Gutted by Money Men, Chicago Newspapers Circle the Drain

In Mike Royko's town, it's been a while since you boarded a bus or train at rush hour and met the "newsprint curtain." In its day, the wall of newspapers spread-eagled in front of intent readers was such an institution that poet Allen Ginsberg satirized it by poking a hole in his paper and peering through.

Nor do most Chicagoans wake up anymore to the Chicago Tribune or Chicago Sun-Times with their cornflakes. Or end the day with the Chicago Daily News and a martini in their easy chair. (Who remembers easy chairs? Martinis?)

With its tail between its legs, the Tribune Company, which owns the Chicago Tribune, the Los Angeles Times, other newspapers, WGN television and the Chicago Cubs, went private after a $8.2 billion buyout engineered by local real estate tycoon Sam Zell.

Bedeviled by a $1 billion tax bill from buying the Times Mirror and the Los Angeles Times in 2000 -- it was a taxable sale rather than a restructuring says the IRS -- the Tribune Company is now owned by an S-corp ESOP employee stock ownership plan which makes "selling for parts" difficult in the near future since it pays no corporate taxes.

Not that anyone's happy. This month the Los Angeles Times lost its third editor since the sale, James O'Shea, a Tribune Company lifer. It has also lost publisher Jeffrey Johnson and two editorial page editors since the Tribune takeover.

And why was outgoing Tribune Chairman and Chief Officer Dennis FitzSimons rewarded a $17.7 million dollar severance package, many are asking? Not just $10.7 million but $4 million to cover his tax liabilities from the $10.7 million? What would he get if he left the paper profitable -- his own island?

Things are even worse at the Chicago Sun-Times, where Conrad Black and F. David Radler siphoned off millions in phony non-compete agreements that they paid to themselves as officers of the parent company Hollinger International Inc., now Sun-Times Media Group, whose celebrity board featured Henry Kissinger, Richard Perle and former Illinois Gov. James Thompson. The pair are prison bound unless their appeals succeed.

In a perverse twist, the Chicago Sun-Times actually had to pay $17.4 million of Black's legal fees -- thank you Director & Officers insurance! -- on top of losing $60 million of its shareholders' money.

This month, Chicago's "other" newspaper terminated 17 reporters, editors and newsroom staff members after merging its suburban Daily Southtown and Star papers, shutting down three weeklies, and farming out newspaper delivery to the Chicago Tribune, failed to total the $50 million it is seeking to trim from its operating budget.

Even the Chicago Reader, considered the granddaddy of free weeklies, is now struggling after three decades of seeming imperviousness to the vicissitudes of the newspaper business.

In July the four-section quarter fold paper, known for its long format articles, was purchased by Florida based Creative Loafing. The Chicago Reader promptly became a standard flat tabloid with one page articles that no longer jump and only half the number of pages as before.

Asked about the shrinking size and staff -- four top reporters were let go -- Editor Alison True and Publisher Mike Crystal both replied that the pub had no choice.

Two free monthlies that were formerly newsprint, Today's Chicago Woman and Conscious Choice, an environmental magazine, have survived by adopting a glossy look, generic content, and reducing local focus and staff.

And while the Chicago Tribune's five-year-old tabloid daily, Red Eye, passed out free at city "el" train stops, has found a readership, the publication had to dumb down content to two paragraph stories and celebrity "cellulite news" to do so.

Even Northwestern University's Medill School of Journalism is caving.