By Brian Hieggelke
“The truth does not change according to our ability to stomach it.”
—Flannery O’Connor quote chiseled into Tribune Tower inner wall, as quoted, twice, in “The Deal From Hell”
What would it mean if history lost its first rough draft?
The inevitable doom of the great American newspaper seemed imminent just a couple years ago, as company after company tumbled into bankruptcy, or worse, turned out their lights for good, many with legacies longer than a hundred years. Even the mighty New York Times was teetering, grasping at a quickie loan from a wealthy Mexican billionaire, and finding itself the source of speculation that its lifespan was measured in months, rather than years.
Here in Chicago, the bloodbath was a flood, with the Chicago Sun-Times, the Chicago Reader and, most astonishingly, the Chicago Tribune all filing for bankruptcy within a six-month period straddling the end of 2008 and the beginning of 2009. With the entire economy teetering on the brink of depression, it was a surreal time.
An interesting confluence of events this month brings the recent past and uncertain future of journalism back into the spotlight, with the release of the acclaimed documentary film, “Page One: Inside the New York Times” and, most notably in these parts, the release of James O’Shea’s “The Deal From Hell: How Moguls and Wall Street Plundered Great American Newspapers.” As if on cue, the Chicago Tribune graciously launched a major redesign on June 15, undoing many of the most egregious affronts to its audience perpetrated under the regime of its notorious former CEO Randy Michaels. Michaels himself even jumped back into the news hole last week, resurrecting what seemed to be an already decomposing career with a buyout of local radio stalwarts The Loop and Q101.
Just a few blocks south of the mighty Tribune Tower, the offices of the Chicago News Cooperative are tucked away rather anonymously on the eighth floor of an innocuous office building. Its reception desk sits unmanned, with short stacks of mail accumulating for the handful of journalists who call CNC home. One of the banks of overhead lights is out. Welcome to the brave new world of nonprofit journalism.
These are not-so-familiar environs for co-founder, editor and CEO James O’Shea, the compact and cordial commander of this fledgling enterprise. Up until 2008, O’Shea was one of the most powerful men in journalism, capping a career at the Chicago Tribune, where he rose to be managing editor, with the editorship of the esteemed LA Times. In his field, few perches were loftier. Nearing retirement age, in normal times, he’d be expected to soon decamp to chase grandchildren and golf balls, and perhaps putter around writing a memoir.
But these are not normal times. O’Shea’s “The Deal From Hell” is a memoir, in part, but the events he bore witness to, that he participated in, led to a final product that’s even more a meticulously reported business war story. It’s the tale of conflict between two of America’s three largest cities, and institutions with wealthy and powerful founding families that date back into the nineteenth century.
In the late 1990s, the Tribune Company, which had just become publicly traded in 1983, was flying high on its reputation for consistently superior financial performance. Its flagship newspaper had a reputation for solid if not superior journalism. Though it had shaken off its longstanding reputation as a tool of its crusading right-wing publisher, Colonel Robert McCormick, it had never risen to the level of the New York Times, Washington Post or LA Times. The latter had reached the upper echelons of excellence under the guiding hand of publisher Otis Chandler, a member of its founding family who made quality his driving imperative until his reign ended in 1980. But by the late nineties the Chandler family was impatient about its dividend machine, and made a deal to force a sale of the Times-Mirror Company to the Tribune, creating a coast-to-coast traditional media powerhouse at the very peak of traditional media’s soon-to-crumble financial power.
The Tribune soon discovered its honeypot was really a hornet’s nest. The sale of a division that had been structured for the benefit of the Chandler family suddenly kicked out a billion-dollar tax exposure for the new owner. And a circulation scandal at the Long Island Newsday newspaper had metastatic implications for the entire newspaper industry. The Chandler family, who’d supported the Tribune in the buyout and took stock instead of cash, soon lost faith in a Tribune Company leadership that, with the departure of longtime executive Jack Fuller, had not risen up through the newspaper’s ranks. Coming from accounting, legal, investment banking and broadcasting, they lacked the understanding of both the value of journalism and the public trust it engenders. A company that had become more focused on winning the hearts of Wall Street than the minds of Main Street became desperate and heartbroken when the moneychangers’ love started wearing off. So instead of focusing on how to bring these two media behemoths together and take on the daunting challenges that the rapidly evolving media landscape presented, management was trying to prop up the stock price, borrowing two-billion dollars to buy back publicly traded shares in a strategic move in 2006 that would prove to be their undoing.
Before long, the company was up for sale just as the media business was in a stock-market free-fall. The unlikely would-be savior for the Tribune soon emerged: Chicago investor Sam Zell, who was known by what should have been an ominous nickname, “The Grave Dancer.”
While much of this was happening, O’Shea was methodically working his way up the Chicago Tribune ranks, where he’d landed after starting his career at the respected Des Moines Register. He’d had a solidly successful if relatively uneventful career in journalism, and by 2001 he’d been appointed managing editor under his ally, the newly appointed editor Ann Marie Lipinski. Though he’d kicked off his journalism career as a US Army correspondent in Korea, his big successes as a professional journalist were not as a foreign war correspondent, but rather in financial journalism, where he did noteworthy work digging into the savings and loan scandal of the late eighties.
But he was destined to serve in a war zone after all: Los Angeles, where he was sent in to replace Dean Baquet as editor of the LA Times in 2006.
Baquet was a star of American journalism. After a stint at the Chicago Tribune in the late eighties where he’d shared a Pulitzer, he’d moved onto the New York Times where he’d risen to the position of national editor and was on the shortlist for the eventual editor’s job. But the opportunity to run one of America’s other great bastions of journalism proved irresistible, and he moved West to be managing editor and then editor of the LA Times. He soon discovered that things had changed at the Tribune Company, where he’d once toiled under the nurturing protection of a proud editorial culture. As top dog in LA, it was now his job to sustain that proud culture of journalism in the newsroom, while grappling with the bean counters who now ran the show in Chicago. The LA Times had a much larger newsroom than the Chicago Tribune, which largely accounted for its stronger national reputation but also for its lower profit margins. When Chicago demanded Baquet cut LA down to size, he refused and so, in turn, did his publisher, Jeff Johnson. Before long, both heads rolled and Baquet became the reigning saint of American journalism.
O’Shea writes that he took Baquet’s job with the latter’s blessing and a firm resolve that he would not do so with the mandate to gut the enterprise. Nevertheless, he was greeted with open hostility upon his arrival: a one-day pass to the building, photos of Baquet and Otis Chandler hung like saints all around the newsroom, and a comment from managing editor Doug Frantz that no matter what you do, “you will always be viewed as a hatchet man from Chicago in this newsroom.” Apparently everyone else knew something he did not.
Nevertheless, O’Shea set out to win the trust of this skeptical crew while also seeking solutions to the financial quagmire into which his company was sinking deeper and deeper, and to do so without mindlessly perpetuating the cycle of cuts and more cuts that had plagued it. So he set out to find new revenue sources, citing his creation of a lucrative fashion section as a notable success under his watch. He was cheered at first by the ascent of Zell and his pronouncements that you can’t cut your way out of this problem, but when the razor-thin margins of error in Zell’s takeover deal started to unravel, the new LA Times publisher, David Hiller, pushed O’Shea to make more cuts. Like Baquet before him, O’Shea refused to do so and was forced out. O’Shea returned to Chicago, spent a few months as a Joan Shorenstein Center Fellow at Harvard, joined the board of the hedge-fund-owned parent company of the Chicago Reader (he’s no longer involved) and helped start the Chicago News Cooperative, a nonprofit journalistic endeavor. And wrote “The Deal From Hell.”
“The Deal From Hell” is a candid and relatively unrestrained insider’s account of the near-destruction of two of America’s great newspapers. Heroes are portrayed and so, certainly are villains. Except the heroes are all gone now, and more than a few of the villains still flourish.
O’Shea spends about a third of his book recounting the dual histories of the Tribune and LA Times, the legacies of Colonel McCormick and Otis Chandler, and the leaders who would replace them and move their companies toward their eventual marriage. It picks up steam when the merger is announced. O’Shea is particularly strong on his reporting of the story of the Newsday circulation scandal that turned executives into convicts, that cost the Tribune Company at least a hundred million dollars and that tarnished the industry at a time when it could ill afford it, which he intimates may have even been known about by the Chandler family prior to the merger. Later, he digs vigorously into the court files from the still-outstanding Tribune bankruptcy case, documenting a harrowing mission to get a solvency opinion—a sort of financial blessing—that Sam Zell needed to close the deal. He finds emails all the way up and down the food chain, from the likes of Wall Street titan Jamie Dimon down to the lowly JP Morgan Chase analyst who crassly wrote of the deal as a “hit and run.” Bankers, he recounts collected colossal fees of about $161 million. “That was more than enough for me to run the LA Times newsroom for a year and employ 970 journalists,” he says.
Obscene? Perhaps, but so too the story recounted in the book of a security guard stumbling upon Tribune CEO Randy Michaels on the twenty-second floor terrace of Tribune Tower, “standing with his arms extended as if on a cross, receiving fellatio from a young Tribune employee.” The New York Times’ David Carr had reported the same anecdote in his story that led soon to Michaels’ demise, but did not name the CEO as a participant. It was not very Tribune-like for O’Shea to do so, either, so I asked him about it, and whether there were more stories like it that he didn’t use.
“Oh yeah there’s a lot more. I did grapple with whether to name him. It was reported in the New York Times story without a name. I had heard about it long before that. I had plenty of salacious stuff to be honest with you, that I did not use. But I thought it spoke to his attitude about the place. And it was emblematic of his almost contempt for its history. I think they were trying to shock the place into a new era, to make it fun and all that stuff. To him it was like a playpen. That to me said it better than anything. I had three sources on it, so that I was pretty confident in the information the way it was. I did not include all the names involved. She wasn’t relevant to the story. He was. He was the CEO.”
After reading the book, I spent a couple of hours last week with O’Shea and attended a book-release Q&A conducted by Jim Warren, a former Tribune managing editor and current CNC columnist. A few days later, I heard Tribune editor Gerould Kern address the City Club of Chicago.
My question? Can journalism survive the newspaper?
It’s a question I’ve been grappling with most of my adult life. As a founder of this publication, I’ve had a vested interest and active engagement in propagating the interests of print media. As a media critic writing a weekly column for two years or so in the early nineties as my alter ego, Hildy Johnson, I’ve spent countless hours trying to parse the doings at the Tribune Tower, long before the “Animal House” antics of Randy and his Gang made it, um, interesting.
More recently, I was going to cancel my Tribune subscription. In part, it was due to time, in part it was due to persistently late delivery on Sundays, but it was mostly due to my malaise with the product.
After an experiment in reading newspapers online that I’d documented years back in a Newcity cover story entitled “Life Without Newspapers,” the rush of bankruptcies and general state of paranoia that set in about all newspapers, even the mighty New York Times, coaxed me back in an act of nostalgia. If the newspaper as we know it was truly on its death bed, its terminal date approaching far faster than imaginable a few years ago, I wanted to be present for its final rites.
So I picked up a weekend subscription to the Tribune and the New York Times and rediscovered the joys of a broadsheet. We read differently in print, I discovered. My online process was methodical and episodic: I clicked on links in email newsletters or on web sites, skimmed stories, and left. Even serendipity traveled in straight lines: link to link to link. With print, the eyes’ full range went to work, taking in the whole page. Story headlines were skimmed, ledes were read even for stories I never would have clicked on. I liked it. I especially liked the Sunday New York Times, which I savored section by section, over the course of the entire week.
The Tribune, alas, did not hold up as well. As long as I’ve been reading it, the Tribune has kept me in a steady state of ambivalence, as it first got caught up in the USA Todayization that swept American newspapers in the eighties, and then tried to figure out how to position itself in relation to the internet. Its answer seemed to be dumb and dumber, culminating in the embarrassment of RedEye, which launched with the claim to be a gateway product for the flagship, but increasingly seemed to be the beast that would devour its parent. When the ill-fated Zell-Michaels era took hold, with their infamous frat-boy culture and utter disregard for journalistic traditions, this process accelerated. The newsstand version of the Tribune became a tabloid, and the paper was redesigned, dumber and thinner again.
Through it all, certain writers always engaged me, especially the insightful Pulitzer-winning architectural critic Blair Kamin, and onetime Newcity theater editor Chris Jones, who has carried on a very high standard on the theater beat. And the comics, of course. But even the comics were not what they used to be. Gil Thorp was gone.
Just in the nick of time, though, the paper announced a redesign. It was rolling back the clock and burying the Randy Michaels era, adding back content (Kern told the City Club that the added forty-four pages per week brings it back to about the levels of ten years ago) and taking a much more serious news approach to its story selection and page layouts.
Kern is the editor who oversaw both of the most recent redesigns: the one rolled out this month, and the earlier one this design seemed to be repudiating. A curious juxtaposition of ideas emanating from the same source, to say the least.
Kern’s also one of the bigger villains in O’Shea’s book. In a chapter entitled “Count Kern,” O’Shea blames Kern for being the guy who started analyzing resource uses in editorial endeavors, and creating just the justification that the business side needed to press for deeper cuts and increased meddling in editorial operations. O’Shea writes, “He started counting: how many journalists Tribune papers used to cover Hurricane Katrina, how many reporters Tribune had in its Washington bureau, how many Chicago Tribune stories ran in the Los Angeles Times. Kern wrote up elaborate reports full of color-coded pie and bar charts that championed what would become a creeping centralization of editorial decision making in Chicago.”
You don’t have to be a detective to discern that O’Shea fundamentally does not respect Kern. The two were rivals for the same job at the Tribune—”I think he never really got over not being managing editor,” O’Shea says—and O’Shea characterizes his own performance as responding to the higher calling of journalism, as opposed to Kern just doing “a job that needed doing.” He writes that Kern, who’d come to the Tribune from the suburban Daily Herald, “had never worked as a correspondent, covered a war, or distinguished himself as an investigative reporter.” Kern, in other words, was a lowly local news guy.
Within a few years, O’Shea was out at the Tribune, his friend and mentor Lipinski was out at the Tribune, and Kern had ascended. The cutters had won. “I thought the downgrading of the Tribune, Gerry kind of embraced that,” O’Shea says. “That became part of what he was doing: In place of the journalism that had been practiced by his predecessors, we’re going to give you the journalism you want.”
I asked O’Shea about his thoughts on the Tribune’s recent redesign, with its expanded news hole reversing the cutting trend of the last decade. I wondered if he thought Kern had become a born-again journalist?
“Obviously they’re not getting the results they thought they were going to get, or they wouldn’t be going back to the way they’ve been going. I don’t have their numbers, but I would imagine they are losing circulation. I don’t know what the finances are, but I would imagine the cash flow has to be under some sort of strain. And they probably got some negative reaction from advertisers. It’s partially market driven. The forces in the market are making them rethink, and secondly I think the results were not good, and most readers didn’t like it. I have people tell me all the time that they don’t read the paper anymore. And I think the third factor is they’re trying to figure out how can we raise the price of the paper. Because everybody’s going to have to do that. This strategy is kind of a recognition that the other one didn’t work.”
I wanted to size Kern up for myself, so I went to hear him speak to the City Club on June 28. So far, I like the latest redesign, as much as I disliked his earlier redesign, and I wanted to hear his thoughts. Sporting a gray suit, a summer tan and a receding gray hairline, Kern looks every part the corporate executive who might just as easily have stepped out of the halls of International Harvester, First National Bank or Illinois Bell. Adhering to a prepared script, Kern walked the audience through what amounted to a press release for the redesign: forty-four new pages of content a week, profitability throughout its times of travail, and a continuing commitment to local news coverage. Kern was most eloquent when he spoke of the role of the newspaper in the era of social media, when Facebook has eighty percent penetration of all connected people in Chicago. “We still live in a public larger than our Facebook friends list,” he said. “Newspapers must defend that common ground,” he added. On the downside, marketing concerns did not seem far from his consciousness: I’d bet editors going all the way back to old Joe Medill paid lip service to the interests of readers when discussing their publication, but it sounds a bit more serious coming from Kern, who also mentioned that “Kathleen O’Hara, our vice president of marketing, worked very closely with us” on the redesign and, at one point dropped the phrase “targeted audiences that deliver ROI to advertisers.” For a second, I thought I was back in business school.
Kern expressed confidence that the Tribune would soon emerge from bankruptcy as a financially solid company, but O’Shea’s not so sure. With the company’s fate in the hand of the bankruptcy judge, under one scenario, “the newspapers are going to be owned by banks,” O’Shea says. “And banks don’t want to be in the newspaper business. And they want their money back. So what’s going to happen to these papers? They’re going to see far deeper cuts than anything they’ve seen once the banks get in there, because they’re owed a lot of money and they want it back, but it’s not there, unfortunately.”
As bad as Kern comes off in “The Deal From Hell,” the woman who now occupies O’Shea’s former seat as the Tribune’s managing editor, Jane Hirt, fares much worse. O’Shea introduces her with a story that, during her tenure as RedEye editor, she suggested to Sam Zell that “the company could increase revenue with a ‘Second Life for Cats’ feature wherein the feline pets of readers could ‘live out lives online, have alter egos, get married, get jobs, run businesses, etc.'” Before long, she’d been moved up to the number-two job at the Trib, and she was nixing stories from the front-page for not being local—such as the Lehman Brothers collapse that precipitated the financial meltdown and drove the economy to the brink of the abyss, or “not in our demographic,” such as a story on Chicago’s troubled public housing. I asked O’Shea to expand on his thoughts about her: “Jane worked for me as a slot editor on the foreign and national desk and she was really, really good. I’m not going to be critical of her; she’s a nice person and all that. Whether she had the experience and background to be managing editor is another question. I didn’t have anything to do with that decision.”
Both Gerould Kern and Jane Hirt declined to comment for this story.
One of the book’s—and O’Shea’s—major shortcomings is his inability to see his responsibility for Hirt’s ascent and what it represents. RedEye came to life on his watch, with Hirt as its founding co-editor and later sole editor, a title she would relinquish to become managing editor of the Tribune. The success of RedEye, a product unabashedly conceived to meet a marketing rather than journalistic imperative, with a minimal budget for reporters or editorial staff, would become the real-world laboratory that could justify the marketing-driven approach to news editing that O’Shea and his cohorts would find so appalling a few years later. Their own monster would soon threaten to destroy its maker. For those of us who watched the launch of RedEye in horror, appalled at its disregard for the journalistic values the Tribune stood for and its cynical disregard for the intelligence of its “target audience” of young adults, it seems disingenuous to now put all the blame on the money guys.
I pressed O’Shea on this issue after confirming that he was indeed involved with the creation of RedEye.
What are your thoughts on RedEye? You don’t go into it much in the book.
“It was meant to create a publication that would try to reach a younger demographic and see if you could convert the younger demographic into Tribune readers. I don’t know how it’s doing now but I’d imagine it’s getting pretty good ad revenue because they were appealing to the demographic that the advertisers wanted. But it wasn’t converting people into Tribune readers. We used to call it the Red and the Blue Paper. At the time people were saying young readers weren’t reading newspapers and woe is us and all that, but I think it was worth trying something. But the Blue Paper became more like the Red Paper.”
I’ve always been appalled by the RedEye, which played to the lowest common denominator. It made USA Today look like the New York Times. It didn’t seem to have anything in common with the Blue Paper.
“Some of the stories were from the Tribune. The whole idea was to see if you could reach somebody with more of that kind of coverage, celebrity coverage. And we had problems with it. The standards between the two papers, I mean I can still see Jane Hirt coming into my office and there was a story in the RedEye which was totally and completely inappropriate, even for RedEye, and I remember telling her ‘What the hell were you thinking?’ Frankly it was really kind of an R&D project that ended up staying alive probably longer than it should have. The initial idea was not to go low. The initial idea was can you mix serious news that might be of more interest to a younger audience to get them interested. Could you get a different mix and see if you could interest younger people in reading a newspaper, and to get them to say ‘OK, well I read this story in the Red Paper, I want to read more about it in the Blue Paper,’ and that didn’t happen. And so I thought it was a worthy effort to try that, but I was not a big fan of RedEye after awhile. It became too juvenile. I had young people telling me they were insulted that we’d give them a paper like that and thinking they were that dumb that they’d like it.”
If O’Shea’s cardinal sin is RedEye, his penance is the Chicago News Cooperative. Up and running for two years this fall, CNC is a bold experiment in finding a new way to finance quality journalism. Since its launch, it’s had a deal to produce Chicago content for the New York Times, two pages on Friday and two pages on Sunday. I asked him to expound upon the evolution of CNC. (An extended version of our conversation about CNC can be found here.)
“You know, this is sort of an R&D experiment too. How can you finance quality journalism? Some people pay $2 for the New York Times on weekdays and $6 on Sunday, they aren’t the problem. It’s how are you going to cover City Hall and how are you going to pay for it because nobody’s going to say to you ‘I’m going to buy an ad on an exposé on Mayor Emanuel.’ They want nothing to do with that. We did find out people will pay for information when we did that ‘Early and Often’ political site for the election cycle. You paid 175 bucks for online reports delivered to you via email that you didn’t get if you weren’t a member. We got advertising revenue, we got maybe 300 or 400 people to pay for it—which wasn’t as high as I wanted, but when I tell people that number they say ‘well that’s pretty good.’ We’re now building an education site. We’re going to start trying to get some advertising revenue, but we’re still a nonprofit 501c3 dependent heavily on donations. If you cannot figure it out within a three-to-five year period, some way of sustaining yourself or taking fairly steep leaps toward self-sustainability, foundations and nonprofit are not the answer.”
So you’re giving this five years, I ask. “I started this thing and said I would help get it off the ground, I’d be a catalyst and then I’d get somebody to run it. So I don’t know if I’ll be around for five years. I’ll be 68 next month. But I will be a supporter one way or another for five years. Will I be the editor? It may get to the point where it needs some fresh blood. I can see somebody younger coming in here. I’d actually like to get back to writing.”
Between his long career at Tribune Company and his more enterprising recent times with CNC, O’Shea’s in a unique perch to pontificate on the future of newspapers. I offer him the last word, asking him to speculate on the landscape twenty years from now.
“I think you’ll still have print, but print might be a weekly newsmagazine. I think this might come faster than twenty years, by the way. I think it will be more online driven. In the next three-to-six years, you’ll see the frequency of delivery start to taper off, people will go to three days a week, or maybe once a week. You’ll have a very vibrant news industry with a lot of online things. Most people will get their news through emails on their cell phones and all that. And you’ll have probably a weekly magazine for people who want it in print for more longer-form stories that are easier to read that way.”