Open minds greet Zell agenda in L.A.

As he became chairman and chief executive of Tribune Co. on Thursday, Sam Zell promised to jettison the company’s centralized, top-down management culture and spin power out to its various media properties, including the Los Angeles Times.

Zell’s arrival raised hopes among employees and community leaders in Southern California for renewed growth and an end to the staff cuts and declining circulation that have plagued The Times for several years.

“I believe this company has spent a significant amount of time in the last five years cutting costs and maybe not enough time on increasing revenue,” Zell said in a news conference Thursday afternoon in Chicago. “So I think our focus and our gut is that we can significantly increase the revenue of this company and dramatically increase its profitability going forward.”

Zell has said he expects to leave in place Times Publisher David D. Hiller, whom he has called a “terrific leader,” and Editor James O’Shea. Both men, veterans of the Chicago Tribune who were brought to Los Angeles last year, will get more power and be held more accountable than in the past, Zell has said.

Many of the newspaper’s employees were upbeat about their new leader.

“I think people are excited, anxious, hopeful,” Hiller said. “The man is investing in the future of our business. How can you not like that?”

O’Shea said he thought reporters and editors in the news operation -- which shrank to 880 from 1,200 employees since Tribune bought Times Mirror Co. in 2000 -- appreciated Zell’s straight talk and promise of more attention to increasing revenue.

“Hopefully, we can grow out of this rather than continue to cut our way out of this,” O’Shea said. “People welcome that idea.”

Though expressing some trepidation about the future, most reporters and editors in the Times newsroom acknowledged relief about the end of the seven-year reign under Tribune’s previous management. One clutch of journalists shared a glass of Scotch on Thursday afternoon in the paper’s third-floor newsroom, and a couple sang “Ding dong, the wicked witch is dead.”

A group of community leaders called the Civic Alliance, who complained last year that cutbacks could hurt the quality of news coverage, also said they liked what they had heard so far from Zell.

“We think it’s hopeful that Zell has an interest in building a quality newspaper,” said George Kieffer, a downtown lawyer who organized the group. “He agreed with us on the need for strong civic news and he was blunt, and both those things were refreshing.”

A change of style

Zell made it clear again in his news conference Thursday that he would be nothing like departing Tribune Chief Executive Dennis J. FitzSimons and the more reserved managers of the past.

Responding to a question about whether he would inject himself into decisions about news coverage at his papers, Zell retorted that he wouldn’t be capable of such a thing because he “got [poor] grades in English.” He added: “So, for the 18,000th time, I don’t have any editorial aspirations.”

A few minutes later, he advised his new employees to abide by his 11th Commandment: “Thou shall not take oneself seriously. . . . If I’m willing to abide by that standard, then I expect everyone else to abide by that standard accordingly.”

The billionaire’s sharp and often-profane style has had his prospective employees and local community leaders alternately gasping and applauding since he set his sights on Tribune last year.

In one instance in August, for example, Zell met Civic Alliance leaders, including former U.S. Secretary of State Warren Christopher, for lunch. He listened as one guest complained that front-page advertising had diminished The Times as a brand.

“I don’t give a [expletive] what you think,” Zell retorted, according to participants in the meeting, “and I don’t give a [expletive] what I think. What I care about is what David Hiller wants to do and how he is going to make it work.”

Similarly, when a Times employee the same day asked Zell what he planned to do to improve the marketing of the paper, he snapped, “I have a better question: Do you have any plans to market the paper? . . . . “Don’t come to me and say, ‘Do I have plans?’ Come to me and tell me what your plans are.”

High hopes

When it bought The Times and the rest of Times Mirror Co. in 2000 for $8 billion, Tribune Co. had high hopes of creating a media powerhouse. But the purchase was made just as readers and advertisers began to flee newspapers for the Internet.

The Chicago owners won high marks for importing a respected publisher and editor: John P. Puerner and John S. Carroll. They succeeded, for a time, in building The Times’ reputation as one of the best newspapers in the country.

But the newsmen soon were fighting Tribune’s Chicago-based executives and their demands for repeated staff cuts.

The feud ended with both Puerner and Carroll leaving the paper. Their successors, Publisher Jeffrey M. Johnson and Editor Dean Baquet, left The Times last year in another fight over newsroom cuts.

Today, The Times finds itself challenged like virtually every big daily newspaper.

Annual pre-tax cash flow dropped over the last four years by about 25%, to roughly $200 million. Over eight years, the amount of print space devoted to news and information declined by about one-fifth -- with stock listings, prep sports coverage and an outdoors section among the notable cutbacks.

Despite those reductions, The Times maintains a larger editorial staff, and devotes a greater amount of space to news, than most other American newspapers. And the paper continues to win numerous journalism awards.

The Times’ website, long a stepchild, has received keen focus and additional resources in the last year.

A recent report from Nielsen/NetRatings showed latimes.com now reaching 16% of Internet users in the Los Angeles metropolitan area, up from 11% earlier in the year. November’s total page views hit 77.8 million, up 20% from the same month last year.

Yet the company will have to increase its online audience even more aggressively if it is to reach its goal: generating an additional $100 million in revenue by 2010.

Tribune papers face a particularly steep challenge because Zell borrowed so heavily to complete the buyout, said San Francisco-based media analyst and investor Alan D. Mutter.

Mutter predicted that the large debt load could force more staff cutbacks at The Times and other Tribune properties, but he said the company would be better off with Zell than its previous management.

The analyst predicted that Zell -- like Rupert Murdoch, the new owner of Dow Jones & Co. and its Wall Street Journal -- would “instill a long-lost sense of daring and mission to companies that have suffered under dangerously timid, myopic, uncreative and demoralizing management.”

james.rainey@latimes.com

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(BEGIN TEXT OF INFOBOX)

Key events since Tribune bought The Times

March 13, 2000: Tribune Co., owner of the Chicago Tribune, agrees to buy Times Mirror Co., owner of the Los Angeles Times.

April 24, 2000: John Carroll, former editor of the Baltimore Sun, is named editor of The Times.

Feb. 2, 2004: Tribune’s stock price reaches $53, its peak after buying Times Mirror.

April 5, 2004: The Times wins five Pulitzer Prizes, the second-highest number ever awarded to a paper in one year.

July 20, 2005: Times Editor John Carroll announces he will retire. Managing Editor Dean Baquet replaces him.

June 14, 2006: The Chandler family, former Times owner and Tribune’s second-largest shareholder, demands a breakup or sale of the company, calling decisions by Tribune management “disastrous.”

Sept. 13, 2006: Times Publisher Jeffrey M. Johnson and Editor Dean Baquet publicly express opposition to staff cuts demanded by Tribune management.

Sept. 21, 2006: Tribune names a committee to consider selling the company.

Oct. 5, 2006: Johnson is forced out as Times publisher and is replaced by David D. Hiller, publisher of the Chicago Tribune.

Nov. 10, 2006: Baquet steps down as Times editor and is replaced by James O’Shea, managing editor of the Chicago Tribune.

April 2: Chicago real estate magnate Sam Zell engineers a deal to take Tribune private along with an employee stock ownership plan. The deal is valued at $8.2 billion, or $34 a share, and is to conclude by the end of 2007.

Nov. 30: The Federal Communications Commission grants Tribune waivers of at least two years from rules prohibiting a company from owning a newspaper and a broadcast station in the same market, clearing the way for the Zell transaction to be completed.

Dec. 20: Zell announces that the deal has closed and that he will take over as chairman and chief executive.

Source: Times research by Scott Wilson