|Poker In Trib Tower|
From David Carr at nytimes.com:
When (Sam) Zell purchased the Tribune Company in December 2007, he bought into an industry desperately in need of new ideas. And Mr. Zell, a consummate deal maker, had a barrelful.Read more here.
Tribune, home to some of the most important newspapers in the country — The Baltimore Sun, The Hartford Courant and The Orlando Sentinel as well as The Chicago Tribune and The Los Angeles Times — had been battered by big drops in advertising and circulation. According to Mr. Zell, the company was also suffering from stodgy thinking and what he called “journalistic arrogance.”
“There’s a new sheriff in town,” he said, in speeches that were peppered with expletives, as he toured the Tribune’s offices.
Mr. Zell’s first innovation was the deal itself. He used debt in combination with an employee stock ownership plan, called an ESOP, to buy the company, while contributing only $315 million of his own money. Under the plan, the company’s discretionary matching contributions to the 401(k) retirement plan for nonunionized Tribune employees were diverted into an ownership stake. The structure of the deal allowed the Tribune to become an S corporation, which pays no federal taxes, making taxpayers essentially silent partners in the deal.
His second innovation was bringing in a new management team, largely from the radio business, that, like Mr. Zell, had little newspaper experience, which constituted more than 70 percent of the company’s business.
(Zell brought in Randy) Michaels, who was initially in charge of Tribune’s broadcasting and interactive businesses as well as six newspapers, was a former shock jock who made a name for himself — and a lot of money for Mr. Zell — by scooping up radio stations while at the Zell-controlled Jacor Communications. Jacor was later sold to Clear Channel Communications for $4.4 billion.
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.
The company said Mr. Michaels had the support of the board.
Also read: Michaels tries to discredit Carr's piece on Tribune