The Deal from Hell (50 page)

My career hadn't ended on the best note. Overall, though, I had had a great ride. The Tribune Company and the newspaper industry had been good to me. A scruffy kid from north St. Louis, I got the opportunity to see the world, tell stories, and run the newsrooms of two great newspapers. Perhaps it was time for some payback. I called
Osnos back and said I would be a catalyst by helping his group get something started. I told him I would work up to a year for no pay and that I would get him someone to run the effort long term, but that I didn't want to run another news organization.

Back at Harvard, I racked my brain about what to do. By now it was clear that the newspaper industry's problems were not about to go away. No matter what, the infrastructure of the newspaper couldn't ditch the significant expense of delivering its product to the doors of customers for far less than it cost. Many younger readers got their news on the Internet, where newspapers and a new breed of news aggregators offered it up for free in a desperate bid to win advertising dollars. Why would any rational person pay for a newspaper subscription when they could get the same thing online for free?

It doesn't take a genius to figure out the situation might not end well. Newspapers remain the backbone of the news. Although many newspaper staffs have been thinned, a dwindling core of journalists still file into courthouses, police stations, legislatures, and government agencies to report on the people's business. While news aggregators on the Internet boast snazzy websites and fresh content, if you peel back the surface, you'll find that most—if not all—of their content is based on a newspaper report. The Pew Research Center's Project for Excellence in Journalism did just that in a weeklong 2009 study on news in Baltimore, Maryland, generated by fifty-three news outlets that ranged from newspapers to bloggers and talk radio. The investigation winnowed the reports studied down to six major narrative threads that dominated the news, and tracked down the actual source for the six narratives. Even though the city had more news outlets than in previous years, eight of ten stories produced relied on information picked up from other sources. Indeed, 95 percent of the stories came from traditional media, mainly newspapers. The
Baltimore Sun
, a Tribune Company newspaper, accounted for nearly half of the stories. But over the last six years, the
Sun
has cut its newsroom by about 60 percent, a staggering reduction. And, the project discovered, the
Sun
produced 32 percent fewer stories on any subject than it had ten years earlier, in 1999. Few have grappled with the consequences of what
will happen if this trend continues, or if the
Sun
and other newspapers like it can no longer afford to be the backbone of the news, which is not as far-fetched as some would like to believe.

I struggled to come up with an idea of what we should do with our proposed venture in Chicago. One night I went to bed thinking about the problem and woke up around 3 a.m. with a brainstorm: We should start a news cooperative dedicated to public service journalism that could be financed by contributions from readers. I had covered agricultural cooperatives early in my career at the
Des Moines Register
, and I suppose I summoned the idea from my journalistic subconscious. I got up, headed to the Internet, and began researching cooperatives. By the next morning, I had produced a memo for Osnos that became the foundation for the Chicago News Cooperative (CNC), where I am now editor.

As a journalist and someone who cares deeply about the future of my craft, I wish I could say I've figured out just where the news is headed. But I haven't, and neither has anyone else. We organized the CNC as a nonprofit that relies on tax-deductible donations. The idea was to raise enough money from foundations and individuals to start a website that would provide in-depth local coverage of civic and cultural institutions and fill in the gap created by cutbacks at struggling major media organizations in the city. With a website creating unique content, we would seek a small membership fee to join the coop, which would give access to our news reports and a voice in the news through interactive features. I figured if we could raise enough money to get 40,000 to 50,000 members over five years, or about one-half of 1 percent of the population of the Chicago metropolitan area, we would have enough money to create a self-sustaining news organization that could employ thirty to forty journalists to cover the city and provide true public service journalism created by skilled journalists and informed by readers.

Over the past year and a half, I've learned that achieving our goals is not as easy as it might sound. We've had some breaks. Editors at the
New York Times
got wind of our idea when the paper was exploring the possibility of setting up local partnerships to produce Chicago news for its Midwest edition. Impressed with our goals and the quality of
the journalists we could attract to the CNC, the
Times
made a modest contribution to help us get started and signed a deal under which it would pay us to produce two pages of Chicago news for the
Times
twice a week. But the
Times'
financial contribution wasn't enough to get us off the ground until the MacArthur Foundation approved an expedited $500,000 grant. We started producing content for the
Times
in November 2009 and have been at it ever since.

We've also had some setbacks. When my fellowship ended and I was driving back to Chicago in July 2009, Osnos called to tell me that Minow had set up a meeting with a major foundation in Chicago to make a presentation for funding for the CNC. Minow was leaving town July 4 for the rest of the summer and wanted me to attend the presentation. I had to come up with a formal outline of our plans within a few days. From the road, I called a trusted, creative, and talented colleague from my days at the
Tribune
, Bill Parker, and asked for his help. He enlisted another
Tribune
colleague, Tony Majeri, and we all went to work on my idea and a presentation. I arrived in Chicago on a Friday and by the following Monday I found myself making my presentation to the McCormick Foundation and its newly minted CEO—David Hiller, who'd been hired by a board comprising Dennis FitzSimons, Scott Smith, Jim Dowdle, and John Madigan. The foundation denied our request.

Although I told Osnos the last thing I wanted to do was run another news organization, I remain the editor of the CNC. Over the last two years, I've had to learn lots of new things—about the world of fund-raising, about running a news organization with a far smaller staff, about the incredible allure and power of technology to resolve one problem and create another, and about a new economics that seems to create billionaires overnight.

Some of what I've learned gives me hope that the next generation will enjoy the same opportunities that I have enjoyed. When I first walked into the
Des Moines Register
in 1971, you had to be a multi-millionaire to buy the plants and equipment needed to start a newspaper. We did it at the CNC with little money. But some of what I've seen in
the inexorable march of technology and economics makes me wonder what kind of world my children will inherit. Capitalism built the American newspaper industry, but it was the sort of capitalism embraced by men and women who wanted to build something that would endure, employ people, and make the founders rich by providing a vital service. I don't know that the kind of capitalism evolving in America holds the same promise. Many of today's capitalists seem more interested in creating companies with baked-in exit strategies designed to get their ventures up and running so they can be sold for billions to global investors far more interested in earning profits than serving the public. The citizens in a democracy need to base their decisions on good, solid information. The exit strategy for a democracy isn't exactly a pretty picture.

Reporting the news remains a struggle, not only for the CNC but also for many major media organizations. Unlike many other cities, Chicago still has two daily newspapers, the
Chicago Sun-Times
and the
Chicago Tribune
. The
Sun-Times
emerged from bankruptcy a little over a year ago, but it is still hanging on by a thread. The parent company of the
Tribune
and the
Los Angeles Times
is struggling to emerge from bankruptcy, but its plight has been complicated by controversy. In seeking an advantaged status as a creditor, one group owed money by Tribune alleged that its claims should take precedence over others because fraud played a hand in the Zell transaction. Bankruptcy Court Judge Kevin J. Carey appointed Kenneth N. Klee, a California law professor and bankruptcy expert, to examine the charges. Klee issued an expert opinion that concluded that a “fraudulent conveyance” charge could stick if the case went to court. Klee's investigation found that Donald Grenesko and Chandler Bigelow, Tribune's former and current chief financial officers, had provided information that suggested Tribune Company would be solvent after phase two of the Zell deal when, in fact, the opposite was true. Grenesko and Bigelow have denied the allegations. Klee's voluminous report exposes that almost every party involved in making sure the deal closed was rewarded with staggering fees and bonuses. His report has sparked litigation that also will make many lawyers rich. A cloud of doubt continues to loom over
the Tribune Company, its newspapers and, most significantly, the employees who have already or might still lose their jobs. The bankruptcy even has spawned a raft of lawsuits against employees who had nothing to do with the details of the Zell deal, including Lipinski and me.

In many respects, the Tribune's plight is unique and far more complex than the dire situation that faces other newspapers and media organizations around the country and world. But in many ways, it also represents the stark reality of the battle facing those interested in the future of the news. Instead of pumping their energy and resources into building a new business model and creating a path to a successful future, newspapers remain institutions distracted by their fight to survive, shackled by declines in revenues, legal problems, new competitors, and, in the case of Tribune Company, diversion of resources into things that have nothing to do with providing the public with news. The company's professional fees in its bankruptcy case total $240 million and probably will top out at $300 million or more before it emerges from court, enough to run the combined
Los Angles Times
and
Chicago Tribune
newsrooms for more than a year.

When I speak to citizens in Chicago and elsewhere, people ask me: Will we still have newspapers? Of course, we will have newspapers. Newspapers today continue to create great journalism, too. But the great journalism that newspapers and broadcasters still produce often is episodic rather than the systematic examination of significant issues. Let's not kid ourselves, either. Newspapers and broadcast outlets will find it progressively harder to finance the delivery of high-quality news. We are moving into a world where someone wealthy enough to pay $2 a day and $6 on Sunday for the
New York Times
or $18,000 to $20,000 per year for a machine from Bloomberg News will get high-quality news, as good as or perhaps better than ever. Gone will be the days when everyone can get the same quality of news delivered to their doorsteps every day for a fraction of what it actually costs. And that is a fundamental change in our society, the implications of which we've not yet absorbed. The current practice of delivering news to readers far below its cost and relying on an advertising base that will continue to
shrink is simply unsustainable. Someone has to find a new model based on new economics. Until then, newspapers will continue to shrink, become more expensive, have fewer subscribers, and be delivered less frequently, perhaps once or twice a week instead of every day.

Yet the need for quality journalism has never been greater. The Internet is flooding the world with raw information, demonstrating its awesome power to unleash democratic revolutions that topple dictators and despots. But raw information also incubates rumor, disinformation, and propaganda, which in turn breed chaos and ignorance that divide our world. We don't know yet what kind of governments will replace the autocratic regimes toppled by the information revolution spreading across the Middle East. The one thing we do know is that, for us to know what will happen, we need to get our information from good, solid reporting, the kind that sifts through rumor, innuendo, and distortion to create fact, context, and reason.

The real question we face is not whether we will 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 about the major issues of the day?

I remain here at the CNC because I believe we must have that kind of journalism. So does Ann Marie Lipinski; she is one of the founding members of the CNC board. Good, solid journalism remains vital to Chicago, the nation, and the world. Throughout my career, I have seen a world without dogged reporting. Time and again, I've seen the press seized and silenced by soldiers marching in the clouds of dust stirred by the despot's boot. We cannot allow apathy and indifference to become the soldiers of silence in America. The answer is out there, perhaps in a fledgling operation like the CNC or one of dozens like it springing up across the land, or perhaps in the head of some entrepreneur. An audience for serious news is out there. It is smaller, more discerning, and willing to pay if the information is good and the reporting is solid. It is out there and when someone finds it, it will be one hell of a story. I know. After all, I'm still a reporter, I can feel that story—in my gut.

SO MANY PEOPLE helped with this book that it's hard to express my gratitude without inadvertently missing someone. So I apologize in advance if I failed to recognize anyone, and, if I did, it was an error of omission and not an intended slight. Several authors have written excellent books on the companies I covered in this book and the newspaper industry, including Richard Norton Smith, the late David Halberstam, Dennis McDougal, Charles M. Madigan, and the late A.J. Liebling. I borrowed material and insights from them and tried hard to appropriately recognize their fine work in the text and in notes. I am deeply indebted to Alex Jones and the Joan Shorenstein Center on the Press, Politics and Public Policy at Harvard University. Jones and the incredible staff at the Shorenstein Center threw me a lifeline when I needed one and provided the resources and encouragement to get this book off the ground. Special thanks should also go to my daughter, Bridget O'Shea, a dogged and determined researcher. This book never would have been completed without the help of Sharene Shariatzadeh of the Chicago News Cooperative, where I work. She calls herself my “handler” but in reality she was a crutch I leaned on time and again during a long journey. I owe everyone at the coop a debt of gratitude for the understanding they displayed when I was distracted by this project. The folks at PublicAffairs embraced my book and me with
enthusiasm, particularly Peter Osnos, Susan Weinberg, and Morgen Van Vorst, an excellent editor with a sharp eye for a narrative. There are many people with whom I worked in the newspaper business who took the time to talk to me about their role in the saga, but I owe a special debt to my colleagues Ann Marie Lipinski, Bill Parker, and Leo Wolinsky. Because so much had been written about the
Times
before the
Tribune
acquired the paper, I decided to write the early chapters largely through the eyes of people who worked there, particularly Wolinsky, who shared with me the story of his incredible career at the paper. My agent, Larry Weissman, was a voice of enthusiasm and confidence. He helped me frame the story in its incarnation. Thanks, also, to Howard Bragman, who originally encouraged me to write the book. And, of course, my wife, Nancy, as always displayed incredible patience with me, the mess I made in the spare room and the hours I kept. And thanks so much to all of the journalists who made the
Des Moines Register
, the
Chicago Tribune
, and the
Los Angeles Times
such special places to work and grow.