The Deal from Hell (31 page)

After Puerner's first year in the publisher's office, the daily circulation of the paper fell by 4.46 per cent, or 48,772 papers. In 2002, the
Times'
circulation dropped an additional 66,451 papers, or 6.36 percent, as Puerner jettisoned circulation Willes had taken on. Sunday circulation remained pretty steady, and the numbers seemed to settle down by 2005, the year Puerner left. Under Steven Lee, the marketing
executive who had been hired from PepsiCo, the
Times
had launched a promotional program to reverse the slide called “Ten for Ten”: ten weeks of the
Times
for only $10. Klunder, who had resigned as the head of circulation under Willes and taken a job at the Los Angeles Newspaper Group, which published the
Daily News
, could see what was happening from afar. To encourage salespeople to sell the “Ten for Ten” program, the company set a commission high enough that a salesperson could get a name from the phone book, pay for the subscription out of her or his own pocket, collect a commission high enough to still make a profit, and hope that the new “subscriber” would like it enough to continue the subscription when someone reached him ten weeks later.

Klunder had run the
Los Angeles Times
circulation department and his father had run it before him. He felt a sense of loyalty to the paper, even though he didn't work there anymore, and he didn't want to see the paper take a wrong turn. So he called the ABC with a tip that all was not right in the
Los Angeles Times
circulation department. ABC auditors descended on the company and went to work helping it fix a problem that would make the industry look even worse if the public got wind of yet another circulation scandal.

Aside from the rare editors like Wolinsky who maintained good contacts with the business-side operations of the paper, few in the
Times
editorial department knew about the circulation problems. Had any industry covered by
Times
or
Tribune
journalists had such cozy relations with its regulators, we would have been all over the story. Granted, a few reporters did investigate the circulation problems plaguing our industry—at
Newsday
James Madore and Robert E. Kessler had dug in, and Chris Twarowski of the
Long Island Press
did an excellent job detailing the scheme on Long Island. But it's likely that their stories would never have seen the light of day had it not been for Giaimo and Banar. Most media reporters across the country slavishly repeated ABC numbers that glossed over the depth of the industry's problems. In newsrooms, we accepted those numbers like the gospel. Carroll claimed that he knew nothing
about the
Times
circulation problems. But then again, he had other things on his mind.

In early 2005, Carroll got word that the
Los Angeles Times
had won five Pulitzers for stories that had run in the paper the previous year, an extraordinary achievement. But he got no congratulations from people in the higher ranks of Tribune Company; instead he learned that Tribune would impose another round of budget cuts, which would mandate cuts in the
Times
news hole and eliminate sixty-two newsroom jobs.

In mid-2005, Carroll attended a management forum in Chicago where the attitude toward the
Los Angeles Times
was decidedly hostile: “I remember one guy from broadcasting standing up and saying the next time we acquire something, we will do it our way from
day one
,” said Carroll. With Fuller and Puerner out of the way or on their way out, FitzSimons solidified control in Chicago, including control of all of the newspaper's Internet operations. Thanks to his refusal to use stories written by the Tribune's correspondents in the
Los Angeles Times
, Carroll had few allies in Chicago, even among journalists who worked at the
Chicago Tribune
.

Carroll paid a visit to Norm Pearlstine, who was head of editorial operations at Time Inc., but had been based in Los Angeles years earlier when he'd covered the West Coast for the
Wall Street Journal
. Pearlstine knew the Los Angeles business community well, and he knew Eli Broad, the real estate billionaire and Los Angeles civic booster. He helped set up a meeting between Carroll and Broad. “I had no illusion that this was a disloyal act. I was doing something out of line for Tribune,” Carroll recalled. “I went there on a Saturday morning. I didn't ask him to do anything. I asked his advice if there was anything I could do to get the paper in local hands. He started talking about getting several nonprofits to combine and buy it.”

Broad wasn't the only one interested in buying the
Times
. David Geffen, who had made billions in Hollywood, also made it known he
was interested in the
Times
and that he, unlike FitzSimons, would actually invest money in the paper. Rumors swirled that Geffen had offered FitzSimons $1 billion for the
Los Angeles Times
and that FitzSimons had rebuffed Geffen, whom he didn't like. Wolinsky took it upon himself to find out what was going on.

“I went to see him [Geffen] at Jack Warner's old estate in Beverly Hills. The place was full of paintings,” Wolinsky recalled. “It was unbelievable. I hardly said anything. It was a two-hour diatribe about Tom King [a former
Wall Street Journal
writer who had written a book about Geffen that he didn't like] . . . all of the people he didn't like, including a lot of people at the
Los Angeles Times
.” Wolinsky left not knowing much more than when he'd arrived. In the following weeks, neither Broad nor Geffen made a move.

Carroll started thinking about his future, too. He had talked of resigning, but his wife urged him to stay on: “I thought that I'd probably be fired and that if I was fired, it would be a big disruption and if they did that, they probably wouldn't name my deputy, Dean, to succeed me. Dean and I talked about this.... I felt that Dean could last longer, perhaps until there was a change in CEOs. There was always the possibility of change from above.”

In July 2005,
Times
publisher Jeff Johnson assembled the staff to announce a change in newsroom command. Carroll, an editor who had won thirteen Pulitzers in five years and had revived the
Times
from the depths of the Staples scandal, was stepping down and would be replaced by Baquet. The staff gave Carroll a standing ovation when he and Baquet embraced. “I'm taking over one of the best newspapers in America at the top of its game, in a city I care about, succeeding somebody who's a close friend,” Baquet announced. “While every newspaper now is under budget pressure, I wouldn't be doing this if I didn't think I could still make the paper better.”

In the barrage of publicity surrounding Carroll's departure, one writer happened to note that Carroll's tenure in the editor's office represented a puzzling, even disturbing, case study in journalistic excellence accompanied by declining circulation. Carroll didn't think that the
paper's editorial content had anything to do with the circulation decline. Instead he cited the problems spawned by the
Newsday
scandal, the do-not-call list, the cuts in promotional and marketing budgets, and increased competition for readers' time.

Behind the scenes, the circulation department at the
Times
was working furiously to make sure that no one could discover that Carroll's sentiments were more accurate than anyone knew, including Carroll. By the time ABC auditors acted on Klunder's tip and swept into the
Times
, circulation boosting programs like “Ten for Ten” had helped inflate home delivery circulation by about 100,000 copies, which was about the extent of fake circulation at
Newsday
. Johnson said everyone was scrambling to avoid being placed on an ABC list that alerted advertisers across the land to newspapers where ABC audits exposed a disparity of greater than 2 percent between the numbers verified by auditors and those the newspaper had claimed on its publisher's statement, the basis of ABC's reports to the public.

Lee, who had recently received a coveted Tribune Company corporate achievement award, was now under the gun. The former PepsiCo executive in charge of marketing and circulation at the
Times
, said “Ten for Ten” was just one of the programs that contributed to the problem. “There was all kind of pressure to get the numbers up at the same time they were cutting costs. Tribune always had the feeling that the
Los Angeles Times
was this huge operation that sucked up costs. I think the Tribune guys put all of their chips on the table with a merger that was questionable on economic grounds and they wanted to justify it by slashing costs. Then you had all of these ABC rules that were kind of screwy and everyone was trying to push the limits.”

The outside vendors the company had hired to sell papers through “Ten for Ten” and the other programs were cheating “and we didn't have out best people on checks and balances to watch them.” Lee said it was like the old sport's cliche that “if you're not cheating, you're not trying.” He said “everyone was focused on getting the number up and getting around the rules and when the auditors came in and caught them, I was the head marketing guy and circulation came under marketing.
It was not my area of expertise but at the end of the day, I was the head of the department and I took responsibility for it.”

The
Times
successfully stayed off the dreaded 2 percent list, Johnson said, thanks to someone in the circulation department who came up with a technicality that satisfied ABC. The paper also used its junk circulation to obscure the extent of the circulation decline that made its way into public reports. Once auditors removed dubious circulation from the
Times
books, the newspaper's home delivery number dropped by 123,738 papers over a two-year stretch that ended in 2005. Simultaneously, the
Times
had sharply increased its junk circulation, the kind allowed under ABC rules. Indeed, between 2003 and 2005, the paper had added 116,000 copies in junk circulation to its totals. Without the junk circulation, the
Times
would have reported a 17 percent decline during that period instead of the 3.1 percent recorded in ABC audits.

Lee resigned and moved on. “It was clear that I didn't have a future with the company,” he said. And Johnson turned around and hired a seasoned circulation pro to replace him—Jack Klunder.

A
nybody watching the Weather Channel in the summer of 2005 knew that New Orleans would be hit by Hurricane Katrina. Nobody guessed how bad it would be, though. My son, who lives forty miles west of the Crescent City, called me from Houston, Texas, to tell me his flight home had been canceled. He'd rented a car to try to drive home, with the hopes of beating the storm. I protested to no avail and grew increasingly worried as reports of the storm's unyielding force flowed into the
Chicago Tribune
newsroom.

Covering a natural disaster like Katrina challenges any newsroom: It's a scramble to find reporters and photographers hotel rooms, communications in ferocious weather are strained at best, and the general tone of a city under environmental siege is one of unease. Katrina was a special case, though, and not just because I feared my son had wandered into the eye of the storm. The fallout from the disaster exposed a persistent vein of racism that shocked many Americans, scattered the poor to points near and far, and shattered the nerves of an already stressed and corrupt police force in New Orleans.

Big newspapers across the country reacted quickly to get the most out of the story. At the
Chicago Tribune
, we immediately dispatched Howard Witt from our Houston bureau and Lisa Anderson, who had become New York bureau chief and a seasoned natural disaster reporter. Working in tandem, Witt and Anderson secured necessities like maps, headlamps, and waders, set up an emergency newsroom, booked cars, established cellphone reception, located supplies, and found a house we could rent temporarily, all the while filing stories and briefing editors back home on the lay of the land.
Tribune
editors in Baltimore, New York, Orlando, and Los Angeles reacted similarly as the casualty toll mounted. Everybody, including Gerry Kern high up in his Tribune Tower office, swung into action. In New Orleans, Kern saw a tremendous opportunity.

Over the next couple of months, Tribune journalists would share scarce rooms, eat meals at their laptops, work sixteen-hour days, and spend weeks away from their families, as Kern began compiling the raw material for “Hurricanes Katrina and Rita,” his 2005 report about “Tribune's coverage of the big storms and the implications for future national coverage.” It was an impressive document that in twenty-two richly colored pages detailed how many stories each Tribune paper ran on Katrina and Rita, what percentage of those stories were written by staff, and what percentage by writers from papers in the Tribune family. Kern examined what percentage of papers covered common themes, and counted stories by topic (there were ninety-nine stories covering hurricane evacuation and shelters but only ten on pets, zoos, and aquariums). An appendix detailed that the
Los Angeles Times
received 97 percent of its stories from its staff at the site of the disaster, while the
Orlando Sentinel
got 30 percent of its stories from staff in the disaster zone. Kern gave his Tribune bosses a report card that told them what they wanted to hear: While coverage from Tribune reporters was good, there was a need to “leverage [Tribune's] scale and talent.” The media would later be criticized for exaggerating the Katrina debacle. With their own reporters on the scene, papers like the
Chicago Tribune
had questioned the accuracy of
those reports from wire services and other sources. But Kern focused his report on the duplication of effort, and not on the content of reporters at the scene.