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The Perfect Test That the Chicago Tribune Failed

01/26/2009 05:12 am ET | Updated May 25, 2011

Over his long business career, Sam Zell has undoubtedly many times smirked at those who have reported failures whilst claiming "It was not my fault". Now, Sam Zell may well be smirking into the mirror. His Chicago Tribune has filed for bankruptcy protection, and Mr. Zell is blaming others (a "perfect storm" economy) for the Chicago Tribune's loss of solvency.

It has been barely one year since the new owners took over the Tribune, so it would be unrealistic to expect that they finalized the implementation of whatever concepts they have. And, obviously, the current recession has put an extra burden on the turn-around venture. On the other hand, how much time should they really need to convert the Chicago Tribune into a profitable media company? Two years? Maybe three. Excuses aside, by the end of the first year the concept should show signs of working. "The perfect storm" could be seen as a perfect test, proof that Sam Zell's vision for the Tribune is working. But it isn't working. The perfect test is unveiling, early and clearly, the unavoidable future of the Tribune Company.

Is there any money in journalism?
Sam Zell was right when he said that a newspaper should be run as either a profitable business or a charitable venture, but that it cannot be both at the same time. Obviously, Sam Zell wants to make money; however, listening to his recent interview with Joanne Lipman one can conclude that he has not yet figured out if there are any money-making opportunities in the realm of journalism. It is striking that he uses the term "customer" interchangeably for both Tribune readers and Tribune advertisers. Sometimes one gets the impression that, in his vision, the Chicago Tribune is an advertising bulletin, advertisers are his clients, and if Macy's spends a fortune on ads, this might be justification for spicing up the bulletin with some pure journalistic work. To verify who the actual customer is, the Tribune could run a test; for one week print the Chicago Tribune with no advertising at all, and on the following week, print the paper with advertising only. The lack of clarity about who is the paper's real client is striking. Assuredly, Sam Zell has many times lectured his younger partners that knowing who the customer is is the first step in making any business profitable.

In the same interview with Joanne Lipman, Mr. Zell says "the newsrooms have basically never recovered from Watergate, and everybody wants to be Woodward and Bernstein, and that's the definition of success. Obviously, the newspaper business must be a great deal more than that." Wrong. Getting on a story like Watergate is to journalism what a bargain price income property that pays living expenses for the rest of one's life is to real estate. Writing a story that makes headlines is the name of the game. In the real estate business, it is owning properties that people want to rent at prime prices. In the newspaper business, it is that intangible attribute of the name that gets readers to read, and thus makes papers attractive to advertisers. The Chicago Tribune can generate more advertising revenue if it becomes a better newspaper. So far, Sam Zell is trying to prove the opposite; that selling more ads will make the Chicago Tribune a better newspaper.

One can compare the newspaper advertising market in Chicago to a city center with one first class high rise building (Tribune), one so-so (Sun Times) and a bunch of buildings too small for major tenants. The Tribune has a quasi-monopoly, and for many advertisers, as long as the Tribune is there, regardless how good or bad it is as a newspaper, it is the only place for them to advertise. In this comparison, readers represent the building, advertisers the tenants. As soon as the building deteriorates, the tenants will move out.

Newcomers to the real estate business often squeeze extra cash from their properties by cutting on maintenance and repairs, thereby practically decapitalizing their buildings. This is exactly what Mr. Zell is doing to the Chicago Tribune as he cuts newsroom staff, making the paper less appealing to readers, hence less attractive to advertisers. Since the Tribune has no real competitor, the lost advertising revenue goes to alternative venues, mostly direct mail, and the internet. This is Sam Zell's contribution to the newspaper ad revenue decline in general.

Investigative reporting is expensive
The Chicago Tribune, as Sam Zell acquired it almost exactly one year ago, had very good investigative reporting. Ann Marie Lipinski, the Tribune's editor since 2001, turned her zeal for reporting into editorial policy. Following major newsroom staff cuts, she resigned last July.

Reporting is the meat of journalism, but it is expensive, whether it is exploring corruption in Chicago, or having reporters roaming in rural China. Sam Zell is probably right that few readers were interested in the Afghan Idol show, a story that ran in the Los Angeles Times, which Sam Zell owns as well. It was mainly about cultural clashes in Afghanistan, and most Americans do not give a damn about what is going on elsewhere unless it hits the Twin Towers. However, this leads to a fundamental question: what should journalism be all about? Should it be informing the public about events that journalists find meaningful, or should it be reaching the lowest common denominator in delivering information that most readers finds pleasant?

This question is often veiled in the lofty talk about the societal duties of journalists. Nothing more wrong than this; it is the money question, as most readers might only occasionally read all these reports from China or Afghanistan; however, they see them, recognize their value, and respect the paper for providing these reference points. When putting the paper away, they feel guilt that they did not read everything worth reading. In the opposite approach, newspapers focus on entertaining readers with gossip and curiosities. I see the Chicago Tribune shifting in this direction under new ownership. A reader with no time or the mood for being entertained will put the paper away disappointed, not being able to find texts that are worth reading.

On polling readers, Mr. Zell finds out that most of them read banalities, since even the most intellectually ambitious readers could be tempted to start reading the paper from the latest about Britney Spears underwear habits; however, even the very dullest readers will not fail to notice that a paper feeding them mostly trivia considers them half-wits. Consequently, they disrespect the paper, and seek real information elsewhere. Advertisers read papers too, and just like building appraisers, they see -- earlier than others do -- this shift in readers experience as cracks in the walls. Mr. Zell however, at the end of the first year of his reign over the Tribune Company, wakes up with his hand in the night pot claiming that "the newspaper business and advertising, generally, has gone off a cliff", as an act of forces beyond his control. Really?

Editorial writing is cheap
Editorial writing is the second leg of good journalism. Unlike reporting, editorial writing costs the same whether it is good or bad. Defining the principles of the Chicago Tribune editorial writing before the Zell era, Timothy McNulty (no longer with the Tribune) wrote: "The op-ed page seemed balanced to me in terms of topics or issues of the day". The significance of this statement and the whole Mr. McNulty column is that the Tribune editors saw the op-ed pages as an eclectic collection of texts. They have found comfort in concluding that the summary social effect of the Chicago Tribune political writing was zero.

What is the purpose of editorial writing? In the approach defined by Timothy McNulty, it is in giving some petty satisfaction to readers of diverse political orientations, since occasionally they can read an opinion that they agree with. Along this line of thinking, the Chicago Tribune was no better or worse than most of the media in the U.S., entangled in the liberals versus conservatives stalemate. It is obvious to almost everyone, except op-ed page editors across the country, that for liberals bashing conservatives and for conservatives bashing liberals, the terms "liberal" and "conservative" are politically correct substitutes for "stupid." No one is trying to figure it out why the country is getting worse, no one is having an actual debate on the essence of the problems of the day, be it the presently ongoing economic collapse, education or immigration policies or malfunctioning health care, unresolved for decades. In editorial writing, we see proselytizing and vilifying opponents. The shallowness of this conservatives versus liberals dichotomy reached its caricature in the Creators Syndicate editors stamping pictures of their writers with a letter "c" for conservative or "l" for liberal. No one was stamped with "w", for wise. In political debates, wisdom is not in high demand.

Major newspapers have quasi-monopolies in their respective markets, and this simple lack of competition has resulted in the degradation of the quality of editorial writing. Concepts like intellectual inquiry, the exchange of ideas within the community, searching for understanding of societal problems, or seeking solutions to these problems -- are barely given lip service, if any attention at all.

Chris Hedges claims that "The Best and the Brightest Led America Off a Cliff". If he is right and the elites have failed us, then the intellectual hollowness of editorial writing in general could be seen as a symptom of a greater crisis.

None of these issues seems to concern Sam Zell, as he openly says "I haven't figured out how to cash in a Pulitzer Prize." It is high time to do it at last.

Zell's options
During the first year, Sam Zell has run the Chicago Tribune with the same -- if not greater -- disrespect for readers as his predecessors did. One year ago, Mr. Zell was full of lofty talk about creative ventures and cross-media initiatives. All of this boiled down to skimming the milk and repackaging it. Sam Zell said it best himself: "I've reformatted all eight newspapers--they're much louder; they've got more pictures; they have more color; they have easier navigation." As if people buy products for packaging rather than content, especially when cash is in short supply. Under Zell's leadership the Chicago Tribune has gone off a cliff as much as the whole newspaper industry did, and what this means is that he is no better than anyone else now or before in this industry. On top of this, as those who have failed before him, he says, "it is not my fault". Is this the most that we can get from one of the best American entrepreneurs?

Sam Zell claims making money is his goal. However, we have already established that in his dealings with the newspapers, he does not have a clear picture of either who his customers and what his products are. Consequently, he cannot develop a clear concept of a product that he could deliver and make money in the process.

His only chance is to respond to Chris Hedges's challenge. America needs to redefine itself. Someone has to take the lead on this task. The Tribune Company has all the material resources to do so. They do not need any cash to replace their mindless editorial writing with some logical concept of working together on fixing the country and making money in the process. From all Mr. Zell has said, nothing indicates that when taking on the challenge of rebuilding the Tribune Company he realized that the real problem was not in the Tribune itself, but in the failure of intellectual elites in the U.S. in general. The Tribune's downfall was just one of the symptoms. The Tribune's rise could be based on taking seriously on the role of the "fourth branch of government" and doing it by sticking to market rules. This would mean that Sam Zell would end up leading the intellectual reshaping of the country with political influence matching that of the President. Is this a good thing? Rupert Murdoch is another man who could do the same. Let them compete. We will all benefit.

Alternatively, Mr. Zell can continue his current course, which will likely lead to bankruptcy. People who read the fine print on Zell's Tribune buyout contract claim that this contract has provisions that even if the Tribune fails, Sam Zell would recoup his investment. Nevertheless, it is up to Sam Zell to decide if he wants to be remembered as someone who ran down the Chicago Tribune.

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