The Deal from Hell (18 page)

Brumback had better luck when he started thinking about his successor. “He came before the board and told us that we didn't need to do a national search because we had two of the best people in the business already at the company—John Madigan and Jim Dowdle,” said Newton Minow, a company director and former chairman of the Federal Communications Commission who had achieved fame when he described television as a vast wasteland in the 1960s. “He then gave us a presentation on both. At the end, half the board thought he wanted Madigan and the other half thought he wanted Dowdle,” said Minow. After a year of due diligence in which he carefully sought out their respective visions of the company's future, Brumback decided on Madigan. “I thought Madigan was the best-equipped guy to do it because of his financial background. There were a lot of financial issues then, and broadcast was a minor part of the business. I talked to them. I asked each of them to write a report on what the newspaper would look like ten to twenty years from then. Madigan had the best vision. He's good at writing reports,” Brumback recalled.

In 1994, the board promoted Madigan to president of the company and Fuller to publisher and president of the
Chicago Tribune
. A year later, Madigan got the CEO title and in 1996 became chairman, when Brumback retired. His rival, Dowdle, got the company's number-two job. Fuller became head of the company's publishing division, which oversaw the company's four newspapers.

Madigan and Fuller inherited Brumback's legacy as a bargain hunter. Because Tribune had acquired numerous television stations, Brumback did his best to get two for the price of one—one reporter who could file reports for both the newspaper
and
broadcast outlets.
Advocates of the idea like Howard Tyner, who had succeeded Fuller as editor of the
Chicago Tribune
, called the idea “synergy.” Tyner and I never really saw the world through the same lens. I felt that asking a journalist to take still and moving pictures simultaneously would only produce bad still photos and bad video. But Tyner fiercely embraced the idea championed by his bosses. He had a television camera installed in the newsroom just outside the editor's office where
Tribune
print reporters would be interviewed for news shows on the company's much ballyhooed cable television station. CLTV stood for Chicagoland Cable Television, but the old hands at WGN, the company's more traditional station, called it Children Learning Television. The lone camera would eventually become a fully functioning television stage inside the newsroom where television anchors could interview print reporters about the stories they were covering. The studio was empty as much as it was occupied. Most television folks thought interviewing print reporters was simply bad TV.

Madigan and Fuller also sharply increased Tribune's earnings. In a shrewd move that reflected his financial market roots, Madigan had the company create a derivative, an arcane investment vehicle that allowed him to sell off Brumback's $5 million investment in America Online for $1.2 billion, a windfall that gave him so much cash that he went out shopping for something to buy.

Ambitious people always recognize the point in their careers when they need a change. I felt that way when I left a good future at the
Des Moines Register
and moved to the
Tribune
. In the mid-1990s, I got the itch to return to reporting and write a book about the consulting industry. I liked being in charge of major sections of the newspaper, but I was tired of working with far fewer resources than journalists at the
New York Times
or the
Washington Post
. Fuller had named Ann Marie Lipinski deputy managing editor for news, and we quickly became close friends and allies in a drive to make the
Tribune
a destination paper for investigative journalism. I confided in her that I had
landed a book contract and that I was going to take a buyout to focus on writing my book. After Tyner hesitated to name Lipinski full managing editor, she was frustrated and understood my desire to make a change. About a half-hour before I was to discuss my plans with Joe Leonard, who ran the newsroom budget and headed up the buyout program, Lipinski came into my office. “You haven't talked to Leonard yet, have you?” she implored. When I told her no, she grinned, relieved. “Good!” she exclaimed. Tyner had reconsidered and was naming her full managing editor. “I need your help running this place.” Lipinski declared. “You can't leave.”

I
n March 2000, Leo Wolinsky walked into the
Los Angeles Times
editorial recognition awards dinner filled with promise. Once a year, the paper's editors nominated and selected the paper's best work over the past twelve months. Over a lavish dinner, winning reporters and editors were rewarded with as much as $5,000. The
Times
paid its staff better than most American newspapers, but not many journalists ever got rich toiling in the trenches. The awards event was a good way to recognize a job well done with an offering of cash or stock to employees who weren't eligible for bonuses. (In Chicago, the
Tribune
carried out its own iteration at the Beck Awards, named after longtime managing editor Edward Scott Beck, who was managing editor from 1910 to 1937.)

Having left his Porsche with the valet at the Beverly Wilshire Hotel, Wolinsky entered the ballroom. Around nine hundred staff members and guests were expected. Well-dressed reporters, editors, and their guests mingled over cocktails, gossiping about newsroom politics and speculating on who would win the twenty-two awards that would be passed out that evening. Shortly before the program was to
start, the
Los Angeles Times'
editor, Michael Parks, tapped Wolinsky on the shoulder and suggested they go for a short walk.

The day before the awards event, Wolinsky had sniffed around the business offices at the
Times
to investigate rumors buzzing in the newsroom of the company's sale to Tribune Company. “Everybody in financial said,‘No way it could happen.'” Wolinsky later recalled. “Everyone still thought the Chandler trusts wouldn't allow a sale of the
Los Angeles Times
. There were all kinds of investment bankers upstairs, and we started thinking maybe we, Times Mirror, were going to buy something.” When Parks asked Wolinsky if he'd heard the rumors, as they strolled the grounds around the Beverly Wilshire, Wolinsky told him that he'd investigated them and they were patently untrue. Parks stopped in his tracks, looked Wolinsky in the eye, and said simply that he couldn't comment. “And that was it. The first thing I did was call David Shaw [the
Times
media writer] and told him he'd better start making some calls,” Wolinsky later recalled.

Times Mirror insiders and outsiders bought the line that Wolinsky got from his friends in financial. Even Mark Willes firmly believed that the Chandler trust would ban the sale of the paper until the last Chandler heir died. Park's “no comment” stunned Wolinsky. He'd been at the
Los Angeles Times
for nearly twenty years, edited or worked on stories that had won fourteen Pulitzers, helped staff members through the things that hit all workplaces—nasty divorces, premature deaths, unfaithful spouses, drinking bouts, too much dope. The
Los Angeles Times
was his family. And now the very real possibility that the Chandlers would sell out to a bunch of people from Chicago who reputedly ran newspapers the way a butcher ran a meat market loomed large. Wolinsky realized the very real possibility of a buyout. “All of a sudden one of the premier establishments in LA was going to be owned by someone from Chicago. . . . It certainly was the end of an era,” he said later.

Wolinsky's surprise at the news was nothing compared to Willes'. As the company's CEO, he should have known if his company were about to be sold, but he didn't have a clue. The last time Willes had
even heard about the subject was following his meeting with Madigan in San Diego. He'd reported Madigan's approach to his board and did a quick analysis that concluded a deal didn't make economic sense. “I reported that to John and I thought that was the end of it. I mean I liked John, and I thought he was being entirely up front. It never occurred to me that he would do anything behind my back. I certainly underestimated him,” Willes recalled.

Times Mirror was on a roll, with its stock price and earnings far higher than when Willes had taken over, and the Chandlers hadn't given him the slightest hint that they were unhappy. “Everything they had said to me,” Willes said, “was ‘thank God you're here. You are doing a wonderful job. We're so grateful.' I mean literally.”

Soon after Wolinksy had taken his stroll with Parks, William Stinehart, a lean no-nonsense Chandler family lawyer, paid Willes an unexpected visit. “He walked into my office,” Willes recalled, “and said that we'd reached an agreement to sell the company. I had no hint at all. I was so incredibly naïve. And I was so stunned and so angry. I think it's the first time and the only time in my life I refused to shake someone's hand when they left my office. It was just incomprehensible after all we had done that they would do this for the sake of a short-term gain. To this day, it's incomprehensible. I felt totally betrayed.”

It was also news to the non-Chandler directors on the company's board. Although the transaction was portrayed as a
merger
of Times Mirror and Tribune Company, it had all the earmarks of a hostile takeover by Tribune and the Chandlers. Skip Zimbalist, who had just become the Times Mirror CFO, said Willes came into his office looking white as a sheet: “He told me that Tribune wanted to buy it. He was visibly shaken; he looked totally shocked . . . like he'd been hit by a truck.”

Although Willes had done the Chandler family bidding, the Chandlers didn't like the way he ran around acting like he owned the
Los Angeles Times
. The family owned the
Times
. As Zimbalist saw it, Willes had numbered his days when, without consulting the family, he named himself publisher and later appointed Downing
publisher after he had been told he couldn't have both the publisher and CEO titles.

And then there was the Staples scandal. In the drive to eliminate the wall between the editorial and the business side of the paper, Downing had cut a partnership deal with the Staples Center, a $400 million sports and entertainment complex in downtown Los Angeles. To meet part of its commitment to the deal, the
Times
had agreed to publish a thick, 168-page Sunday magazine in October 1999, touting the center—an edition that lured $2 million worth of advertising. On the surface, there was nothing wrong with the Staples deal. Newspapers routinely run supplements full of puff pieces to lure ad dollars that support serious journalism elsewhere in the paper. But the Staples deal exposed Downing's inexperience as a publisher: As part of the deal, the
Times
had agreed to split $2 million of ad revenues with the Staples Center. Soon, the outraged staff at the
Los Angeles Times
denounced the deal publicly. “A fundamental premise of journalism is that a journalist should not be sharing revenue or have a business relationship with somebody he's writing a story about,” Henry Weinstein, a highly regarded
Times
reporter told PBS. “Our own code of ethics for reporters specifically forbids this. What we saw in this deal was that the people who run the newspaper had done something that just flagrantly violated our own rules.” The Staples faux pas became a huge story, one that deeply embarrassed the
Times
and, by implication, the Chandlers, to the rest of the publishing world.

Zimbalist noted:

In point of fact, the
Los Angeles Daily Business Journal
had broken the story, but in a flash,
everyone
started writing about it.

“You know I got blamed for Staples,” Willes said, “and I had nothing to do with the Staples thing, they didn't ask me, they didn't consult me. I didn't know about it till after it become a problem.” But Willes had made Downing the publisher, a move that he admits in retrospect was a mistake. She wasn't ready to become publisher, and the criticism fell upon the man who had put her in the job prematurely.