The Hatchet’s Tale

James O'Shea, Tribune's one-time man in Los Angeles, tells all in his new book

The Deal From Hell: How Moguls and Wall Street Plundered Great American Newspapers by James O’Shea | Public Affairs | 395 pages, $28.99

Many in the journalism craft have watched the decade-long struggles of Chicago’s Tribune Company with bewilderment, incredulity, and occasional gasps of horror. The story begins with Tribune, solidly profitable and staidly Midwestern in its values, swooping west to buy the parent company of the Los Angeles Times before the CEO realizes it’s for sale—stabbed in the back by his largest stockholders, the coupon-clipping cousins of Otis Chandler, great-grandson of Times Mirror’s original president. On creativity alone, it qualified as a brilliant coup. Not even Otis knew the Chandlers could sell their Times Mirror stock. The deal created the nation’s third-biggest newspaper and television powerhouse.

Closing the deal proved to be the last happy moment Tribune would savor. The suits in Tribune Tower dreamed of merging rival journalism cultures, heartland and left coast, into one contented, synergistic family. That never happened. The Chandlers’ addiction to fat dividends burned Tribune, as it had Times Mirror, and led to the emergence of CEO Sam Zell as, arguably, America’s most ill-suited media mogul. He openly loathed the journalists he employed, replaced Tribune’s old-line Republican executives with uncouth ex-radio hacks, and burdened the company with huge debt. For three years now, Zell’s Tribune has lingered in bankruptcy.

In The Deal From Hell, James O’Shea gives many of the gory details. The title comes from Zell’s reflective quip about his media ownership dalliance. O’Shea puts the label on the whole mess, which he saw up close as a Chicago Tribune senior editor, as newspaper tutor to Tribune CEOs, and as Chicago’s temporary ambassador to the rebellious Los Angeles newsroom. He was a Chicago partisan who initially celebrated his employer’s ambitions—and who relished the chance to humble swelled heads in La-La-Land—until he came to believe that journalism itself was in peril from the likes of Zell and excessive corporate focus on the bottom line.

The book’s subtitle, How Moguls and Wall Street Plundered Great American Newspapers, suggests ransacking outside invaders. But the tale in it is more about self-inflicted damage from executives, like ex-Tribune CEO Dennis FitzSimons, who fancied themselves as visionaries, but who were more consumed with personal crusades and petty jealousies than with addressing the challenges and opportunities of the digital age. While they tinkered, Tribune’s managers let themselves be blindsided by larger forces that changed the rules of the media game.

Like many Tribune watchers, I had hoped someone would write a behind-the-scenes book about the company’s troubles. I began at the Times as a college intern and stayed for twenty-five years, as a Metro reporter, roving correspondent, state desk editor, and senior projects editor. I left for The Industry Standard a few months into Tribune’s ownership; when the tech bubble burst, taking my new employer with it, I started LA Observed, a blog monitoring the local news scene. The tensions between Tribune and my friends and former colleagues at the Times quickly became the biggest media story in town. O’Shea reveals enough juicy details that his Chicago perspective keeps even a biased Angeleno engaged.

The deal from hell, as O’Shea tells it, begins to come together in April, 1999. Tribune held a nice package of papers and TV stations, but CEO John Madigan craved more. He requested a meeting with Mark Willes, CEO of Times Mirror, parent of the Times, Newsday, The Baltimore Sun, and a few smaller newspapers. As the CEOs sat down, Craig Newmark was filing the papers to create Craigslist. Stanford grad students Sergey Brin and Larry Page were preparing to announce Google’s initial public funding. And a gift shop clerk in Hollywood was gaining traction for a conservative-leaning news aggregator. His name: Matt Drudge.

None of those external forces were on the meeting agenda. Willes didn’t even know there was an agenda. Madigan surprised him by laying out a detailed proposal of marriage. In the niceties it was a merger, but Chicago planned to run the household. Willes listened politely and put the matter out of his head. The deal didn’t make sense for Times Mirror, and even if it had, provisions of the Chandler family trust forbade a sale, he thought.

Willes had come to Times Mirror in 1995 from General Mills to be a fiscal disciplinarian, charged with upping profits and satisfying the Chandlers’ dividend income needs. Many at the Times dismissed Willes as the “cereal killer,” especially after he closed Newsday’s money-losing New York edition, but he was bullish on the future of newspapers, vowing to add a million paying customers. Profits rose on his watch, which made it even more stunning when, months after that April meeting, the Chandler family lawyer informed him that the cousins were selling their family birthright, under a complex stock swap. The paper that built Los Angeles would answer to Chicago. “One of the things I have never been is politically astute,” Willes later recalled. “I had no hint at all. I was incredibly na├»ve.”

Willes had provoked the Chandlers by naming himself publisher and acting like more than their hired hand, O’Shea writes. Then there was a humiliating scandal: Willes’s successor as publisher, Kathryn Downing, had approved a plan to share profits from a special issue of the Sunday magazine with the subject of the issue, the new Staples Center arena in downtown Los Angeles. The scheme was so embarrassing that Otis Chandler phoned in a statement from his retirement retreat. The Staples deal was “unbelievably stupid and unprofessional,” Chandler said, and the Willes era “the single most devastating period in the history of this great newspaper.”

In comparison, the post-merger era began smoothly. Chicago sent a fresh team to reassure Los Angeles, led by publisher John Puerner and the respected editor John Carroll. He stressed investigations, won Pulitzers, and shrunk the layers of editing that reporters dislike. The honeymoon was nice, but quarreling soon began. Tribune had overpaid for Times Mirror. Profits were sagging, and there was scant financial benefit to Tribune’s idea of leveraging its TV stations and papers in a fantasy of city-by-city synergy. Chicago pressured its properties to slash costs. Among the easiest reductions were the now-redundant executives in Los Angeles. Puerner cut staff from 5,300 to 3,400.

The Times newsroom was largely spared, but not for long. In Chicago, everyone felt the Times was fat—its bureaus overstaffed, its reporters coddled and overcompensated. But mostly, Chicago felt Times people looked down on them. “We all resented the insolence toward our paper,” O’Shea writes. The cost-cutting directives from Chicago grew more personal and painful. In one incredible frenzy in 2005-06, Carroll resigned as editor and Puerner as publisher, saying the cuts Chicago wanted were devastating and unnecessary. A new publisher groomed in Tribune culture, Jeff Johnson, also refused to cut. “Newspapers can’t cut their way to the future,” he said, infuriating his bosses. Dean Baquet, Carroll’s successor, was next to go for pushing back at Chicago.

O’Shea was dispatched to LA in November 2006 to be the third editor in two years. Friends advised him not to go. “No matter what you do, you will always be viewed as a hatchet man from Chicago,” Times managing editor Doug Frantz warned. He took the job, and an apartment on the beach—too good an opportunity to pass up, O’Shea writes. He supervised deep cuts, but writes that he successfully resisted worse demands from Chicago. In the sixteen months before his time came too—over yet more staff cuts, of course—O’Shea takes credit for streamlining the Times’s structure, adding a profitable new fashion section, and steering the paper toward smarter use of the Internet. (Times journalists, who remember O’Shea more as an aloof editor, might dispute some of that.)

Before he left, the Tribune story took a twist that has yet to be resolved. The Chandlers, worried about their declining dividend checks, forced the company to consider takeover offers. The winner was Sam Zell, a Chicago investor known for buying depressed assets and riding them to huge profits. At first, his new staff was optimistic that Zell would stop the bleeding. But he proved to be even less of a friend than his predecessors. In one notorious incident, he barked “fuck you” at a female photographer who dared to ask about news values. He mocked his editors, and in a visit to the Times shocked staffers when he announced that the paper would start taking ads from strip clubs because, as he said, “it’s un-American not to like pussy.”

With Zell came executives of dubious value, like CEO Randy Michaels, who resigned after The New York Times exposed his boorish treatment of women, and chief innovation officer Lee Abrams, roundly mocked for his rambling, poorly punctuated all-staff e-mails. But the bigger issue is that the Zell deal burdened Tribune with huge debt, adding pressure for even more cuts. O’Shea’s reporting on this point makes for instructive reading on the perils facing today’s media business. His book joins that conversation, while avoiding the neatly wrapped solutions that some might want.

He writes in summation that “the real question we face is not whether we still have newspapers; the real question is, will we still have journalism—not aggregated content gathered to foster ad sales—but hard-hitting, time consuming investigative and analytical reporting.” Of course, hard-hitting analysis is alive and well online and more easily accessible now to a reader in, say, Fresno than in the days when a wire editor at The Fresno Bee chose a few stories for inside pages. Investigative reporting is still as difficult and expensive as ever, but innovators like ProPublica and California Watch are trying to fill in the gaps left by the weakening of newspapers.

Some are weaker than others. His old paper, the Chicago Tribune, has become “sophomoric, parochial, and superficial,” O’Shea writes. He cancelled his subscription. The Times, meanwhile, is far smaller in size and paid circulation than it once was. Still, this year the paper won a pair of Pulitzer prizes.

O’Shea has proven himself adaptable. He now runs the Chicago News Cooperative, a website that also produces local news stories for the Chicago edition of The New York Times. One of his fundraising stops was the McCormick Foundation, where he had to pitch David Hiller, the publisher who fired him in Los Angeles. O’Shea didn’t get the money.

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Kevin Roderick is a Los Angeles author, radio commentator, and the editor-publisher of