Ouster of News-Press Publisher Ends Year of Feuding at Firm

The ouster of Robert E. Page last week from the publishing company that bears his name was the season finale to a yearlong soap opera that saw the nationally known newspaper executive embroiled in conflicts with his business partners as well as with some employees.

The accusations that surfaced in a lawsuit filed against him raise the specter of wasteful spending and sloppy management at Page Group Publishing Inc. in Costa Mesa. Page denies the claims and counters that some of his accusers have profited from a deal that saddled Page Group with a money-losing newspaper.

But from its start in late 1989, the Page Group’s partners were unrealistic in what they expected from the newspaper properties they initially bought--the Glendale News-Press and the Orange Coast Daily Pilot in Costa Mesa, said one insider.

“There was a certain inevitability about this from the start,” the insider said. “Perhaps both sides went in with rose-colored glasses on. They went in with high hopes but not a lot of good hard facts. They saw the glamour of Southern California . . . and figured they could turn it around in a year.”

The Pilot, which at 16,000 circulation is twice as large as the profitable News-Press, has been losing money for about 12 years and would need much more time to return to profitability, the insider said.

Behind Page Group are some powerful, though passive, investors, including former Secretary of State Henry Kissinger, Hollywood producers Peter Guber and Jon Peters and Chicago industrialist Lester Crown.

Guber, Peters and Crown own a stake in Page Group, while Kissinger is one of the limited partners in the publishing firm’s majority shareholder, Commonwealth Capital Partners Ltd. in New York. About a dozen investors put a total of $70 million into Commonwealth for a variety of investments.

But on center stage are 54-year-old Page, fired May 13 as Page Group’s president and chief executive and unceremoniously evicted from his office, and 42-year-old Elliot (Skip) Stein Jr., chairman of Page Group and a managing partner of Commonwealth.

Page and Stein met and became friends in the mid-1980s, when both were in Chicago--Stein as an investment adviser and Page as publisher, president and part-owner of the Chicago Sun-Times. Stein eventually moved to New York, and Page resigned from the Sun-Times in August, 1988, after losing a corporate power struggle, in large part, over accusations concerning free-spending ways and high-living off the company expense account.

Page sold his interest in the Chicago paper for a reported $2.5 million--a sum that angered Sun--Times insiders--and hooked up with Stein a year later to form Page Group. The new company, funded mainly by Commonwealth’s $16-million investment, embarked on a plan to build a network of community newspapers in Southern California.

But soon, Stein began having doubts about Page’s ability to handle the business matters of the publishing company, especially as it grew to include two start-up magazines, several weeklies and a Spanish-language paper called Tu Mundo in Los Angeles.

Eventually, Commonwealth sunk $2 million more into the company, mainly to keep the money-losing Pilot afloat, and took out a $3-million bank loan for the company’s use, according to Page and other sources in the company.

By the time Page was ousted and sued by his company, the complaints had grown and become more specific.

The lawsuit accuses him, among other things, of misrepresenting circulation figures to advertisers, hiring cronies who weren’t qualified for executive positions, acquiring new media properties without proper analysis, failing to pay vendors for various supplies and failing to follow budgets by spending more money than the company had.

“The issue they’re trying to claim is I’m not a good business manager, and that’s just not true,” Page said. “At the Sun-Times, it was strictly philosophical issues--a difference of style in managing the company--that caused me to leave. It had nothing to do with performance. It was just two guys who couldn’t get along.”

Stein wouldn’t discuss the contentions in the lawsuit, but one of his lawyers said Page Group directors recently learned that Page had hidden certain information from them about his departure from the Sun-Times. He wouldn’t explain further.

“That’s ridiculous,” Page said. “There isn’t anything about me that these guys didn’t know. Skip and I were friends, and we had a number of mutual friends. There’s nothing I didn’t share with them.”

But Stein, Page said, kept him in the dark about the purchase last fall of Tu Mundo. Page said he was told to stay out of the negotiations and “let New York handle it.”

Page said he was simply told what the deal was going to be. Tu Mundo’s owners--a partnership consisting of Stein, New York communications executive I. Martin Pompadur and producers Guber and Peters--would get 5% of Page Group stock in exchange for what Page was told would be, at worst, a “break-even” operation.

Page said he learned later that Tu Mundo had only $21,000 in assets and was a money-losing venture.

More important, he said, the sellers received not 5% but 10% of the stock in his company, which he figured amounted to a $1.7-million value based on the sale of stock last year to two new investors.

When he asked for more information on the deal, Page said he was ignored. When he demanded it, he was voted down. When he sued last week to get more information, he lost his job.

But a lawyer for Page Group said Page’s version is nothing but a smoke screen fabricated when he realized that “his tenure was on the line.”

Charles N. Shephard, the company’s lawyer, said that other directors wanted Page to review the Tu Mundo transaction because they were concerned about Stein being on both sides of the deal. Shephard said Page was given the documents and asked to evaluate whether the deal made economic sense.

“After all, he purports to be experienced in the field,” the lawyer said, adding that Page approved the deal. Page disagrees, saying he never reviewed the transaction.

Meanwhile, at the News-Press and the Daily Pilot, there are no plans to change the editorial product that Page fashioned, said James Gressinger, who was hired last week as Page Group’s executive vice president and general manager.

Stein acknowledged that the recession has hurt Page Group, particularly the Pilot. Nearly 70 employees have been laid off in the past year at the Pilot, the News-Press, the weeklies and the two reader-written magazines, the Brentwood Bla-Bla and Beverly Hills, the Magazine.

But Stein said the company will get through the hard times and will grow.

“There is a tremendous future for these papers,” he said. “We believe we have a terrific staff and very loyal people. We have to set the right strategic pattern and goals. Once we get that done, we intend to look for additional small papers in the area.”

Page said he plans to stay in Southern California. He and his wife, former Boston newscaster Nancy Merrill, rent a home in the exclusive, gated Big Canyon community in Newport Beach.

“I’m already talking to people about other jobs,” he said.

In his more than 30 years in the newspaper business, Page has gained a reputation as an energetic, charismatic executive--a big-picture man with a gift for promotion, a love for the news side of the profession and less interest in the financial side.