The Oakland Tribune Rides Again   

Battling Bob Maynard reached into his sombrero and pulled out a debt writeoff from Gannett and a Cheshire cat named Neuharth. Now what?

Then media tycoon Al Neuharth stood beside newspaper publisher Bob Maynard in mid-August to celebrate the salvation of the long-suffering Oakland Tribune , the two men hoped for a better ending than the first time they'd joined forces to rescue the newspaper.

That was 1979, when the hard-driving Neuharth was chief executive officer of the ever-expanding Gannett Company. The newspaper firm had just purchased the Tribune and hired Maynard to edit it. Four years later, Maynard bought the paper from Gannett in one of the first leveraged buyouts of the 1980s and he and Neuharth parted ways.

Now, together again, the duo takes a stab at a happier course. The plot remains the same – Neuharth provides the deep pockets, Maynard the journalistic savvy and community connections – and the flailing newspaper gets a handhold.

But the story may twist with the allegiance of Neuharth, the self-professed "S.O.B." who two years ago retired from Gannett to become chairman of the nonprofit Freedom Forum. The Forum, at Neuharth's urging, committed $7.5 million of its $670 million endowment to save Oakland's paper.

What remains unclear is what impelled Neuharth back into the Oakland game. Is he – as he and Maynard maintain – merely the generous bystander with nothing more on his agenda than the preservation of a 117-year-old paper? Or does he see the Tribune rescue as a chance to tweak noses at the Arlington, Virginia, offices of his former employer, which wound up swallowing most of the

Tribune 's $31.5 million debt?

Neuharth insists the reports of a feud are overblown. "All the speculation that we are trying to poke each other in the eyes is not true," he says. "It didn't matter to me whether the Tribune 's major creditor was Gannett or Joe Blow...

"It's really quite simple," he says. "We believe in the Maynards and we believe in the staff of the Oakland Tribune ."

Motivations aside, media observers and Tribune employees are asking the same question: What next? For better or worse, will Neuharth use his new clout to tinker at the Trib ?

Critics such as the respected Ben Bagdikian, author of "The Media Monopoly," are convinced Neuharth won't sit idly on the sidelines. "Allen Neuharth has never shared power easily," he says. "He is interested in power and is used to wielding it."

Neuharth, 67, has never denied his love of power – he details it extensively in his 1989 autobiography, "Confessions of an S.O.B." – but insists Freedom Forum's investment in Oakland is hardly enough to draw him back into the newspaper business.

"We certainly will not meddle in the operations of the paper," he says. "We will help in whatever way we can, if (Maynard) asks, but I have no interest whatsoever in running a daily newspaper again."

Meanwhile, the 54-year-old Maynard has every intention of keeping his venture running, although doubts also shadow him and his wife and business partner, Nancy. The Tribune has sputtered since the couple bought the paper from Gannett in April 1983, eking out a meager profit in just two of the last eight years.

But now, with the Gannett debt off his back and Neuharth again in his corner, Maynard says he's convinced the Tribune is on track toward profitability.

Maynard's optimism is rooted in a fierce cost-cutting program that began in 1987 and intensified last year as the Tribune 's fortunes grew desperate. The paper's expenses today are about 25 percent lower than they were just 16 months ago, Maynard says, primarily because of hefty pay cuts for most workers and the elimination of about 150 jobs. The Tribune work force of about 600 employees is about half what it was before the Maynards took over.

In an effort to curb circulation costs and focus readership for advertisers, Maynard has scaled back the Tribune 's news coverage dramatically. The repositioning from a regional newspaper to one with more local emphasis has dropped the Tribune 's circulation to about 123,000, down 17 percent from when Maynard first took control.

With the city still recovering from the October 1989 earthquake as the recession arrived, the Tribune 's advertising market has grown woefully weak – Maynard says the paper bled $2 million in losses during the first half of this year alone. Even with several large-scale retail projects approved or under consideration in the area, the bailout doesn't change the demographic forces that have ravaged the Tribune 's base. Oakland is down to its last major department store, one mired in Chapter 11 bankruptcy proceedings after closing down for a year to make repairs from the quake.

Yet Maynard has reams of marketing data portraying the affluence of the Tribune 's primary circulation area, a 20-mile stretch on the San Francisco Bay area's eastern shoreline. The market, spanning 10 cities from Richmond to San Leandro, is populated with 1.5 million residents who spent $15 billion on consumer goods last year, according to Maynard's numbers.

Nevertheless, the Tribune 's circulation area is widely perceived as a nesting ground for crime, which caused many of the paper's readers to move to outlying suburbs while the paper's long-time owners, the Knowland family, were in control in the 1960s and '70s. The area's continuing maladies make the Tribune look terminally ill to many observers.

An official at a competitive paper, who asked not to be named, insists the Tribune is a goner. "It's a dead duck," he says. "It will only last as long as the foundation wants to put money in."

Others aren't so certain but have qualms just the same. "A lot of fundamental issues troubling the paper remain," says Dean Tom Goldstein of the University of California at Berkeley's graduate school of journalism. "It's more viable now, but all its problems aren't resolved by any means."

"All this did was ensure a tenuous situation will continue for a while longer," says Michael Collier, the Tribune 's one-person San Francisco bureau. "It does not mean the paper will get larger or the staff will have more time to do better stories."

Maynard remains unperturbed. "We can be unequivocally optimistic about our future," he says in language reminiscent of a campaigning politician. The Tribune owner predicts his daily will see a 20 percent pretax profit by 1995. Neuharth expects the Tribune "not only to survive, but thrive. But I'm an optimist. I seldom see failure in anything."

He certainly sees success in Maynard, who won respect for his negotiating skills after the Tribune 's dramatic August reprieve. Yet the former editor hasn't been able to shake criticism of his overall business skills.

"The general view of Bob Maynard is that he is an upstanding guy with the right connections, but he doesn't have great business acumen," says Dave Newhouse, a former Tribune sports columnist who left the paper in February after a 27-year career.

Much of the paper's top editorial talent is ready to jump ship. "Many people are looking intensely for new jobs," Collier says. "People respect Bob and Nancy Maynard for their commitment to the community and the paper, but Bob Maynard has made some less than ideal business decisions." Departing editorial employees will be replaced with workers paid 20 percent below the current pay scale under a system approved by unions earlier this year.

"A lot of us questioned if we really wanted the paper saved if Maynard was still in control," says one newsroom employee who requested anonymity. "A lot of us are hoping Neuharth will become more involved. Some people dislike Maynard [as a businessman] to the point that anyone is better than him."

But Neuharth's link with the paper also evokes unpleasant memories for veteran Tribune watchers. When Gannett owned the daily, Neuharth pushed a morning edition called East Bay Today . The widely disdained product, now regarded as a prototype for Gannett's USA Today , accelerated the Tribune 's financial downslide. During the last 2 1/2 years that Gannett owned the Tribune , the paper lost $10 million, Maynard says.

Analysts say it's unlikely that Neuharth will gear down his busy career as a speaker, gift-giver and USA Today columnist to give the Tribune his editorial stamp.

"I don't think he has any interest in going back into newspaper operations," says J. Kendrick Noble Jr., a New York analyst who has closely followed Neuharth's career. "But Al is unique. Anything is possible with him."

Neuharth proved that by becoming a Northern California hero in August. Without his last-minute intervention, Oakland, with its populace of 372,242, would have become the nation's largest metropolis without a daily paper.

The Freedom Forum's rescue first began to materialize in late July, when Neuharth proposed a bailout to the foundation's board, according to one trustee who spoke to the press. (Neuharth insists that he didn't make the proposal until two weeks later.)

At the same time, Maynard says he lost the backing of a mysterious New York investor who had been willing to revamp the Tribune if Gannett had accepted $2.5 million cash to retire the paper's $31.5 million debt. Bob and Nancy Maynard flew to Virginia to ask Gannett officials to accept the offer, but they refused and demanded Maynard name his investor. Maynard says he was – and is – sworn to secrecy, leading to speculation in the California press that the investor was a phantom.

At the meeting, Gannett officials told Maynard that the note on the Tribune 's debt was worth $6 million to $8 million. The figure was derived from negotiations to sell the note to Houston Post Publisher W. Dean Singleton, according to a source close to the talks. Maynard later confirmed Singleton's role. Gannett officials declined to be interviewed for this article.

Singleton, who owns a chain of suburban Alameda County papers anchored by The Daily Review in Hayward, California, has been stalking the Tribune for years in an effort to fortify his market position.

But the discussions between Singleton and Gannett never got serious because Maynard made it clear that he wouldn't relinquish control to Singleton, who wasn't interested in a hostile takeover, according to the source. Maynard also believes the cost-conscious Texan would have turned the paper into a Daily Review clone and laid off most of the employees.

"From our standpoint, (a sale to Singleton) was not a moral option," Maynard says. Still, the source claims Maynard kept the door open to Singleton as a "backstop" if other possible investments fell through.

Maynard realized as early as 1987 that he needed to attract new capital to save the Tribune . In the next four years, he showed the paper's books to 48 different investors. But the Gannett debt, which was accruing $300,000 in monthly interest payments by this year, killed a deal each time.

Gannett had indicated it would restructure the debt as far back as 1987, according to a company memo to its auditors. But Maynard says he proposed numerous compromises, to no avail. "The only thing that we didn't offer was to go down Broadway in a tutu," he says.

Gannett held onto the note because the company believed the Tribune was capable of churning profits as high as $8 million annually, Maynard says he was told by a lawyer he hired to negotiate with Gannett. In Maynard's view, however, the 500-page document that spelled out the Tribune 's debt obligations was no longer "worth the paper it was printed on." Maynard argues that "material changes" in Oakland's economy since the 1983 buyout had made the Gannett debt worth only a tiny fraction of its face value.

When Gannett rejected the Maynards' last-ditch effort to restructure the debt, the Tribune 's situation became dire. The paper owed $6 million to impatient creditors and had nearly exhausted its inventory of supplies. Even the newsroom's water cooler was carted away. "We had to decide whether we wanted water or ink," recalls General Manager Richard Wyckoff.

"We were just going on because out of force of habit we hadn't noticed we were dead," Maynard says. "It was down to fumes in the gas tank."

In a move that has been interpreted as both a cry of anguish and a calculated squeeze play, Maynard informed his employees and the media on August 8 that the Tribune had just six days to live unless Gannett accepted the $2.5 million offer.

Maynard says his mystery investor had already walked away. But he carefully worded his statement to hint a savior was still in the wings. Maynard says now he was confident a benefactor would emerge if he could free the paper from Gannett.

To pressure Gannett, Maynard linked the Tribune 's looming death to the obstinacy of the nation's largest newspaper company. Maynard also emphasized his African-American heritage, assuring Gannett would also have to deal with the repercussions of unseating the country's only black owner of a major daily newspaper.

"Gannett in 1983 gave life to a dream," Maynard wrote in a publicly circulated memo to his workers, "and Gannett in 1991 chose to kill the same dream."

The stinging criticism seemed unjust to Gannett officials and many other newspaper executives. Within much of the industry, Gannett has been regarded as an ally in Maynard's fight to keep the Tribune alive. As Gannett pointed out in a terse reply, the company allowed Maynard to keep the Tribune even though he had defaulted on the debt five years ago.

"We didn't want a confrontation, but this paper was going out of business," Maynard says. "Perturbing Gannett didn't bother me one goddamn bit. No matter what happened, we were going to raise maximum hell."

Maynard succeeded. The day after his announcement, a consortium of 85 major Oakland area businesses and many other supporters faxed letters of protest to Gannett CEO John J. Curley. The Tribune has also received hundreds of letters of support.

John C. Quinn, Gannett's chief news executive until last year and now the Freedom Forum's deputy chairman, was among the people who phoned Maynard in the days after his dramatic announcement. By August 11, it was apparent that the Forum was prepared to salvage the Tribune if Gannett would write-down the debt. Ironically, Neuharth would be offering cash from his earlier sale of 15.9 million shares of Gannett stock back to Gannett – a sale that had created the Forum's huge endowment.

Still, Gannett was reluctant. Maynard says company officials insisted they could retrieve up to $4 million in a liquidation of the paper.

The day before the Tribune was to publish its final edition, Gannett finally relented. The details were hammered out in a 24-hour "fax frenzy" between Maynard's Oakland home and the Arlington headquarters.

Gannett agreed to wipe the Tribune 's debt from its books for the Freedom Forum's guarantee of a $2.5 million payment within three years and $5.5 million in the Tribune 's preferred stock. The stock will pay an annual dividend of $220,000. Maynard says he plans to reinvest most of the paper's anticipated profits, along with $5 million provided over the next three years by the Forum, in badly needed building repairs, computers, presses and delivery vehicles.

In return, the Forum has the option to take 20 percent of the Maynards' stock in the Tribune and can use the paper as a site for some of its teaching and training programs. Maynard says he hopes to give employees an equity position in the paper by acquiring the 21 percent stake held by Los Angeles attorney Paul R. Greenberg, who last year resigned from the Tribune 's board of directors.

Despite Maynard's carefully crafted plans, many employees continue to portray him as a great newspaperman lacking business savvy. Maynard has heard the complaints and says he's weary of them.

"I took a business that no one else would buy, restructured it, repositioned it...and got rid of a big debt," Maynard says. "So what's a good businessman? Someone who wouldn't have taken over this paper in the first place?"

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