by James O'Shea
The flap over the star exposed me to another side of Hiller for the first time, the one behind the smile. I felt bad for him. He obviously loved the klieg lights of Hollywood, and not to have a story in the paper about the glitzy event would have embarrassed him in front of his new Hollywood friends. But I was also concerned. As trivial as the Walk of Fame incident might seem, it made me realize the depth of Hiller’s blind spots as a publisher. A major part of an editor’s job is to educate the publisher. Lacking any true editorial experience, he honestly didn’t seem to know where the publisher’s job ended and the editor’s began.
From my days in Chicago, I knew Hiller liked to intervene in stories, letting reporters and editors know what he liked and what he didn’t. At first, Lipinski and I dismissed Hiller’s meddlesome notes as naïveté, but they kept coming, and many were tinged with his own political bent. He often queried editors, seeking their views about the adequacy of Chicago Tribune’s and, later, the Los Angeles Times’ stories, compared to accounts sent to him by conservative bloggers or political operatives. In his view, a publisher bore responsibility for the entire paper and should therefore weigh in on issues involving news coverage.
Hiller seemed oblivious to the impact that notes from the publisher would have on a reporter, particularly regarding political issues. Some staffers in Chicago appreciated his tendency to comment on their work; they felt he displayed more interest in them and their stories than former publishers. But in Los Angeles, no one appreciated his interference. Publishers were supposed to stay out of the newsroom, and Hiller made many journalists feel uncomfortable.
There was also a significant difference between the two papers. At the Tribune, the editorial page reported to the editor. When Baquet became editor of the Times, the Tribune Company changed the reporting relationship between the editor and the person who ran the editorial page. Under Carroll, the editorial and op-ed pages had been under the control of the editor, as it was in Chicago. Under Baquet, the editorial pages in the Los Angeles Times reported directly to the publisher of the paper. There was nothing unusual about either system. Some papers put the editorial pages under the editor, and others under the publisher. I told Hiller that the arrangement in Los Angeles made him a more visible factor in the editorial page voice of the paper—something that was different from Chicago. Even if his intentions were benign, Hiller was treading on a minefield. Commenting on a news story could easily be seen by a reporter as an effort to align the story with the newspaper’s editorial position.
I had warned Hiller about the difference in the structure of the two papers before we left Chicago and had suggested he curtail his notes and leave the newsroom to me. But he wouldn’t stop his notes to the staff and even asked if the editorial board should be placed under me. I said no. It didn’t help that many of his complaints about unfair headlines or stories revolved around conservative political issues or influential people in the community. I don’t think he ever complained about stories written about liberals or poor people.
What’s more, Hiller loved to interact with readers, showing them he cared about their views and often inviting them to deal directly with him. I hated to discourage anyone from talking to readers. In my mind, journalists hadn’t done enough of that, particularly at the Times. I spent as much time as possible going to community forums where I would defend the paper against critics and convince readers I was in Los Angeles for the long haul, regardless of how long it would take to fix problems at their paper. I even encouraged them to come in and attend page-one meetings. But when readers and community leaders exchanged views with Hiller, he usually bypassed the reporter who’d written the story or the editor who had handled it and dealt with the complaining party himself—thereby angering staff and engendering resentment. When I suggested to Hiller that it was more effective for all concerned to refer readers to the staffers who’d been involved in the stories under scrutiny, he didn’t listen. Instead, he started his own blog.
Tensions between editors and publishers were becoming increasingly common in American newsrooms. On the surface, newspaper finances in 2006 didn’t seem that bad; the real estate boom that fueled the subprime mortgage crisis was in full swing, generating huge amounts of real estate classified ad revenue. But help wanted and automobile classified ads, a crucial component of newspaper revenue, were in a free fall, partially because of the Internet and partially because advertisers were aware of newspapers’ declining circulations. Were the real estate market to soften—something that was only a matter of time—newspapers would be in real trouble.
In a near panic, publishers ordered marketing studies to help determine how they could reverse the slide. Civic-minded editors traditionally try to balance the needs of readers with their own agendas, providing stories about sports, money, and celebrities as well as reports on the environment, foreign news, and legislation. The marketing studies’ results were music to a publisher’s ears. Newspaper readers wanted local news about their communities, the surveys said, not lengthy expensive reports on the foibles of the Bush administration, the war in Iraq, or the political implications of some arms treaty. Of course, the answers to questions in these surveys depended a lot on how the question was asked and who was asking it. But it soon became pretty clear that things near and dear to the hearts of journalists—big, expensive foreign and national news bureaus that grappled with the weighty, significant subjects of the day—were the next targets for budget cutters. As accountants sharpened their knives, editors scrambled to protect their journalistic assets, while publishers felt the heat from stockholders and Wall Street. Tensions escalated sharply across the country as journalists and publishers squared off over which journalistic assets should be cut and which should be spared.
In Los Angeles, Hiller had inherited a gimmick to attract readers’ attention when he took over from Johnson, in the form of a “guest editor” venture. In an effort to make the paper more relevant or entertaining to the local community, the weekly Sunday opinion section would be assigned to a famous non-journalist. The guest editor would select the stories, get writers, edit the copy, and give readers a perspective on his or her choices when the section was published in the biggest paper of the week. The Times editorial page editor, Andrés Martinez, who had been recruited by Hiller’s predecessor, had selected an all-star team of news makers as guest editors, including celebrities such as Hollywood’s Brian Grazer, the spike-haired producer of big hits like TV’s 24, and film’s American Gangster, A Beautiful Mind, and The Da Vinci Code. I didn’t see much harm in the idea, particularly since it involved the editorial board, which was out of my purview. Hiller loved it.
Problems soon surfaced in its execution, though. The newsroom was abuzz with gossip that editorial page editor Martinez had separated from his wife and was romantically involved with an attractive woman who worked for a public relations firm where Grazer was a client. I didn’t know a lot about all of the personalities involved, but after thirty years as a journalist, I knew how this story would read:The editorial page editor of the Los Angeles Times relinquished the paper’s Sunday Opinion Section to a big-time Hollywood producer represented by a PR firm where the editor’s girlfriend works.
LA Observed would have a field day.
Hiller had sent me an e-mail saying he might need my counsel about something. Then Wolinsky dropped by my office to report on the newsroom gossip mill. “I know this isn’t your area, but somebody’s got to do something,” Wolinsky said. Soon Nick Goldberg, Martinez’s deputy, came into my office and implored me to intervene.
When I met with Hiller, I didn’t have to raise the subject. He told me about Martinez and said he felt we could explain the situation in a note and publish the section. He asked me for my thoughts. I told him to kill it. Hiller was shocked. “You are the only one to suggest that,” he said. I told Hiller I had been a journalist for thirty years and I felt strongly that we’d be crucified for publishing Grazer’s section, with or without a note.
The
discussion went on for quite a while and spilled into the next day as Hiller called others seeking their views, a lawyerly tactic but one that also spread the story. Martinez was furious with me, and the blogs had a great time with it. But Hiller seemed far more worried about how Grazer would react. In the end, Hiller listened to me. He killed the section and the guest editor’s project. Martinez resigned, a baffled Grazer was miffed, but Hiller got positive reviews from most observers.
More significantly, the incident seemed to bolster my credibility with Hiller in our ongoing wrangling over the budget. He was honest and would listen, but was vulnerable to adopting the position of the last person to get his ear. I learned with Hiller that I had to make sure that I was the last in line. Hiller had originally sought a budget number from the newsroom that would have required me to chop seventy-five to eighty people from the staff in addition to numerous space and expense cuts that were wrong for the paper and that would undermine my credibility. I reminded him of the agreement that I had struck with Smith and I argued for a less ham-handed approach.
Cutting staff is a horrible exercise under any circumstances, but it is particularly hard in journalism because many readers and sources in the community establish a bond with the reporters who cover them. Every single item in a newspaper has a constituency, whether it’s the bridge column, the comics, a star columnist, or sometimes even a secretary.
Just months after I arrived at the Times, I started preparing my senior editors for an imminent staff reduction. We crafted a list of people who should be canned for performance issues. That was easy. Then I announced an open-ended voluntary buyout in which anyone who wanted to leave would receive a week’s pay for every six months of service up to a year’s pay. We gave the staff a few weeks to think about their options, as my editors fanned out through the newsroom and advised people on the poor-performance list that they should agree to the buyout, lest they be fired and get nothing. The open-ended nature of the buyout was dangerous; people who you didn’t want to leave might take it.
Accountants arrived at the number of jobs I needed to eliminate in a buyout by assigning an average salary to a job. If people with salaries higher than the average accepted the offer, I wouldn’t have to eliminate as many jobs. In my case, fifty-seven people, some who I wanted to leave and many who I didn’t, raised their hands, giving me far more in total salary than I needed to meet my goal. I convinced Hiller to let me use the excess dollars to hire back about twenty-five younger journalists who were cheaper than some who had left. The deal left me with a net reduction of only thirty-two journalists and allowed me to inject some fresh blood into the staff, which was always good for morale.
In keeping with my deal with Smith, I also began looking for opportunities to increase revenues at the Times. Scanning a Baquet memo about future plans, I noticed a proposal for a fashion news section for Los Angeles. All things being equal, I probably wouldn’t have dedicated precious resources to coverage about Ferragamo and fedoras when rampant corruption and war plagued the nation and the city. But all things were not equal. Fashion, properly covered, was news to many people and reflected broader social trends. Plus the section could generate fresh revenue from new advertisers, money that would help me finance stories on budgets and battles. Working with colleagues in the advertising department, John Montorio and his editors had proposed a brilliant section called Image that offered full-color, sophisticated coverage on a national scale.
We convinced Hiller to authorize the section and to approve an additional eight to ten hires to generate news that would result in revenue. Over a nine-month stretch, Montorio’s editors produced thirty-eight sections to rave editorial reviews. Image attracted new advertisers, and while it generated more than $5.5 million in new revenues, it made more than $2 million in profit to prop up the paper’s struggling cash flow. In effect, I had paid for the Baghdad bureau with coverage of shops, shoes, and Chanel.
By accident as much as design, I had started to achieve my goal of combining revenue enhancements with modest cost cuts to stabilize the newsroom and meet the budget. Sean Reily, an editor and a budget ace, proposed that we go through the entire paper and select sections where we could replicate our experience with Image.
The Los Angeles Times that I inherited was an excellent newspaper that regularly won Pulitzer Prizes. Consistent with Puerner’s philosophy that paid content was a winning strategy, Carroll and Baquet had built exceptionally strong foreign and national news coverage, a vibrant Washington bureau competitive on major stories, and a stable of investigative reporters who regularly rooted out corruption and neglect with huge multipart stories. Under Montorio, the paper also had a collection of excellent feature sections, many of which Reily began to assess to determine whether they had the revenue potential of Image. But the paper had always had trouble crafting a strategy to cover the huge, sprawling city it called home. Anyone reading the Los Angeles Times didn’t really get a good sense or feel for this fascinating, diverse city and region. I was determined to correct that imbalance and told everyone that metro was my highest priority in new hires and budgeting.
But the controversies kept coming. “Editors here have always had to live with controversy,” Reily told me one day. “But I don’t think I’ve ever seen anything like what’s happening with you.” Controversies over the paper’s content were raised left and right. When Frantz had a problem with a story about the Armenian genocide (the writer, of Armenian descent, had shown that he had an opinion on the issue and we had reassigned it to another writer), there was an uproar in the strong and impressively large Armenian community in Los Angeles. Unlike me, who had once run a newsroom under attack by the powerful Chicago Israeli community, Hiller had never been at the other end of a gun aimed by a special-interest group. And the Armenians knew how to attack: They flooded the company with complaints. At one point, my BlackBerry was immobilized by the number of e-mails I received from Armenians.
Meanwhile, the circle of investors hovering over Tribune Company in hopes of buying it became far more controversial when Chicago real estate billionaire Sam Zell joined its ranks. Then, just as I was telling the newsroom who had agreed to the buyout, Mike Oneal of the Chicago Tribune broke a story about huge bonuses being awarded to key executives in Chicago who had agreed to stay on until the company had been sold, making it appear as if managers like me were cutting budgets to finance huge bonuses. I was livid and drafted a memo to the staff announcing the buyouts but also addressing the bonuses, which I characterized as indefensible. The blogosphere had a field day, of course, and Hiller called early the next morning to say, “I just got off the phone with one pissed-off chairman.”
Gradually, though, the newsroom started to settle down. Some staffers privately said I spent too much time in my office and that I wasn’t as open and charismatic as Baquet. Unfortunately, that was true. I didn’t make time in Los Angeles to demonstrate my journalistic skills as an editor. That was my fault. But the newsroom had changed for the better under me. There was more hope in the air. The staff had removed most of the pictures of Baquet and Chandler and was busy getting back to work. I started hiring some new staff members and replacing others and the first Image section debuted.
About six months after I had arrived, FitzSimons came to Los Angeles for a visit. Over breakfast, we engaged in ritual chitchat. But after a few minutes, FitzSimons’ brow furrowed, and he pulled from his briefcase my original memo on the Los Angeles Times. “Well, Jim, it’s been six months,” he said, “and I’m not too impressed.” He wondered why I hadn’t done more, a sly reference to my failure to fire Wolinsky and others on my masthead, and why I criticized the bonuses in my statement about staff buyouts. “You didn’t even know what those bonuses were about,” FitzSimons erroneously chided me, noting that the tone of my memo implied that I had an inflated view of myself and my role. “The day of the imperial CEO is over, Jim, and so is the day of the imperial editor.”
16
Before the Fall
FitzSimons’ $2 billion stock buyback effort had saddled Tribune Company with a lot of debt and had infuriated the Chandlers. In private, the Chandlers had hinted they might shop their stock around because they were at loggerheads with Tribune over the valuation and tax treatment of their family trusts. The Tribune’s announcement that the company would launch the stock buyback was the last straw. Lawyer William Stinehart fired off his harsh letter, dramatically elevating the row by publicly accusing FitzSimons and the Tribune board of incompetence and dismal performance, and of blindly pursuing a deeply flawed synergy strategy.
At the time, Tribune’s revenues were declining, largely due to soft advertising in Los Angeles: As the subprime mortgage fiasco began to unfold, real estate ads were diminishing, and Hollywood movie studios, too, were drawing back on advertising. In the face of a declining market, traditional advertisers were exploring what options existed for them online. But things were not as bad as the Chandlers’ sky-is-falling letter implied. Despite some rough patches, Tribune Company posted robust operating profit margins, earning about $1 billion in 2006, or profits equivalent to 18.5 percent of its revenues, down from the 20 percent level the year before, but still an enviable margin.