Sep 16, 2008

Current and former Times employees sue Sam Zell

Dan Neil, auto critic for the Los Angeles Times, and former Times writers Corie Brown, Henry Weinstein, Walter Roche, Myron Levin and Jack Nelson, have filed a federal class-action lawsuit against Sam Zell.

The group alleges Zell and his cohorts acquired the Tribune Company as part of a "scam" that saddled employees - who own the company through an Employee Stock Option Plan - with all of the risk while Zell shouldered none of it. From the press release:
It's a classic grift, played out under the cover of legal technicalities.


When Zell hung “You own this place now” banners at the
Los Angeles Times, employees could not know the high price they would pay for this “privilege.” According to the complaint, Zell has de-funded employees retirement packages, raided the employee pension fund for more than $400 million, and eliminated more than a thousand Tribune Co. jobs. Meanwhile, Zell and his band of publishing rookies are wrecking the company’s marquee properties – including the Los Angeles Times, the Baltimore Sun, and the Chicago Tribune – alienating readers by launching aimless redesigns while dramatically cutting coverage. Seemingly ignorant of journalistic ethics, they have, for instance, turned control of the Los Angeles Times Magazine over to the advertising staff, with no indication to the reader that this product is now a “pay-to-play” advertorial. All the while, revenues have continued to decline.
Further, the plaintiffs allege the Los Angeles Times and other publications could have weathered the tough economic times had Zell not so completely damaged their reputations through massive layoffs, unwise cuts and a general contempt for the product:
The media landscape is changing and, yes, newspapers are just learning how to navigate this new world. Unfortunately, current management is making things worse, led by Zell and his Chicago gang who can't shoot straight. Zell does not consider himself a publisher and has shown nothing but contempt for journalism. He notoriously said “F… you” to an employee-photographer who dared question his leadership. Speaking to the Washington bureau of the Los Angeles Times, Zell referred to the staff as “overhead, not producing any revenue.” Zell’s history is specializing in profiting from the purchase and sale of distressed properties. He has said he expects to make a fortune for himself during his tenure at the Tribune Company. And, as it stands, he can do that while leaving the coffers of the Tribune ESOP empty and the readers of the Los Angeles Times, the Chicago Tribune and Tribune Company’s other news outlets without an authoritative local source for news and information.

Should these institutions, vitally important to the life of the nation – indeed, never more so – be allowed to fall victim to ruthless corporate raiding and the pump-and-dump machinations of predatory “investors”? News organizations are both businesses and public trusts. A free press is the only business stipulated by the Constitution. No other entity – no website, no blogger – is on the horizon to replace the boots on the ground around the world providing Americans with the information we need to function in a global economy. The
Los Angeles Times, alone, spends $2 million a month to support its Baghdad bureau, making its war coverage among the finest in the world. If Zell and his cronies continue to cut the staffs of these news organizations, it means inevitably that they will give their readers less content that is valuable to them. As these newspapers become less valuable to readers, they become less valuable to advertisers as well.

To that point, Zell and his cronies say they plan to close the Los Angeles TimesBaghdad bureau.
Read the full press release here.

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