LA Times cutbacks, papers for sale, and other speculation

I'm told a memo was circulated this weekend among Los Angeles Times staffers asking for volunteers to take buyouts as a way to lessen or avoid layoffs at the paper.

The Chicago Tribune, the Times's sister paper, laid off 20 people on Friday, "many of them" from the newsroom, WBEZ reported.

Times employees are in a state of anxiety, as LA Observed pointed out last week, as rumors of layoffs swirl amid continued efforts by owner Tribune Co. to crawl out of bankruptcy. Investors are impatient and layoffs are a quick way to improve the financial picture in the short term.

So, is this about boosting profits and satisfying debt holders? Or should we believe the Wall Street Journal's speculation that the Times could be being readied for sale - with a smaller payroll making for a more attractive sales price?

And since we're speculating... Could the Tribune be raising cash as a way to up its bid for the Orange County Register? The Register's publisher announced Friday that he'll at the end of September, which would indicate a deal is in the works. MediaNews Group had emerged as the top bidder for the paper, but negotiations broke down last month. This was followed by a flurry of layoffs in MediaNews's Southern California newspapers - a sign the chain is looking to up its ante.

From hell

James O'Shea, who was fired in January 2008 as editor of the Los Angeles Times, has a new book out later this month called "The Deal From Hell: How Moguls and Wall Street Plundered Great American Newspapers." A companion website is coming soon.

The book is a retelling of the history that led to a disastrous merger between the Chicago Tribune and the Los Angeles Times and the layoffs and bankruptcy that followed. I have a copy on my desk - it was delivered late Friday - but I haven't read it yet. The chapter titles give one a good sense of what's inside, as "Otis Chandler's Legacy" gets tarnished by "Market-Driven Journalism" and the inevitable march to "Zell Hell" begins.

"It would be easy to condemn the people who caused this modern tragedy as venal and evil," O'Shea writes in the preface. "Thousands of friends and colleagues the world over have lost jobs because of the way the industry has been managed. Some were venal, all right. But most of the people who led newspapers to this point in history were smart and thoughtful. They thought they were doing the right thing, and that's what makes the story of what happened so terrifying. It shows disaster could happen to anyone in any industry."

The book will be out June 28.

Feds probe Tribune Co. deal

The Labor Department has opened an investigation into Sam Zell's leveraged buyout of the Tribune Co., the Chicago Tribune reports.

From the story:

The U.S. Labor Department is investigating Tribune Co.'s employee stock ownership plan, as well as Lisle-based GreatBanc Trust Co., hired by Tribune Co. to serve as plan trustee and represent employee interests in the $8 billion deal, according to Tribune Co. bankruptcy filings.

Court filings show that the Internal Revenue Service also has audited the ESOP, which Zell employed in the novel transaction to shield Tribune Co. from sizeable tax obligations once it went private.

Randy Michaels watch, day three

Tribune Co. CEO Randy Michaels has "decided to resign," according to the Chicago Tribune, and company executives have a succession plan in the works that includes Los Angeles Times publisher Eddy Hartenstein.

From the story:

Randy Michaels, Tribune Co.'s embattled chief executive, has decided to resign his post at the Chicago-based media company and intends to leave the company before the end of the week, sources close to the situation said.

He will be replaced by a four-member office of the president that the sources said would comprise Eddy Hartenstein, chief executive and publisher of the Los Angeles Times Media Group; Tony Hunter, president and publisher of the Chicago Tribune Media Group; Nils Larsen, Tribune's chief investment officer; and Don Liebentritt, chief restructuring officer.

The development comes after weeks of turmoil at the bankrupt company, brought on by assertions that Michaels and his management team displayed boorish behavior and fostered a sexist, hostile work environment. The Tribune board met Tuesday, but no announcement on Michaels' fate followed.

-snip-

The sources said Michaels had willingly decided to make his exit, having concluded that it was best for the company under the circumstances. He and the board had determined that the turmoil was distracting employees, threatening to hurt business and complicating the company's efforts to emerge from a contentious bankruptcy process.

Does anyone else think the unnamed sources sound a lot like the company executives who forced Michaels to willingly resign his job?

Tribune has done a good job of turning what should have been a single "CEO fired" story into multiple days of incremental updates and anonymous leaks that have probably bored most readers and will end with Michaels announcing he's going to step aside for the good of all involved.

Tribune CEO Randy Michaels could be out of a job tomorrow

The firestorm surrounding Tribune Co. CEO Randy Michaels in recent days is what happens when your days are numbered and your supposed friends and colleagues become sources for a piece like this.

Whatever one thinks of the New York Times story that portrayed the Tribune executive suite as a low-rent frat house full of aging radio execs who think locker room chat is a form of creative enterprise, it should come as no surprise that Michaels would soon be shown the door. After all, little of the information in the story was new - its just that no insiders had felt the need to help the Times connect the dots. Until now.

And so the other shoe drops:

The board of directors of the Tribune Company is expected to ask Tuesday for the resignation of Randy Michaels, the controversial chief executive of the company, according to a person directly involved in the matter.

The individual, who spoke on the condition of not being identified, said the board had lost confidence in the ability of Mr. Michaels to lead the troubled company. 

Mr. Michael’s resignation would follow by days the exit of another top executive at the media company, Lee Abrams, Tribune’s chief innovation officer, who resigned on Friday after sending a sexually explicit memo to the entire company. 

All of this comes ahead of Tribune's expected emergence from nearly two years of often contentious bankruptcy proceedings. Michaels, who was brought in by company owner Sam Zell, would likely be out of a job even if it weren't for the bad press; especially since Zell himself will probably lose his stake in the company as part of the bankruptcy deal. The bad press about Michaels just adds momentum.

Tribune innovation guru Lee Abrams quits

Lee Abrams, chief innovation officer for the Tribune Co., quit today, two days after being suspended for sending out a companywide memo with a racy video parody attached.

The Chicago Tribune summarized his tenure at parent Tribune Co thusly:

Championing change at Tribune newspapers and broadcast outlets, Abrams repeatedly accused TV news of clinging to a late-20th century look, sound and feel. He wondered aloud whether readers knew that a newspaper dateline meant the reporter was actually writing from the location where the story occurred.

Abrams also advocated new and different styles of storytelling and conveying information. In Houston, where the Tribune TV station has virtually no viewers to lose, he was developing an anchorless newscast.

It's not known what will happen to Abrams' Tribune projects and initiatives with his departure.

 That's about as impartial as it gets.

Randy Michaels denies Tribune-turned-frat house story

David Carr at the New York Times writes about a "rugged ride" at the bankrupted Tribune Co. under the management of owner Sam Zell and chief executive Randy Michaels. The story describes a frat-house executive suite that reined over a crumbling empire.

From the NYT story:

Mr. Zell and Mr. Michaels, who was promoted to chief executive of the Tribune Company in December 2009, arrived with much fanfare, suggesting they were going to breathe innovation and reinvention into the conservative company. 

By all accounts, the reinvention did not go well. At a time when the media industry has struggled, the debt-ridden Tribune Company has done even worse. Less than a year after Mr. Zell bought the company, it tipped into bankruptcy, listing $7.6 billion in assets against a debt of $13 billion, making it the largest bankruptcy in the history of the American media industry. More than 4,200 people have lost jobs since the purchase, while resources for the Tribune newspapers and television stations have been slashed. 

The new management did transform the work culture, however. Based on interviews with more than 20 employees and former employees of Tribune, Mr. Michaels’s and his executives’ use of sexual innuendo, poisonous workplace banter and profane invective shocked and offended people throughout the company. Tribune Tower, the architectural symbol of the staid company, came to resemble a frat house, complete with poker parties, juke boxes and pervasive sex talk.

Michaels has pushed back against the story. In a memo posted by LA Observe, he says Carr dug up old, discredited allegations and describes the company culture as "creative" and "fun." From the Michaels memo:

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.

(Found via LA Observed)

Clock ticking for Tribune Co. execs

As bankruptcy proceedings drag, time is running out for Tribune Co. bosses to maintain control of their destiny, the Chicago Tribune reports.

Four in the morning

1. Sidney Harman is full of ideas for making Newsweek a more successful magazine, including discounts on books written by Newsweek writers, connecting dots, and, "has a fundamental respect for the business aspects of the operation, who doesn't think this is somehow an artistic undertaking totally separate from the real world." WSJ

2. The Tribune Co. bankruptcy negotiations have broken down. Does this mean debtors want to see the contract even more before they're willing to make a deal? ChiTrib

3. Star Trek nerds bypass Riverside exhibit, for now. Press-Enterprise

4. Amid the travails of bankruptcy, the Los Angeles Times has a scrappier feel these days, with what feels to be a more robust watchdog-approach to local reporting than in recent years. For all the good work, Tribune has decided to get the newsroom new time clocks. Ed Padgett

Trib execs accused of pushing bad deal

The court examiner appointed to analyze Sam Zell's leveraged takeover of Tribune Co. has pieced together through "a tangle of e-mails, documents and recollections" a report that purports to show former and current Tribune executives used flawed revenue projections to push a through deal that was doomed to failure.

From the Trib-owned Chicago Tribune:

The densely-packed pages show participants on all sides of the deal trying to explain how a transaction weighed down by almost $13 billion in debt could unfold amid ample evidence of a collapsing economy and the steady erosion of the advertising dollars Tribune Co. thrived on.

Although only confidence flowed from deal participants in 2007, the report shows that what held the complex, two-stage transaction together was mostly fear of getting sued if it fell apart. The banks that had agreed to finance the deal wanted out, the documents show, and in the offices of Sam Zell, the Chicago real estate magnate who orchestrated the LBO, debate ensued over whether to bail.

Desperate to unload nearly $13 billion of debt, Trib execs, with the assistance of a small valuation firm, relied on anomalous revenue projections to prove the deal would survive under its own weight. The examiner takes particular umbrage at the decision to toss a final $3.6 billion of debt on top of the load even as the economy headed toward recession and newspaper advertising dollars disappeared. The deal went through, the Tribune Co. spiraled into bankruptcy, and the deal-makers shrugged.

Possible fraud in Tribune takeover, court examiner says

A court-appointed examiner in the Tribune Co. bankruptcy case has concluded that "the company's 2007 leveraged buyout was 'marred' by the 'dishonesty and lack of candor' of its then-senior management and that the deal rendered the media conglomerate insolvent from the moment the two-step transaction closed," the Chicago Tribune reports.

In response, Tribune Co. CEO Randy Michaels issued a memo that asks all company employees to "stay focused" and to "try not to be distracted by the media attention it may receive."

Can he say "f*&k you" in a deposition?

Sam Zell is scheduled to be deposed on June 28 in the Tribune Co.'s never-ending bankruptcy case, the blog ProtectConsumerJustice.org reports.

Noted: Eric Bailey Scott Martelle, who was cut from the Los Angeles Times just months before Tribune filed for bankruptcy, authored the post.

The "them" generation

We are all marketers now. To succeed in today's media, one must successfully engage The Audience - which often means repeated and desperate attempts to meet the mysterious and mercurial expectations of a largely unknown "them."

In this cause, former Chicago Tribune editor Jack Fuller argues that journalists need to better understand the human psychology to devise ways to carry forth good journalism in an age when the Audience makes all the decisions.

From his post at Nieman Journalism Lab:

The sciences of the mind offer a lot of help if we are willing to learn from them. They explain, for example, why the immediate crowds out the important. Why bad news attracts attention more than good news does. They can show us how emotion interacts with the human brain’s inherent mental shortcuts to lead us systematically to erroneous conclusions. They can point us to the ways in which search algorithms interact with emotions and these mental shortcuts to mislead people about the relative importance of various pieces of information. They can even help us understand the way our ability and impulse to read other people’s minds draws us to a story and light up other secrets of how and why narrative works.

It should be clear by now that the challenge for journalists from here forward is not only the steadfast adherence to the values of accuracy and independence and the social responsibility to provide a civic education but also the development of new ways of thinking and talking about how to advance the social mission of journalism in a radically and rapidly evolving environment. The answer is not to figure out how to transport 20th century news presentation into 21st century delivery mechanisms but rather to create a new rhetoric of news that can get through to the changed and changing news audience

Phrases like the "sciences of the mind" sound anachronistic to me, but let's set that aside. Frankly, I'm not sure how practical any of this is, even though I sympathize with the goal. Grasping the basic tenets of human behavior is hard enough; do we really believe we have the ability to use that limited knowledge to create a "new rhetoric of news"?

It's not that change is bad - or that new ways of communicating the news impossible to construct. What I'm critical of is this bizarre faith that measurements and data are the keys to better communication. We should embrace the author/ego vs. crowd/id dynamic and let new forms of news develop organically - indeed, that's going to happen whether we plan for it or not. We should stop being slaves to the metric and stop condescending to the "them."

Four in the morning

1. Republicans Meg Whitman and Steve Poizner have spent nearly $100 million between them in an increasingly bizarre primary contest. The headline for Dan Morain's latest column in the Sacramento Bee says it all: "Never before has so much been spent for so little" SacBee

2. Alan Mutter says local television stations could go the way of the newspaper (would that really be so bad?) Mutter

3. Reporters at Tribune Co.'s WGN Channel 9 are asked to shill for L.L. Bean. ChiTrib (found via Romenesko)

4. The Los Angeles Times has yet to close its printing press in Orange County. The new deadline is June 15, but the change in ownership at the Orange County Register could win the plant a reprieve. LA Pressmens' blog

Four in the morning

1. The Tribune Co. bankruptcy saw another complication as senior creditors filed an objection to the latest plan. The company, which owns the Los Angeles Times, filed for Chapter 11 bankruptcy in December, 2008 and was hoping to get by mid-August. Chicago Tribune

2. The Tennessee House speaker collapsed during a public session in the Capitol building and an Associated Press photographer had the temerity to think the public might care about that. Lawmakers, however, knew better and had security escort the photographer out. Knoxnews.com

3. Personal advertorial: The five things one male journalist thinks every woman should know about dating a male journalist - "And yes, ladies, I’m single." rockmycar.net (found via LA Observed)

4. New York Times Editor Bill Keller said the paper will begin charging for access to stories on its website in January. WSJ

Four in the morning

1. Ezra Klein consider the success of NPR and the Economist. WaPo

2. Tribune Co. takes a step closer to finishing bankruptcy proceedings. Chi Trib

3. Will the iPad deliver another blow to journalistic standards? Newspaper Death Watch

4. Over at Bitter Lemons, there's a lot of chattering/rationalizing/explaining/parsing going on about getting a story completely wrong. fishbowlLA and Bitter Lemons

Bankruptcy costs

From the Chicago Tribune:

In the 15 months since Chicago-based Tribune Co. filed for bankruptcy, law firms and other professionals have billed the media conglomerate $138 million, or about one-quarter of the company's cash flow last year, an analysis of court documents shows.

(via Romenesko)

Tribune Co. bankruptcy update

The U.S. trustee's office has ordered an investigation into claims that the deal Sam Zell crafted to purchase Tribune Co. amounts to a "fraudulent conveyance" because it put the company on an inevitable path to Chapter 11 bankruptcy.

Tribune owns the Los Angeles Times and Chicago Tribune, among other papers.

Zell sees his shadow

The Tribune Co. filed a motion on Friday asking for an extension of the time it has the exclusive right to negotiate its Chapter 11 bankruptcy. According to the motion, the company expects to remain bankrupt for another six months, until end of May 2010.

Here's a portion of the memo Tribune executive Randy Michaels and Gerry Spector sent to employees:

The exclusivity motion makes it clear that we’ve accomplished a lot as a company. With your help, we have stabilized and repositioned our businesses, exceeding the financial results of most of our newspaper and broadcasting peers. This year we project operating cash flow of approximately $400 million—nearly double our original operating plan. ...

Today’s motions will generate some media attention. Try to tune out the noise and focus on your job. The fourth quarter is traditionally the strongest one of the year and, with your continued hard work, we're sure this year will be no different.

The filing did in fact attract some media attention. Here's how the Tribune-owned Chicago Tribune led its story:

Signaling that infighting among creditors is bogging down reorganization efforts, Tribune Co. has asked a U.S. Bankruptcy Court in Delaware to give its management team until March 31 to craft a plan to exit Chapter 11 without interference from other parties.

Prosecutors claim j-school students bought favorable interviews

Faced with a new report that casts doubt on the 1978 murder conviction of Anthony McKinney, Cook County prosecutors have launched a campaign to discredit the work of the current and former students at the Medill School of Journalism who prepared the report.

In a Tuesday court hearing, prosecutors alleged that students paid witnesses for favorable interviews - $50-$100 in one case, $40 in another. The hearing is part of an effort by prosecutors to force the students to turn over off-the-record interviews, notes and even grade information about their investigation.

From the New York Times:

After the hearing, a former student, Evan Benn, who works for The St. Louis Post-Dispatch, said he had given the cab driver $60 because the driver had estimated it would cost at least $50 to take Mr. Drakes where he wanted to go. It was not supposed to be a payment for Mr. Drakes, Mr. Benn said.

So prosecutors think the students coerced a witness into placing himself at the scene of a murder with an implicit promise to give him the change from a cab ride? The man who headed the student project defended their work, and dismissed the prosecutors' allegations. From the Chicago Tribune:

Professor David Protess, of the university's Medill School of Journalism, called the filing "so filled with factual errors that if my students had done this kind of reporting or investigating, I would have given them an F."