Storms Still Ahead for the Chicago Tribune

For the Chicago Tribune, Tuesday Dec. 10, 2008 was a fateful day.

On that day, the newspaper published its in-depth investigation of the Gov. Rod R. Blagojevich scandal; two days earlier, its parent company, Tribune Co., filed for Chapter 11 bankruptcy.

“That day said the business model is broken,” editor Gerould W. Kern said at a May 21 panel of industry leaders titled “Make Media Matter.”

Before and since December, the newspaper suffered numerous layoffs, lower print circulation and a $13 billion debt load which real estate mogul Sam Zell took on when he purchased the company in April 2007. Zell invested $315 million in equity in the company in an $8.2 billion dollar buyout.

“Reporters are losing their jobs and people are getting lower quality,” said Rick Edmonds, media business analyst for the Poynter Institute, a nonprofit industry education resource. “It’s a lot to do with helping Sam Zell pay the debt, which he isn’t able to do completely anyway.”

Not all newspapers are saddled with debt. But the Chicago Tribune has plenty of company in the pool of struggling papers trying to conquer the Internet and other new technologies, while seeking to overcome economic challenges and attract younger audiences. Experts fear the Tribune’s financial trouble is negatively affecting the credibility of the paper, and with advertising revenues falling, the Tribune must search for other revenue streams and ways to deliver its content. [Click for MORE] Sphere: Related Content

Tribune Considers Design, Copy Editing Functions to Be ‘Manufacturing’

From VisualEditors.com:

Yesterday’s statement by the Washington-Baltimore Newspaper Guild makes an interesting point. You’ll find it in the second sentence of this quote by Cet Parks, the guild’s executive director:

Tribune, through careless management practices, has saddled itself under $13 billion in debt and now Baltimore is paying a price. Tribune is siphoning good jobs from Baltimore and sending work that talented editors, reporters, photographers, copy editors and designers have done here to its home base in Chicago. That is not right.

Oh, it’s worse than that, Cet. A staffer at another Tribune paper — who wishes to remain anonymous, for obvious reasons — tells us copy desks all over six Tribune-company papers are being gutted:

Reporters and line editors are being told that their copy has to be clean enough to publish because it may not get another read. Word is the copy desk is only going to read copy for the section fronts, and they’ll get to the rest of the paper if time permits.

As if newspapers didn’t have enough problems retaining readers as it is. One big advantage newspapers — and newspaper web sites! — have over a common blogger is their fact-checking, proofreading and accuracy safeguards.

And now we’re cutting back on those. [Click for MORE] Sphere: Related Content

Zell Admits ‘Mistake’ in Tribune Co. Purchase

The company is looking at all its options


From Crain's ChicagoBusiness.com:

Sam Zell admits that taking over Tribune Co. hasn’t gone according to plan and was a “mistake.”

“The definition if you bought something and it’s now worth a great deal less, you made a mistake,” he told Bloomberg Television [VIDEO at 10:11 and 14:30] on Wednesday. “And I’m more than willing to say I made a mistake. I was too optimistic in terms of the newspaper’s ability to preserve its position.”

The Chicago billionaire, who made his fortune from commercial real estate, was instrumental in taking the parent of the Chicago Tribune and Los Angeles Times private through a complex deal that saddled it with $13 billion in debt. Tribune Co. filed for Chapter 11 bankruptcy protection in December, a move Mr. Zell said in Wednesday’s interview was necessary to “stop the bleeding and preserve a great company.”

The process that Mr. Zell used to take Tribune private caught the attention recently of the U.S. Department of Labor, which last month subpoenaed the company for documents related to its Employees Stock Ownership Plan, now the sole owner of Tribune Co.

Mr. Zell said he was unprepared for how quickly and steeply the newspaper industry has deteriorated.

“We underwrote the Tribune (deal) based on the fact that over the previous five years, we had seen an erosion of about 3%,” he told Bloomberg; he didn’t specify the losses to which he was referring. But in the months before filing for bankruptcy protection, the company saw a 25% decline, losses that “in a leverage business are just insurmountable.” He called the figure “significantly larger” than expected.

He said the company is looking at all its options, but he ruled out the possibility of a merger.

“That’s like asking someone in another business if they want to get vaccinated with a live virus,” he said. “I don’t think there’s a long list of people who want to buy a newspaper company today.”

• Trib to pare newsroom 20%
• Sam Zell on Tribune Co. acquisition: 'I made a mistake, I was too optimistic'
• Billionaire Zell Says ‘I Made a Mistake’ in Purchasing Tribune

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Chicago Tribune Plans Job Cuts, Salary Freeze

The publisher of the financially struggling Chicago Tribune Media Group says the company plans to cut jobs, freeze wages and increase prices for home subscribers to help offset a decline in revenue. [Click for MORE] Sphere: Related Content

Newspapers Move to Outsource Foreign Coverage

Tribune Could Close Dozens of Bureaus in Favor of Washington Post Deal; New York Daily News Signs Start-Up

From the Wall Street Journal:

Two major newspapers publishers are taking steps to outsource international coverage, as falling revenue is causing more U.S. papers to shrink their foreign and national footprint.

Tribune Co., which owns the Los Angeles Times and Chicago Tribune, is in talks with the Washington Post Co. about a deal to pay the Post for foreign and national coverage for Tribune's eight major dailies. Meantime, the New York Daily News has reached an agreement with a Boston-based start-up called GlobalPost to use the company's network of part-time foreign correspondents.

Together, the agreements could substantially overhaul the foreign news operations of three of the 10 largest U.S. newspapers. [Click for MORE]

> Tribune Co. weighing national, international news options

> News Media Run by China Look Abroad for Growth

> Russian Billionaire Held Talks to Buy U.K. Paper

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Chicago Tribune Repackaging Itself in Tabloid Size for Street Sales

The Chicago Tribune on Monday will hit the streets—and its rival, the Chicago Sun-Times—with a newly reformatted tabloid-sized version of itself for weekday sales at area commuter stations, newsstands and newspaper boxes, the Tribune announced today.

Home delivery subscribers will continue to receive the Tribune’s traditional broadsheet edition, which will have the same editorial content as the single-copy tabloid version with minor differences in headlines, photos and captions because of the new size, the paper said.

Tribune executives said they believe publishing near-identical versions of the paper simultaneously in broadsheet and compact editions is unprecedented among major U.S. dailies. [Click for MORE]

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Live from Chicago... the Tribune News Room

Hat tip to Ed Padgett

> Tribune Co. Partnering With Online Ticket Seller Sphere: Related Content

Tribune Subpoenaed in Blagojevich Shakedown

Tribune Co. was subpoenaed by federal authorities in relation to corruption charges levied on Tuesday against Gov. Rod Blagojevich, the Chicago Tribune reported.

The newspaper said that its parent company was asked to provide documents that would relate to allegations that Blagojevich and John Harris, his chief of staff, conspired to get members of the Chicago Tribune editorial board fired in exchange for help in selling the company-owned Wrigley Field. [Click for MORE]

> Tribune's Zell says FBI contacted him in government case
> Blagojevich owes Winston & Strawn $500K: WSJ
> Delaware Judge Authorizes Tribune to Pay $74 Million Owed to Employees Sphere: Related Content

How Chicago's Newspapers Covered the Bust

• What Did Zell Know, And When Did He Know It?

Both the Chicago Tribune and the Chicago Sun-Times published Extra editions on Tuesday after Illinois Gov. Rod Blagojevich was arrested in the early morning hours by FBI agents for what’s being called a “staggering” level of corruption involving pay-to-play politics.

The Tribune has been tracking the story for days, even weeks and months if you take the sum of the newspaper’s coverage into the accounting. Indeed, the newspaper played a critical role in the criminal complaint against the governor and had even withheld some stories at the behest of the government. [Click for MORE]

• Download the Tribune’s Extra front (PDF)

• Download the Sun-Times’ Extra front (JPG)

• Download the Tribune’s Wednesday front page (PDF)

• Download the Sun-Times’ Wednesday front page (PDF)

• Download Red Eye’s Wednesday front page (JPG)

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Media, Blogs Are All Atwitter About Tribune, Sam Zell and Gov. Blagojevich

From Romenesko:

Editorial writer targeted by Blagojevich wasn't pressured by Tribune bosses

Reflections of a Newsosaur
Chicago Tribune editorial writer John McCormick (left) says no one at Tribune tried to influence the tough stance taken by him and his editorial board colleagues against Gov. Rod Blagojevich. "The feds say somebody wielding power and money tried to muscle Tribune Co. at a difficult time for our industry – and didn't get away with it," McCormick e-mails Alan Mutter. "The Tribune Co. was the object of a huge extortion attempt and didn't budge." || Earlier: Blagojevich singled out editorial writer McCormick.
> Who knew editorial writers were so important?
> Blagojevich bust makes Zell look a bit better today
> Read the editorials that angered Blagojevich

Chicago Tribune says it held some stories at U.S. Attorney's request

WGNTV.com
Tribune editor Gerould Kern (left) says in a statement: "On occasion, prosecutors asked us to delay publication of stories [about allegations of misconduct involving Illinois Gov. Rod Blagojevich], asserting that disclosure would jeopardize the criminal investigation. In isolated instances, we granted the requests, but other requests were refused." || Chicago Tribune: U.S. Attorney Patrick Fitzgerald thanked the Tribune Tuesday for not reporting some aspects of his probe.
> Sun-Times' Sneed outed as Blago's favorite patsy

Blagojevich was told a Tribune exec would be "going after" the editorial section

Chicago Sun-Times | NYTimes.com
In a Nov. 11 intercepted call, Illinois Gov. Rod Blagojevich was told by his chief of staff that a "Tribune Financial Advisor" talked to Sam Zell and Zell "got the message [about the editorial board] and is very sensitive to the issue." The chief of staff told the governor that according to Tribune Financial Advisor, there would be "certain corporate reorganizations and budget cuts coming and, reading between the lines, he's going after that section." Blagojevich allegedly responded: "Oh. That's fantastic." || Floyd Norris comments on this.

Littwin: "Every self-respecting newspaper person that I know would enjoy seeing Zell fall, but..."

Rocky Mountain News
"We don't have that luxury anymore," writes Mike Littwin, whose newspaper is on the block. "The problem is, as much as I'd like to gloat [about Sam Zell's problems], I can't find it in me. Apparently it's hard to gloat and work on your resume at the same time. I hate that. But I hate even more that there is so much wrong with today's financial model for newspapers -- this was where Zell was absolutely right -- and that no one seems to have any idea what to do about it."
> Tribune's woes don't stop Abrams from cranking out another "think piece"

Analyst: Zell mortgaged the future of Tribune employees to pursue "a childhood fantasy"

NYTimes.com DealBook
"The employees were put in a very bad situation," says analyst Jack Newman. He noted long before Monday's bankruptcy filing: "If there is a problem with the company, most of the risk is on the employees, as Sam Zell will not own Tribune shares. The cash will come from the sweat equity of the employees of Tribune."
> LATer: "No love lost between employees here and Zell"
> Bankruptcy looks like just another phase in Zell's strategy
> Filing won't make things much worse -- or improve things
> Ebert: At least Lord Black was a newspaperman with taste
> Tribune's letter to advertisers | Tribune story | LAT story
> Odds stacked against Tribune from the moment Zell bought it

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Zell More Dewey Than Truman

From LAobserved.com

News item: Illinois Gov. Rod Blagojevich, arrested on suspicion of corruption, believed that Sam Zell planned to use "certain corporate reorganizations and budget cuts" to get the Chicago Tribune editorial board, as the governor asked. Sun-Times

Blog item: Lee Abrams tells Tribune papers and TV stations to own the recession: "Instead of reporting to doom and gloom, AGGRESSIVELY OWN it, via ongoing series'. New one weekly...it's probably going to be a crisis for a looooong time, so NOW is the time to establish ownership." Blogger reaction: "I find this terribly ironic. Who needs a primer on how to survive the recession more than the bankrupt Tribune?" The Daily Pulp

Satire item: "Tribune bankruptcy brings out Zell’s humanitarian side" Not the LA Times

Cartoon take off on Dewey Beats Truman by John Sherffius in the Boulder Camera, courtesy of the artist.

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Governor Held in Shakedown of Tribune, Cubs

Charged With Conspiracy to Sell
Obama's Vacant Senate Seat

Illinois Gov. Rod Blagojevich was arrested on Tuesday on charges he brazenly conspired to sell or trade the U.S. Senate seat left vacant by President-elect Barack Obama to the highest bidder in what a federal prosecutor called a "corruption crime spree."

U.S. Attorney Patrick Fitzgerald told a news conference prosecutors make "no allegations" Obama was aware of any alleged scheming.

Blagojevich, right, also was charged with illegally threatening to withhold state assistance to Tribune Co., the owner of the Chicago Tribune, in the sale of Wrigley Field, according to a federal criminal complaint. In return for state assistance, Blagojevich allegedly wanted members of the paper's editorial board who had been critical of him fired. [Click for MORE]

> Governor accused of seeking revenge against Tribune for critical editorials

> Read the complaint against Gov. Blagojevich HERE.

> Blagojevich free on $4,500 bond

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The Miami Herald Is Said to Be for Sale

The McClatchy Company, burdened by debt and a steep slide in newspaper advertising, wants to sell one of its most-prized properties, The Miami Herald, according to people briefed on the company’s plans.

McClatchy, the nation’s third-largest newspaper chain, has approached potential buyers for The Herald, said these people, who asked for anonymity because they were not authorized to discuss the issue. But they said they knew of no serious offers for the paper, reflecting the evaporation of major investors’ interest in buying newspapers. [Click for MORE]

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• FOR SALE: Newspaper. Runs good. Driven daily and Sunday for decades. Leans slightly to the left. Fully loaded: includes presses, delivery trucks, journalists, newsprint reels, many working news boxes. Has fresh coat of layoffs. Needs some work: cost-cutting, redesign, updated Web strategy. Offers buyer a unique chance to be a local big cheese. Seller is highly motivated–will take best offer. [Click for MORE]
• OVERHEARD: Preparing for the worst? There is talk that Tribune Co.'s lending syndicate has hired FTI Consulting as financial pressures build at the owner of the Los Angeles Times and Chicago Tribune. [Click for MORE]
  

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> Internal Post memo suggests Rocky to close
> Singleton: Rocky sale not going to happen
> Rocky Mountain News 'sale' shows peril of crossing profit line
> Newsday cutting 100 jobs -- 5% of staff -- and raising price
> 25 more jobs cut at Star Tribune
> Honolulu Advertiser sheds more than 50 staffers
> Three Baltimore Sun staffers laid off; another 12 leave voluntarily
> Elsewhere: AT&T to cut 12,000 jobs as landline losses grow Sphere: Related Content

Rejected Obama Front Pages

Click image for large version.

Hat tip to HeadCandy Sphere: Related Content

Incredibly, Deep New Cutbacks at L.A. Times

2:53 PM Monday

From LA Observed:

This is a breaking situation this afternoon. Editors met over the weekend to get the word and to refine their lists. Newsroom staffers are being told today individually and in department meetings that as many as 75 editorial positions are being cut through voluntary departures and layoffs. Some staffers were approached last week about volunteering, "enticed" with the threat that this will be the absolute final time that editorial employees will receive two weeks severance pay for each year of service when they leave. When new publisher Eddy Hartenstein took over in August, right after the last round of deep cuts, he was asked repeatedly about the prospect of new layoffs, and according to a first-hand report I passed along then:

The question of more layoffs was posed in half a dozen different ways and he said he hadn't been given a target number for the staff, that Sam Zell told him to run the place, etc., etc. He did say (as did Mark Willes and Sam Zell) that we can't cut our way to prosperity.

I've emailed Hartenstein and Times spokeswoman Nancy Sullivan some questions about what has changed since August and the extent of this round of cutbacks. My sources say the newsroom staffing level is headed to about 650, but I don't know if that includes the decimation of the Washington bureau expected by many there after the November election. Associate Editor for features Leo Wolinsky [photo, right] is holding a meeting with his staff shortly amid strong rumors that he is leaving. Stay tuned.

* Update: Wolinsky confirmed to his people that he's out, citing staff reorganization. Editor Russ Stanton has announced a 5 pm staff meeting. Wolinsky, you'll remember, moved over into the features job during the March buyout wave after years as the page one editor under a few different titles.

LA Observed

> Lest we forget, Saturday was the anniversary of the launch of the free-standing Valley section in 1984. The Valley printing facility shut down Jan. 8, 2006. See http://chatsworth91311.tripod.com/.
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Financial Downturn Further Weakens Newspapers

From the Wall Street Journal:

The financial turmoil is adding headaches for troubled newspaper publishers.

The Star Tribune said Wednesday it skipped a debt payment as the Minneapolis newspaper tries to restructure $430 million in borrowings. Publisher Chris Harte indicated the company is testing all options with its lenders.

Gannett Co., the country's largest newspaper publisher, meanwhile said Wednesday it had tapped its credit line as short-term financing markets stall. And alternative weekly publisher Creative Loafing Inc. filed for Chapter 11 this week. [Click for MORE]

> FORBES: For Newspapers, The Storm Gets More Perfect

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Redesigned Newspapers Launch in Three Cities

It was a busy weekend for redesigns among U.S. newspapers. The Hartford Courant's new look debuted Sunday, with a dramatically different nameplate and a lead story on the death of one of Connecticut's most well-known residents, Paul Newman.

The Chicago Tribune and The Oklahoman both launched this morning. [Click for MORE] Sphere: Related Content

Chicago Tribune: Lipstick on a Pig?

Next week the Chicago Tribune will debut a redesigned three-section newspaper. It is the latest Tribune Co. newspaper to get a makeover ordered by Sam Zell. The objective is to attract more readers with flashy graphics, big photos and maps and charts, while saving newsprint and operating with fewer reporters and editors.

For Tribune video, click HERE.

For WTTW interview video, click HERE. Sphere: Related Content