Friday, January 18, 2008

Sam Zell makes first visit to Newsday

"The union's role is to protect its members; my job is to protect everybody else, and that's what I'm doing." Sam Zell
Sam Zell, the new chairman and chief executive of one of the nation's largest media companies, strode through Newsday's Melville offices Tuesday with the gregarious efficiency of a political candidate entering the main stretch of an election campaign.

"Hi, I'm Sam," he said to each employee he passed, extending his arm and smiling broadly. And to those who addressed him formally: "I'm not Mr. Zell. Mr. Zell was my father."

It was the 66-year-old's first visit to Newsday since he consummated a deal last month that placed him at the helm of Tribune Co., Newsday's corporate parent. Employees approached him with a mixture of curiosity and excitement -- wondering about the man behind the quirky, jocular e-mails they had been receiving, and relieved to see new leadership atop a corporation that experienced frequent setbacks in recent years.

Bursting into an auditorium overflowing with pressmen, copy editors, reporters and salesmen, Zell gave a speech that -- like his blazing path through the newsroom -- recalled the mantra of change being preached with more vigor than clarity this political season.

"This isn't a dress rehearsal," Zell told the crowd. "Today is the first day of the rest of our lives. ... I just want to create an environment where everyone is open and everyone is challenged."

"I don't think this company has been particularly well run in the past," Zell told the Newsday audience to appreciative applause. One reason for this, he suggested, is that Tribune -- which owns seven major newspapers, 34 television stations and the Chicago Cubs baseball team, among other properties -- has been run as a "media conglomerate" rather than "a conglomerate of media companies."

To that end, the real estate mogul advocated a "bottom-up" corporate structure in which individual employees' ideas and innovation will be fostered for the long-term benefit of the entire organization.

Drawing on comments from Randy Michaels, Tribune's new head of interactive and broadcast operations who was present throughout, he also spoke about the potential for improving revenue through more effective and innovative use of interactive properties.

Zell's subsequent question-and-answer session with employees grew heated early on when unionized workers questioned the company's failure to grant them the same retirement benefit all other Tribune employees will enjoy under the new corporate structure -- and about the termination of Tribune's contribution to their existing retirement accounts.

"I don't know anything about it," Zell said, emphatically pointing his finger at the floor. "The union's role is to protect its members; my job is to protect everybody else, and that's what I'm doing."

"We were surprised to hear that Mr. Zell seemed to separate unionized employees from the rest of our colleagues, since we work just as hard as everyone else in this company and are just as invested in its success," said Zachary Dowdy, a Newsday reporter and vice president of the union's editorial unit. "We respectfully ask Mr. Zell to give unionized employees the same retirement package being offered to the rest of the company and we look forward to working with him toward common goals."

Justin Rocket Silverman, a reporter who had attended a similar session with Zell earlier in the day, said the talk was rousing but gave its audience little to hold on to.

"There was absolutely zero in the way of specifics as far as management or editorial policy or anything like that," said Silverman, who works for am New York, a free daily newspaper that Newsday produces and distributes in New York City. "We're no more informed than we were before."

Still, Silverman allowed that Zell's visit had been galvanizing, saying, "I guess it's kind of reassuring, he's kind of human, really -- in the way that Bloomberg is a human billionaire." Zell ranked 52 on Forbes Magazine's recent list of the world's wealthiest individuals, with a net worth of $6 billion.

Twice during the forum at Newsday's Melville headquarters, Zell repeated that the only difference the deal would make to him was "a couple billion dollars" which he would "just have to deal with giving away."

Tribune boss visits The Morning Call

I don't look at you as employees. I look at you as partners,' he tells workers in Symphony Hall talk.

Sam Zell, CEO of the Tribune Company, parent company of the Morning Call, speaks at Allentown Symphony Hall on Wednesday, January 16, 2008. (Rob Kandel/The Morning Call / January 16, 2008)
Employees of The Morning Call clapped and cheered Wednesday afternoon after Sam Zell, the new top boss of the newspaper's Chicago parent company, laid out an optimistic vision of growth for an industry others have written off as dying.

The 66-year-old real estate mogul last month closed the $8.2 billion deal that put him in control of Tribune Co., one of the country's largest media companies. His Lehigh Valley visit was part of a two-day tour of Tribune newspapers in the Northeast.

He called for decentralizing Tribune management and putting "responsibility and authority in individual business units."

"Are we a media company or a conglomerate of media companies?" said Zell, speaking to hundreds of employees gathered at Allentown Symphony Hall. "I think the truth is we are a conglomerate of media companies."

Wearing a sport coat and striped shirt but no tie, he scoffed at Tribune's traditional starched-collar culture -- something he suggested made the company inflexible and slow-footed. The audience roared when he riffed on Tribune's policy of requiring new hires to learn about the company's history.

"I would tell you frankly that the thing we don't want to learn is the history of Tribune," he said, joined on the stage by his second-in-command, Randy Michaels, and Timothy R. Kennedy, The Morning Call's publisher, president and chief executive officer.

Much of Zell's notes-free speech, delivered with the aplomb of an experienced stage performer, was pep talk for people on the front lines of an embattled industry. He said newspapers have "a viable, long-term role in society."

And he told people they now have an opportunity to become wealthier through a new retirement program that will reward them with a stake in the company instead of the typical 401(k) contribution.

"I don't look at you as employees. I look at you as partners," he said. "I want to make you guys, along with me, winners."

Yet success, Zell warned, would depend on the company's ability to adapt: "We have to accept the fact that it's a new world."

Over the past two decades, U.S. newspaper circulation has steadily eroded as people have turned to other media, such as cable TV, for news. The trend has only accelerated in recent years, especially at large metro papers, with the growing popularity of the Internet.

Zell's takeover of Tribune means the company, whose shares were once publicly traded, is now owned by an employee stock ownership plan created to finance the highly leveraged deal. Tribune owns 23 television stations and eight other newspapers, including the Los Angeles Times, the Chicago Tribune and Newsday of Long Island, N.Y.

As a fresh face in the news media business, Zell has been met with a combination of excitement and apprehension. Maryland industry analyst John Morton was reluctant to make any predictions about him.

"How do I know?" he said. "It would be wonderful if he has some vision that nobody else has had that takes hold."

Zell said Tribune's smaller newspapers, including The Morning Call, would serve as a "petri dish" of innovation. He disclosed little in the way of specific plans, although he made clear that he wants compensation of The Morning Call's advertising sales force to have a greater emphasis on incentive pay.

When Zell was finished speaking, Michaels stepped up to the microphone. Michaels, whose title is chief executive officer of interactive and broadcasting, exhorted employees to look for new and better ways of doing their work.

"I'm ready to play offense. Defense means losing slowly," said Michaels, who said The Morning Call is financially "pound for pound" the best newspaper in the chain.

Change, however, would not result in diminishing the newspaper's news-gathering abilities, Michaels assured. "I understand who is most important," he said, "It's the people who make the product."

That statement also triggered a round of applause. In recent years, Tribune has cut costs at The Morning Call through the rounds of layoffs and early retirements that have become commonplace in the news industry. The newspaper's total employment at the end of last year was 790, a decline of 15 percent in five years.

In the question-and-answer period that followed, Zell's in-your-face manner was on full display.

Asked about his thoughts on workplace diversity, he responded: "I'm f------ color-blind. I'm interested in excellence." Tribune should be a meritocracy, he said, "If you are good, I'm going to keep you."

He was also asked about the possibility that he might opt to sell The Morning Call. Zell said he had no plans to do so and noted that he has a tax incentive to keep Tribune intact.

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