Honeymoon Is Over At Tribune

By Louis Hau, Forbes

In the weeks since Sam Zell led a buyout of Tribune, the real estate mogul has been meeting with some of his wary new employees, reportedly making a good first impression during visits to the newsrooms of the Chicago Tribune and Newsday.

But departing Los Angeles Times Editor James O'Shea's blistering attack Monday on Tribune's spending priorities served as a blunt reminder, if any were needed, that Zell's charismatic presence at the helm won't magically wave away the severe financial challenges faced by his newly acquired newspapers.

In an e-mail to employees Monday, O'Shea confirmed reports that he had been ousted from his job due to a budget dispute with Times Publisher David Hiller.

It was a case of deja vu all over again for the Times, which saw a strikingly similar scenario play out in the fall of 2006--twice. After publicly resisting job cuts ordered by their bosses, Jeffrey Johnson was forced out as publisher and then-Editor Dean Baquet resigned.

O'Shea was brought in to replace Baquet from the Chicago Tribune, where he was a managing editor. But on Monday, it was O'Shea's turn to take aim at Tribune.

"I disagree completely with the way that this company allocates resources to its newsrooms, not just here but at Tribune newspapers all around the country," he said, adding that, "I think the current system relies too heavily on voodoo economics and not enough on the creativity and resourcefulness of journalists.

"Journalists and not accountants should seize responsibility for the financial health of our newspapers so journalists can make decisions about the size of our staffs and how much news remains in our papers and Web sites," he said.

The newspaper industry's "biggest challenge," he argued, was "to overcome this pervasive culture of defeat, the psychology of surrender that accepts decline as inevitable."

Then O'Shea appeared to throw down a challenge to Zell: "I believe that when Sam Zell understands how asinine the current budgetary system is, he will change it for the better, because he is a smart businessman and he understands the value of wise investment."

But in response to the unfolding events at the Times, Zell who ranks 158th on Forbes' list of the word's richest with a fortune of $5 billion, fired off an e-mail of his own, saying that he supported Hiller and that he is "returning control of our businesses to the people who run them."

Tribune took on an enormous amount of debt to go private under December's Zell-engineered buyout. But the self-assured optimism with which the billionaire investor took the reins of the company provided Tribune's beleaguered newspaper journalists with a sliver of hope that their future might not be as turmoil-ridden as the last few years had been.

So much for that. The honeymoon is officially over.