, La Niña's summer.

The interviews with the L.A. Times triad have been delayed and juggled so long they are almost anticlimactic. I am staying at the regal old Biltmore, a place of velvet and scrollwork and Persian rugs and an era long gone, where 40 years ago Otis said "Wow!" but which now is stranded in a downtown that turns hostile at 7 p.m. But it is daytime, a 15-minute walk to Times Mirror Square, and I hoof it.

As I walk I wonder if they realize that they have delayed this too long and that a delay wasn't in their interest if it wasn't in mine. Journalism is not always a fair game but it is their game, too. So the interviews now are more pro forma than informative. There are far more mandatories than Willes could logically expect. What's this about offering the job to Mary Junck? Twice? What about the meeting over the secret circulation study? And Otis.

The walk turns left on Broadway past the very same man who started to hand Eric Malnic and me a leaflet, then withdrew it. He repeats himself. And the trumpets blare amid the amplified sales pitches, and the sidewalk is as jammed with as much humanity as any in New York. I recall something Malnic told me. This short stretch of Latino Los Angeles, five or six blocks of bienvenido! , does more dollar volume per day than Rodeo Drive. At two-bits a sale, he added. The new, reduced price of the L.A. Times--a circulation stimulant.

I am five minutes late as I am escorted into Willes' office by Martha Goldstein, corporate public relations officer, another VP, who is also my minder. She takes notes as I tape.

Immediately, I like the man. I've been told--warned by some--that I might. He puts a person at ease, even a late person, which I know irritates him. He's a minute manager, I'm a minute waster, the difference in the events that formed our lives. He introduces me to his view--the browned San Gabriels, the white buildings out of which people struggle to run this city. He tells the O.J. Simpson story, a good story for him, and then he signals with a glance at his watch.

He immediately blunts personal questions. Just a dead end. "I've chosen not to go down that road because I don't think it's useful and productive from the organization's point of view." He gives me instead a Who's Who recitation of his life, a bone here that maybe he wanted to be a banker when he was 10 years old because his father was a banker and "I couldn't think of anything better than being like my father."

And then he is through to the present and he says, "I ended up in absolutely the best job I've ever had by far, which is in the newspaper business. I love it."

Q: And you loved being publisher.

A: I loved being publisher. Best job I ever had.

Q: Why did you stop being publisher?

A: Because I wasn't hired to be publisher. I was hired to be CEO.

Q: You gained a sense of that as you went along, that there was a difficulty...

A: Well, you can't, I mean you really can't do two full-time jobs.

Q: Excuse me, but I guess what I'm asking you is, you did it for awhile. Why did you go into it? Or did you discover afterwards that you couldn't do it?

A: No. No. No. It was absolutely clear when I put myself in that I couldn't do two jobs. But you can't tell the organization you're a lame duck the day you start.

Q: All right.

A: And so you go on with everybody thinking you're going to be there forever. But the plan always was, as soon as I felt comfortable that the fundamental changes were under way, and that we had an organization that could reinvent this thing and make it work, that I would step back. What I didn't honestly fully appreciate, I knew I would find the job interesting and exciting and fun, but I didn't honestly expect to fall in love with it.

Q: Yes.

A: And I did.

Q: What part--

A: The whole part.

Q: --did you like best?

A: The whole thing.

I'm entranced, both with the passion of his words, but also with the fleeting feeling I'm in one of those Woody Allen movies with the split screen, man on one side, wife on the other, and they are talking about the same life in different perspectives.

The interview racehorses from issue to issue, no real news, none expected. No looking back on the Newsday decision. Was he elbowing Schlosberg and Coffey? "I had no sense of that at the time." Does it surprise you that some people are afraid of you? Pause. "No, it doesn't surprise me." Do you still think you are going to gain 500,000 circulation in a reasonable length of time? "Sure."

The bristling comes occasionally. I say it bothers some news people to hear the branding language, to hear someone calling the L.A. Times a "brand" on radio and television. Why do you continue to use the language when it puts them off?

"It's the future language of this business." Period. Snap, crackle and pop. Willes leans slightly forward, certain.

"The problem is the following: If you assume that everything newspapers were doing was right and wonderful and good, then all of this concern about terminology and new ways of doing things is totally misplaced and I should be thrown out on my ear. But our newspapers are declining. Now, why do I talk about brand? Because if we don't brand, if we don't give the value of the brand, we become increasingly marginalized. You don't just inch down forever. You have what science calls the 'tipping point.' You go like this"--his hands nosedive--"and all of a sudden, boom, you've fallen; you're gone. And I happen to believe in newspapers and I'm not going to let that happen on my watch."

Time is running out and I bring up Otis, that Otis is angry and disappointed in Willes and that he says that Willes hasn't called him since he became publisher. "Is that so, and if so, why?" I ask him.

"I haven't called him." The words come immediately and they crackle again. Then he pauses ever so briefly, as if searching for repartee, finds it, and adds almost with a lilt, "I had the impression Otis wanted to retire. And I wanted to respect that decision."

"Simply that?" I ask.

And Willes adds that he thinks the world of Otis and Otis has had enormous impact on this newspaper. And we really are almost out of time. He points to one of his favorite books, Intel Chairman Andrew Grove's "Only the Paranoid Survive," and concludes, "Well, you know, if you are sitting comfortable and quietly thinking all is well in the world, the world's going to take your head off."

Kathryn Downing is next. She is pleasant and artful and says almost nothing. She clearly has been forewarned that the Otis question is coming and is ready.

"Otis Chandler was pretty blunt when I talked to him," I say. "He really didn't like what is going on. He thought you were a poor choice and said so on the record. He wasn't too thrilled with Michael, either. I think I should give you the opportunity, obviously, to respond to that."

"I have tremendous respect and admiration for Otis," she replies, smiling. "And that's all I want to say."

Later, I will think she should have been taking notes.

Downing, 46, has been publisher for four months and everyone in the building is curious about her. She is immensely private, more so than Willes. A native of Portland, Oregon, where her parents owned a landmark eatery called the Pancake Corner, she graduated from Lewis and Clark University, then took a law degree at Stanford. After two years practicing law in Sacramento, she moved into business and rose rapidly, joining the Times Mirror legal publishing division in 1995. Willes named her president and CEO of the Times, her first newspaper job, in the summer of 1998. Along the way she met and married Gerald Flake, a former executive of Thomson Newspapers. She has three stepchildren and six stepgrandchildren.

That is more than she is going to tell me. "What I don't want to do is talk that much about my family," she says.

For Downing the leap into this glass-walled office as publisher of one of America's major news institutions in one of America's major cities has been monumental. "I think it is an incredible responsibility. And there is a lot to learn about Los Angeles and the newspaper. But I've also been here for 16 months now so it is getting a bit easier." It is a Wednesday. On Sunday the largest edition of the Los Angeles Times Magazine will land on doorsteps with the rest of the paper. The cover is a mauve-toned photo of the Staples Center. "Taking Center Stage," says the cover headline.

We talk about circulation. The paper is going through the Perils of Pauline now on that issue, desperately trying to keep circulation on at least a gradual rise while continuing the talk about gaining a million. A lot of people find it difficult to believe that the Times can achieve that, I say.

When she first became president and CEO, Downing says, she consulted with Michael Parks about the numbers. "I asked him what he thought about a half million. And he says, well, that isn't enough. We had to double it."

It is difficult to get anyone to spell out how they will do this. "Is there any way to see some of the data?" I ask. "It's not data we share publicly," Downing responds. "Give me a hint," I ask.

Two samples Downing dwells on are the Our Times local-locals and a program, begun last August, to stuff the Times inside La Opinion, a 90,000-circulation Spanish-language paper half owned by Times Mirror. Both are high cost and high risk. La Opinion sold for 25 cents before the stuffing. Now the price is 35 cents. The Times is being sold for a dime to people who prefer the Spanish language. The Audit Bureau of Circulations has been leery of the idea and would not count all the gains in the most recent reporting period. Times circulation drifted down to 1,078,186.

Downing seems truly perplexed that critics even raise the issue of the circulation goals. "What I don't understand is what the issue is. Every journalist wants more people to read their story. If we don't grow in circulation, if circulation continues to decline, who will our readers be? Where is this going?"

Sitting here, we seem to be back in the parallel worlds. "I don't think anybody has argued that this is an undesirable thing," I say. "I think the critics don't know how you are going to get there."

"Let me give you an analogy," she counters. "I would wager that when [Michael] Dell decided to sell computers the way he sells them, the folks at IBM thought he was nuts. But he's built a wonderful business that went contrary to IBM. I think we can grow this paper."

At times, it seems more like a religion than a plan.

Parks is next. He is waiting for me in his newsroom office rather than his corporate office.

For three people who apparently think so much alike, their personalities could not be more different. If Willes is cool, collected and quick and Downing is cordial, cautious and occasionally vague, Parks is all smiles and effervescence--the opposite of the classic, laconic, big-city newspaper editor. He is Mr. Enthusiasm.

Even as I bring up Otis' more muted criticism of him, he cuts me off before the words are completely out. If he were to come back as publisher, I begin, he would "evaluate Michael Parks to see if he's grown enough to continue as editor--"

"Absolutely," Parks breaks in. "Yeah. I would say that's one of the chief responsibilities of the publisher."

Parks, 56, landed in his job suddenly and with limited experience as an editor, a corporate infighter or even an Angeleno. He spent the bulk of his career overseas as a foreign correspondent. Nevertheless, he was highly regarded as a journalist, and he has been viewed in the newsroom as a counterbalance to the newspaper rookies above him.

Still, Parks is every bit the Willes convert.

"Let's look at circulation because it's the subject of so much controversy, not over the wish but over the means," I say. "Willes came in and people scoffed when he said 500,000. Now you and Kathryn are both saying a million. Do you have a time schedule for that?"

"No I don't. Let me tell you how I got to where I was. Mark said, 'Let's grow a half million.' Many people told him that was impossible. I went in and I said, 'Mark, I've got a problem with your half million.' He said, 'Oh, not you too.' 'I've got a different problem, I think. That gets us into 42, 44 percent of the households in Southern California. We have a paper that I believe everybody needs. We have a paper that seeks to create the basis of understanding across Southern California. It's a huge area divided into many different communities. But the only institution, the only thing that can create common understanding is the Los Angeles Times. We need to be in well over half the households. We need to have 2 million circulation to do that. That's what I think our goal should be.' "

"Now, the means?"

"Now, the means," Parks repeats. "I turn to my colleagues on the business side and say, 'How do we do that?' " End of explanation, and I think, whew, Parks started all this with a wish.

"Yours is almost a social goal."

"It is," Parks says. "It's very aspirational. It's very aspirational. But it's, you know, it's what I believe a newspaper should be to its community."

As they got to know their new publisher last June, the reporters found Downing to be pleasant, personal, engaging if a little out of sync with them. She scheduled a meet-and-greet for 9 a.m. the first day after the Fourth of July weekend. Five reporters showed up. Leo Wolinsky later described it as a "cultural mishap"--the new boss not quite on the circadian rhythms of a morning newspaper.

There also was an appreciation for her candor, but by fall the journalists were becoming uneasy with her message. The meet-and-greets had evolved into conversations that sounded ominous.

Downing reportedly said she was concerned that people weren't performing well enough, that at any institution with 1,100 professionals, at least 10 percent would not pull their own weight. Words like dead wood and bell curves came up. She sounded to many like she was reading from a textbook on modern management. Until everyone was pulling 110 percent, she said, there would be no additional help for the newsroom. Nonperformers needed to improve or find jobs somewhere else. She also said she had read about the "velvet coffin"--the legendary term coined for the cushy days of an era that had ended 10 years ago. Long before Downing's arrival at the Times in 1998, a sour newsroom joke had begun calling the old velvet coffin a pine box.

The stir came as the 2000 budget was being prepared, fueling rumors of more cuts. Bill Boyarsky, the city editor, tried to calm things down. He told the staff no one would lose his or her job but there would be a hiring freeze. Parks, who had good-naturedly lamented how time-consuming it had been for him to break in two novice publishers, now sighed to the same friend, "If you apply the bell curve to Nobel laureates, you will get a bottom 10 percent, too. But they still are Nobel laureates."

Then suddenly, all these jitters became background to a blunder of such monumental proportions that it validated every old fear about the church-state wall. It convulsed the newsroom in an uproar that dwarfed anything in the tumultuous decade that had consumed the Los Angeles Times, and it raised questions about the very integrity of the paper's editorial independence. It would cost Parks great chunks of credibility with his staff and force Downing to humble herself.

The Los Angeles Times Magazine issue of October 10 was highly unusual--164 pages containing a record $2 million worth of advertising. It was dedicated entirely to the opening of the Staples Center, the arena intended to become the centerpiece of a downtown renovation. The Times is one of 10 "founding partners" of the arena, an arrangement that provides the paper with a skybox and the right to advertise around the facility. For these privileges, the Times pays the Staples Center $3 million a year. The payments contain three components: cash, free or discounted advertising, and profits from "joint revenue opportunities." Those opportunities, as outlined in the contract, called for a special section of the newspaper or a commemorative yearbook to be distributed at the Staples Center.

The fatal moment that led to scandal came with the decision to place the joint project in the Sunday magazine. That decision was made in the spring of 1999. Willes was still publisher.

The opening of the arena, home to the city's professional basketball and hockey teams, was big enough to warrant major coverage on its own merits. Sports Editor Bill Dwyre and Executive Sports Editor Rick Jaffe began planning a special section even before the deal was signed. But where would such a section go? The business logic was compelling--a huge section in the Sunday paper would dry up ads for the already thin magazine. It should become the magazine.

The thought horrified Magazine Editor Alice Short. Knowing nothing about the profit-sharing, she felt the subject was just too puffy. She didn't want it. Neither did managing editors John Lindsay, who oversaw the magazine, and John Arthur, who oversaw sports. They argued against it through most of the winter. By spring, they had lost--and disaster became almost unstoppable.

In late September the magazine was shipped off to the printer in Reno, Nevada. That's when Short received her first clue that something was seriously wrong. Someone from accounting was on the phone, wanting man-hour totals put in by the reporters so that the paper could figure its expenses into the division of profits.

Over in sports, Rick Jaffe got the same request. He walked into Dwyre's office.

"You're not going to believe this, but we have shared revenue with the Staples Center," Dwyre recalls Jaffe saying. "We both pry ourselves off the ceiling and I go in to see John Arthur and say, 'Are you aware of this?' He looked pretty amazed."

Not long after, Dwyre bumped into Parks. From their conversation, Dwyre drew the conclusion that Parks already knew. It was still three weeks before the magazine came out.

"There was a fairly long time in the life of a daily newspaper between the discovery and when it appeared," says Short. "So the big question is: Should we have put something in the newspaper that explained the business relationship?"

"I was trying to communicate to [Parks] how bothered I was by this," Dwyre says. "I remember the last thing I said was, 'I hope nobody finds out about this.' "

There are few secrets in a newsroom. Word leaked out to Rick Barrs, who writes a scrappy, often over-the-top column known as The Finger in the alternative weekly New Times. Barrs reported the basic details of the profit-sharing in his usual provocative language. The Finger's self-appointed mission is to needle the Times and it rarely disappoints. So not many paid attention when the story broke October 21. That changed when the New York Times weighed in with its own piece on Tuesday, October 26, followed by the Wall Street Journal the next day. In the Journal, Times Advertising Director John McKeon defended the Staples deal with disastrously ill-chosen words. Why can't "a promotional vehicle like the L.A. Times" do a profit-sharing deal, he asked? It was like dropping a match in a tinderbox.

At that morning's news meeting, Parks began by blaming the "Eastern media" for banging the Times again. His editors moaned. Parks quickly backed off, saying, "This confirmed all the suspicions that the critics of this general manager system have conveyed."

Parks said he learned of the profit sharing at a management meeting after the magazine went to the printer but before it was published. He also tried to get Downing off the hook, blaming a general manager, obviously Sande, who had since left the paper. (Sande says he left before the crucial question of using the magazine was settled.)

Metro Editor Roxane Arnold expressed horror at McKeon's words. Parks can get "very Jesuitical," friends say. Now he did, beginning, "Well, we are a promotional vehicle, we have ads that promote products, we promote ourselves..."

Bill Boyarsky cut in abruptly: "Michael, we are a newspaper..." The meeting ended with several of the editors still wondering if Parks "got it."

McKeon's words were the last straw for the staff, too. Three hundred people signed a petition questioning the paper's integrity and demanding an apology from management. As the petition circulated, Downing apologized to a meeting of senior editors. The publisher blamed her own "fundamental misunderstanding" of editorial principles. She said she had not told Parks of the profit-sharing part of the deal.

The Times finally published a story the next day, Thursday.

That afternoon Downing and Parks met with the hostile staff at a meeting that overflowed the cafeteria. This was raw stuff for the Times, far more angry and confrontational than anyone can remember seeing before. For more than two hours, until after 5 p.m., well into the witching hour for a morning paper, the staff demanded answers not only to the Staples affair but to many other fears and complaints that had been mounting.

Downing began the meeting, humbling herself before the crowd. She was crestfallen and emotional, her face beet red as she offered her "profound apology." She acknowledged she had put the paper under a "horrific cloud."

"I am responsible," she said.

There was no let-up from the staff. Some questions bordered on insulting. Downing was asked if she'd consider going back to school to learn journalism.

"This is a major, major mistake, but I am publisher of the L.A. Times and I am staying the publisher of the L.A. Times," she said. "The question is how do I come up the learning curve faster."

Reporter Henry Weinstein, a Berkeley-educated lawyer, rose to face the Stanford lawyer. Weinstein is known as a man who "keeps people honest" with his almost old-fashioned demand for purity and rectitude. He had written his speech.

"I've been here 21 years and I've never seen anything like this," he began. "Anything so horrendous, anything that has galvanized the staff in such a way." The executives who made the deal had crossed the Rubicon and somehow had to be brought back across the river, he said. Taking the blame publicly was admirable on Downing's part, he said, but McKeon's comment incensed him.

"We are not promotional vehicles," Weinstein pronounced.

The applause was the loudest, most sustained of the day.

The weekend did little to calm things. The staff wanted an investigation. Parks resisted. David Shaw, the media critic, had volunteered but been rebuffed. The L.A. Weekly printed Parks' rationale, which only made things worse: "We know what happened. I don't see anything more to discover."

Now a second petition circulated, demanding the investigative story. Staffers lined up to sign it. Reporter Ken Reich announced he wanted his grandchildren to know he'd signed it. Boyarsky added his name. Most of the Washington bureau, including Doyle McManus, joined.

Each day seemed to produce another trauma. But what happened next was one of those moments in newspapering that few will ever forget.

"It was like nothing I've ever seen before," Dwyre says. "It was out of a movie. A newspaper movie. Like yelling, 'Stop the presses!' "

Otis Chandler could restrain himself no longer. On Wednesday, November 3, he called in and dictated a long letter to Boyarsky. He wanted the city editor to read it to the staff and post it on the bulletin board.

"I took this down like rewrite," Boyarsky says. "When I hung up, someone said, 'Was that who I think it was?' " Boyarsky nodded. He edited the letter and faxed it back. Otis made revisions and returned it. The process went on all afternoon, until 5:30.

Parks asked Boyarsky not to read Otis' letter in the newsroom. Boyarsky wouldn't budge. "I have to," he told Parks. "He's the man who created this paper."

"OK," Parks relented. "Just don't stand on the city desk when you read it."

Boyarsky read the letter to "somber silence," as the Times itself described it the next day. Then the cheers exploded.

Chandler said "sadness" was the one word that capsulized his feeling about events at the Times. "I am sad to see what I think may be a serious decline of the Los Angeles Times as one of the great papers in the country," he wrote. He called the Times employees "abused and misused" and the Staples decision "unbelievably stupid." He then took a direct shot at Willes and Downing. A great newspaper cannot be maintained, he said, when both its top executives "have no newspaper experience at any level."

Pictures of Chandler materialized all over the newsroom. His letter hit the Internet. It was retrieved at Newsday and flew around the newsroom to the delight of reporters whose dreams had been dashed in Gotham. Times Mirror's Eastern papers did not go easy on the story. The Baltimore Sun said the affair left readers "questioning the integrity and credibility of the newspaper itself." The Times was "reeling from an ethical controversy," Newsday wrote.

Tim Rutten was assigned to write the story for the Times. For it, Willes declined comment. But Downing didn't. Her statement landed on Roxane Arnold's desk late in the day. It said, "Otis Chandler is angry and bitter and he is doing a great disservice to this paper and that's too bad because when he was publisher, he did wonderful things. It's too bad when some people get old, they get so bitter."

Rutten looked hard at the sheet of paper and decided to edit his publisher. He cut the last sentence. It went too far. He consulted with Parks. Parks agreed. Few in the Times newsroom knew what had actually happened. But the rawness of the quote that did make the paper cost her dearly. Even her supporters were aghast. Why make it personal? Her newsroom had protected her from only part of herself.

Parks was also faring badly. Finally forced to reverse himself, he assigned Shaw to do the definitive investigation of the fiasco. He tried to do it with good humor in a situation that had none. He left a slip of paper on Wolinsky's keyboard, stamped with a red rubber stamp that Shaw once gave him as a joke. It said: PARKS CHANGES HIS MIND.

As 1999 neared an end--10 years from that unusual toast in which David Laventhol had said it had been good year but he was glad it was over--a lull finally settled over the newsroom. No such toast would be made this year. People were waiting for the next shoe to drop. But they could glimpse the near future--the paper's redesign due in April, with a news space cut of 7 percent (making the decade's loss more than 25 percent)...the attrition of 65 more jobs...a travel-budget cut.

The subject of Otis had come and somewhat floated away. Many said they were thrilled he had spoken but were not sure he had really helped the situation. Willes was so angry he could not contain it in public for weeks afterward. Otis had gone surfing a long time ago now.


"Otis will forever be an icon around here," Bill Dwyre says. "He was a publisher who was a newspaper guy. He weighed in in our hour of need...

"It's not that I wouldn't follow Mark Willes or Kathryn Downing. But Otis is Otis. In my career there's been nobody like Otis. I came here as a pimply-faced kid from Milwaukee, Wisconsin, and they made me sports editor and suddenly I'm in this giant place, not ready to be here, but given a chance. This is Patton out there, and you want to go out and get on the tank and ride with him. If Patton comes back and says let's go, there is one more mission, you go with him.

"He said the integrity of the newspaper and journalism has to be first and foremost. For all of us, that is a message we thought was slipping away. And here was our guy, pounding on the table from afar, saying, 'God damn it, let's get our priorities straight.' "

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