James O’Shea, former editor at the Chicago Tribune and the Los Angeles Times, was close to the center of the successive storms at the Tribune company, from its ill-fated 2000 merger with newspaper chain Times Mirror—then owner of the LA Times and Baltimore Sun—to the disastrous 2007 takeover by a group of investors led by Sam Zell, leading to the company’s eventual bankruptcy. O’Shea gives his account of the company’s decline in The Deal from Hell , published in 2011.
After leaving Tribune, O’Shea founded and managed the Chicago News Cooperative, which folded last year. Now, Tribune has reentered the limelight—the company has emerged from bankruptcy, and its newspapers may be purchased by the Koch brothers. In an interview with CJR, O’Shea spoke on a range of topics, from the bankruptcy and the Kochs, to the company’s newspaper spinoff, and the Sun-Times photographer layoffs.
The Tribune company emerged from bankruptcy at the end of 2012. Is it truly in better financial shape, and to what extent were more serious decisions about the company’s financial assets kicked down the road?
Well, I think splitting the company into two [the newly expanded television arm of Tribune is being split from the newspaper arm] is basically a strategy of creating one company with the assets that the existing owners consider to be good, and one company with the assets the existing owners consider bad. The broadcasting company is clearly the one they think has the good assets, because they put the digital assets there, and by doing that they diminish the value of the newspapers. They probably couldn’t sell the papers as a group without the digital, but they could still sell them individually.
In The Deal from Hell, you seem to say that tensions after the Times Mirror-Tribune merger between the most powerful papers in each former company—the LAT and the Chicago Tribune, respectively, made the union a risky proposition. Do you think it was doomed from the start? If so, why?
Well, I don’t think it was doomed from the start, but I think Tribune made a mistake by not appointing someone from Chicago, who knew the lay of the land and knew the personalities involved, to a high position in the editorial ranks at the LA Times. The distance between LA and Chicago surfaced almost immediately, when the Tribune guys went out there and got critical of how the Times Mirror people ran LA, but tensions really accelerated was when you get into 2004, 2005, when the LA Times began seeing declines in its revenue, especially when the movie industry started pulling back on their advertising. This loss of revenue meant Chicago started pressuring LA to come up with cuts,and LA’s looking at Chicago and they’re not seeing the same kind of thing happening at Chicago. Meanwhile, Chicago’s looking at LA and saying, their editorial staff is 50-percent bigger than ours—they should be cutting.
One of the critiques of the Times Mirror and later Tribune—articulated most prominently by David Simon in the final season of The Wire, is that the newspapers badly served their cities by focusing too much on working issues into prize-mongering “five-part series.” Do you feel his critique is justified?
It’s an interesting question. I happen to believe very strongly that a newspaper should be a public-service institution, and everything that’s in the paper doesn’t have to be read by everyone. But there has to be a value to it, so I disagree with him. Those series, though they won prizes and, in cases, probably were conceived with prizes in mind, had a valid public-service purpose, and they gave the paper credibility.
A large part of The Deal From Hell is an indictment of Sam Zell and his acolytes, and the culture he brought to Tribune. Are the people that Zell installed still in decision-making roles at the company?
It depends on what you call the ‘Zell acolytes.’ If you are talking about Randy Michaels, he’s clearly gone, and Nills Larsen, who was running the broadcast side, he’s gone, but he did a fairly decent job there. Some of the existing Tribune people who were put into positions by Zell, like Gerould Kern, the editor of the Tribune, are still there, but they aren’t really his acolytes.
Do you feel that Tribune overall has changed course for the better since you left the company?
No, I don’t think they have. When Sam Zell bought the Tribune company, he had the best collection of newspapers in the country, and then they began dismantling that. Today you can’t say it’s the best collection of papers. Even though the company recently emerged from bankruptcy and ditched much of its debt, it had nonetheless suffered a severe loss of revenue and is a company with diminished assets, including its newspapers. Cash flows are off steeply, too, as are profits.
A lot of the reviewers of The Deal From Hell pointed out that even though you rightfully center on the problems with the executives at Tribune, even companies owned by strong families with a commitment to journalism—The Washington Post, The New York Times—also made substantial cutbacks to their editorial staffs. Are the troubles you pinpointed at Tribune unique or part of a wider industry problem?
First of all, I did not say you didn’t have to cut. My argument was, if you’re going to cut, you have to reinvest the money in a way that would generate revenue. At Tribune, what they were doing is that they would pass the savings back to Chicago, and then that would be used to bolster their earnings. Other companies did this. The Washington Post diversified their revenue base with Kaplan, and while that’s having it’s challenges now, that revenue probably saved them.
If you were in charge of Tribune now, given the situation with the spinoff, and the assets they put there, what steps would you take to ensure the continued viability of the papers?
I can’t say there’s one solution for all of them. I believe that the future of the newspapers is in becoming content companies. The fundamental value of a news organization is the ability to generate content, and the companies that win and survive are going to be those that invest in their ability to provide content. Tribune, however, has disinvested in content, by cutting the editorial staffs. Looking forward, I think each market you have to look at individually. in LA, I would look at making the Times a state newspaper. By covering California aggressively, you’re in effect a national newspaper, because California is bigger than most nations. If I were in Chicago and Florida, I would do the same thing and make it regional. if I were in some of these smaller markets, like Hartford, you then want to look at if I can create an online operation with a weekly magazine, and evolve into that over the next five to seven years, because printing the paper is the real cost, and papers often have limited other options for savings. As you saw in New Orleans when that happens, it can blow up in your face too if you don’t handle it right.
You just said in the small markets you might want to cut back on the newsprint. Advance Publications did that, and it caused massive outrage. How should they have handled it?
Advance in New Orleans just came out and said, we’re going to three days a week, screw you, and it was accompanied by steep editorial cuts. Meanwhile, when they did cut delivery days in Detroit a few years ago, they said, “We’re doing this so we don’t have to lay off more reporters.” Every paper in the near future is going to be facing that decision, because if you’re delivering a paper for people, and costs you $3 a day and you’re charging them a dollar, you rely on advertising to make up that other $2, and that isn’t going to come back. You either have to create a new revenue stream to make up for that, or you have to cut delivery. Additionally, digital advertising has to mature, so you can transition more evenly to a combined print digital product rather than a newspaper that’s got a digital website.
Do you think issues might arise with some of these new revenue streams damaging the credibility of the paper?
Let’s take branded content. There are issues with it, but you need to sit down and say, “Let’s try and do it in a way that doesn’t diminish the news organization,” because if you diminish the credibility of the news organization, nobody’s going to believe your branded content—no one’s even going to look at it. All a news organization has got is credibility.
Last year the Chicago Tribune was caught using Journatic to produce outsourced, semi-automated news. Do you feel this was reflective of a continued Zell-type management outlook or reflective of broader problems in newspaper management elsewhere?
I think the whole idea of trying to automate content is bad, and it isn’t going to work, and people are going to see through it. I don’t think that was a Zell idea, because Journatic was devised by two Tribune executives who are now at the Sun-Times. There’s a good way to do it. For instance, when I was at the LA Times, if I had a computer program that could scrape data from communities around LA, and had trained reporters look over it, I could have expanded the area I could have covered. But if I had taken data, didn’t check it out, sent it to the Philippines, had somebody write a story about it, and then call them ‘Joe USA,’ that would have been a disaster.
How do you feel about the interest the Koch brothers have expressed in buying the Tribune papers? Do you think that the widespread concern in journalistic circles over their potential effect on news coverage is warranted?
The key question is what they’re going to do in the newsrooms: Are they going to keep them independent, and would they actually turn around and invest the money to devise some additional revenue sources to make these papers financially independent? Hopefully they would be smart enough to say, “We’re going to have a right-wing editorial page, but the news operations are going to be left alone,” because you don’t do well with this business when you turn it into something that doesn’t have credibility. Put in a strong editor, someone who’ll stand up to you, and who will run the newsroom with the utmost of integrity.
Do you feel the way Murdoch has handled the WSJ has been a good example?
I think the Journal has become more conservative in its news judgment, but I still think it’s a great newspaper. It’s the same thing: Murdoch’s a smart guy; he knows that this is the Wall Street Journal. You don’t go in and make it the New York Post, because it isn’t going to work, and you’ll lose too much readership.
Your biggest initiative post Tribune—the Chicago News Cooperative—folded just over a year ago. Meanwhile, a similar nonprofit news startup, the Texas Tribune, is in the afterglow of its coverage of the Wendy Davis filibuster. Where do you think the fates of these two organizations diverged, and what lessons should observers looking for the future of serious local coverage take from the fates of these news publications?
I think there was a couple of big differences between the Chicago News Cooperative and the Texas Tribune, and the biggest one is that [CEO] Evan [Smith] developed the Texas Tribune with its own identity. if you’re living in Texas, you know what the Texas Tribune is. Evan and John Thornton solicited strong financial support from their local community, and I didn’t have that support. The Chicago News Cooperative got started as a project in partnership with The New York Times, which was was our biggest asset and our biggest liability—because while it gave us credibility, it was very hard to say, “We are the Chicago News Cooperative,” because everybody kept saying, “You guys are The New York Times.” Donors would ask, “Why should we give you money—we’ll just be supporting The New York Times, a profit-making corporation.” The Times association wasn’t the sole reason I pulled the plug, but the complexities it created were factors. In the end, we negotiated a deal where the Sun-Times bought the intellectual property of the CNC, and I used the money I got from that to pay off all our debts, and they offered almost everybody jobs at the Sun-Times.
Is there anything else you want to say?
We will eventually work out these problems in the industry, but journalists have to be part of the conversation. We have to come together and create the kind of industry that was available to people like me when I got out of college. While it’s not new that you don’t make a lot of money when you get out of college, there was a clear path. If you did the right things, you might not get rich, but you’ll make good enough money to support a family. Journalism will be sustained when people really feel like they got a chance to achieve the things they really want to achieve.