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From AJR,   September 2010  issue

Endgame in Chicago   

Web exclusive
The lamentable Sam Zell/Randy Michaels era at Tribune Co. winds down at last.
Posted: Wed, Oct. 20 2010


By Rem Rieder
Rem Rieder (rrieder@ajr.umd.edu) is AJR's editor and senior vice president.      

The century began with such promise for Tribune Co.

In March 2000, the company, owner of the Chicago Tribune and many other media properties, announced that it was acquiring Times Mirror and its fleet of prestigious dailies, including the Los Angeles Times.

A prosperous future loomed, company officials said, thanks to the much-ballyhooed "synergy" strategy. The deal gave the company both newspapers and television stations in the nation's three largest markets. The idea was to leverage content and attract advertising over a wide array of platforms: print, TV, online and radio. The whole would be far larger than the sum of its parts.

But it didn't work out. The company ran head on into the Internet-fueled transformation that has proved so challenging to traditional media companies. But, as Rachel Smolkin pointed out in AJR nearly four years ago, there was more to the picture.

Smolkin wrote: "Innovative but misguided business assumptions complicated Tribune's strategy, as did the melding of two very different cultures, relentless cost-cutting and friction over centralized versus local control of Tribune operations."

Enter flamboyant, motorcycle-riding developer Sam Zell, who in 2007 acquired the embattled company, pretty much with other people's money. Zell was one of those rich guys who thought because he had so much money, he knew more about everything than anyone else. With his free-wheeling ways, unencumbered by bureaucrats and uptight, old-school notions about journalism, he was going to turn things around. Zell's management team included Randy Michaels, a former disc jockey and broadcast executive, and a "chief innovation officer," Lee Abrams. Things were going to change at starchy Tribune.

But things got worse, much worse. While this has been a brutal time for many media companies, the Tribune suffered more than

most. There were more gimmicks and stunts and mindless memos than new ideas and fresh approaches. As former Chicago Tribune Managing Editor James Warren told the New York Times, "They wheeled around here doing what they wished, showing a clear contempt for most everyone that was here and used power just because they had it. They used the notion of reinventing the newspapers simply as a cover for cost-cutting." In 2008 the heavily leveraged company filed for bankruptcy.

It's quite a contrast to Philadelphia, where public relations executive Brian Tierney and a group of local investors took over the Inquirer and Daily News when McClatchy jettisoned the papers in 2006.

Tierney faced the same intractable problems as Zell: the new media landscape, the punishing recession, crushing debt. And there was no happy ending: Tierney & Co. recently lost the paper to the creditors. But before that happened, the papers fought the good fight by focusing largely on journalism rather than pernicious nonsense. Tierney named well-respected editor and reporter Bill Marimow to run the Inky, and the paper responded with lots of strong accountability journalism. And the seriously understaffed Daily News, for which the phrase "scrappy tabloid" would have to be coined if it didn't exist, won a Pulitzer for investigative reporting this year.

But as bad as Zellworld has been for journalism and finance, the situation at Tribune was even worse, as the New York Times' David Carr made clear in an excellent piece on October 5. Carr wrote: "Mr. Michaels's and his executives' use of sexual innuendo, poisonous workplace banter and profane invective shocked and offended people throughout the company. Tribune Tower, the architectural symbol of the staid company, came to resemble a frat house, complete with poker parties, juke boxes and pervasive sex talk."

In an impressive display of the lingering power of big media, that marked the beginning of the end for the Michaels era. Last week Abrams was suspended without pay for sending a companywide e-mail with crude video links. The executive quickly resigned. Now there are reports that the Tribune board has awakened from a deep slumber and has at last run out of patience with Chief Executive Michaels, who may be gone any minute.

What's next? The company is expected to emerge soon from bankruptcy, in the hands of creditors led by JPMorgan Chase. It may be that rare moment when being taken over by the money people is a cause for celebration.