Thirteen Ways in Which Owner Sam Zell and CEO Randy Michaels Have Destroyed the Tribune Company

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Photo: Jonathan Fickies/Bloomberg via Getty Images

The long struggling Tribune Company controls some of the most influential newspapers in the country, like the Los Angeles Times, the Hartford Courant, the Baltimore Sun, and the Chicago Tribune. In 2007, real estate mogul Sam Zell swooped in to take over the company by taking on over $10 billion in debt and converting the enterprise into a largely employee-owned company. This was meant to stabilize the company while it figured out how to move its newspapers and radio and television stations into the future. Instead, the purchase has spelled economic and spiritual doom for the entire operation. In a scathing takedown today, New York Times writer David Carr enumerates the many, many different ways in which Zell and his cronies have destroyed a venerable media institution.

The list includes both financial problems and gross personnel misconduct (though, for the full effect, you should really read Carr's article, which is a blockbuster):

1. Let's start with the numbers. Less than a year after buying the company Zell brought it through a bankruptcy where it listed $7.6 billion in assets against $13 billion in debt. That makes it the largest bankruptcy in American media history. More than 4,200 people lost jobs.
2. The Chicago Tribune's circulation is down 9.8 percent in the first half of 2010. The Los Angeles Times's circulation is down 14.7 percent. Both drops are worse than the industry average.
3. As this happened, though, the top level cronies of Zell and CEO Randy Michaels (he hired about twenty top managers from his former days as a radio manager and shock jock) received a total of $57.3 million in bonuses going into 2010. The previous year they only made $5.9 million in bonuses.
4. At papers like the Tribune and the Times, brass insisted on credibility-crippling stunts like placing ads on the front page of the paper that were disguised as articles, and wrapping entire sections in obnoxious marketing campaigns.
5. Radio stunts, like CA$H GRABS ("in which a viewer was led into a bank vault and allowed to scoop up dollar bills," sometimes cheered on by Hooters waitresses) were inserted into evening news broadcasts at member TV stations.
6. Meanwhile, employee morale was crippled. To begin with, the employee handbook was rewritten to say: "Working at Tribune means accepting that you might hear a word that you, personally, might not use … You might experience an attitude you don't share. You might hear a joke that you don't consider funny. That is because a loose, fun, nonlinear atmosphere is important to the creative process … This should be understood, should not be a surprise and not considered harassment."
7.That would be all well and good, if so much of what Michaels and his cronies did hadn't come off so much like, well, harassment. Carr opens his story with an anecdote from early in Michaels's tenure, during which he offered a waitress at a Tribune hangout bar $100 to show her breasts. "Here was this guy, who was responsible for all these people, getting drunk in front of senior people and saying this to a waitress who many of us knew," said an executive. "I have never seen anything like it." (Michaels denies this story.)
8. Women, it seems, were hardly taken seriously. When a Clear Channel exec was hired onboard, a news release mockingly claimed she was "a former waitress at Knockers — the Place for Hot Racks and Cold Brews."
9. To bolster this feeling that they weren't valued, Michaels and a fellow executive once had a loud conversation on an open balcony (over a populated work space) "about the sexual suitability of various employees." (Michaels has been sued in the past for biting a woman on the neck, and Clear Channel, under his reign, was sued for firing a woman who complained about lewd e-mails and for three counts of sexual harassment. All suits were settled out of court.)
10. The Chicago office space became a warren of sexual and illegal behavior. A pair of top workers were allegedly found having sex on a balcony at one time, and at another, Michaels turned a former Tribune executive's office into a casino, with gambling and cigar smoking. (They covered up the smoke alarms.)
11. Sam Zell tried to compromise the Chicago Tribune's credibility by forcing the paper to go hard after then-Illinois Governor Rod Blagojevich in order to pressure him into buying Wrigley Field from the Tribune Company. When a female editor resisted, he told her, "Don't be a pussy."
12. Zell also insisted upon reducing actual news-gathering at his television stations, instead focusing on clips with narration — which requires far less production, on-air talent, and of course, again, credibility. "Don't sell us on your solid newsroom experience," read a recent job listing. "We don't care. Or your exclusive, breaking news coverage. We'll pass."
13. Zell, who has said from the beginning that "no matter what happens in this transaction," his "lifestyle won't change" because he made such a small investment of his own money in the project. Now that the company is in bankruptcy, however, he's trying to put himself at the top of the list of people scheduled to get reimbursed. Employees, whose 401(K)s were used to finance his purchase of the Tribune Company partially, are naturally further down the list.

Here's part of the internal statement that Michaels issued to staffers yesterday in anticipation of the story:

[Carr] will apparently paint the work environment at Tribune as hostile, sexist and otherwise inappropriate. Many of the rumors Mr. Carr referenced were spread by an ex-Chicago Tribune employee who is now a contributing writer to the New York Times. Mr. Carr has made clear that he is digging up these old allegations because he believes that decisions about the company's management are about to be made, and he wants to influence those decisions. Mr. Carr knows that an outside firm investigated the most substantial of these allegations, and that they were found to be without substance. Mr. Carr intends to use them anyway … It is our intention to have creative environment. A creative culture must be built on a foundation of respect for each other. Our goal is an environment where people are free to speak up, free to challenge authority, and free to fail on the way to success. Our culture is NOT about being offensive or hurtful. This is supported by our Harassment Policy. It's in the Employee Handbook which is posted on TribLink-Section 3.

At Flagging Tribune, Tales of a Bankrupt Culture [NYT]