The (Allentown) Morning Call, Jan. 17

Morning Call's new boss stops in to chat with 'partners'

By Sam Kennedy
Of The Morning Call

Employees of The (Allentown) Morning Call clapped and cheered on the afternoon of Jan. 16, after Sam Zell, the new top boss of the newspaper's Chicago parent company, laid out an optimistic vision of growth for an industry others have written off as dying.

In December the 66-year-old real estate mogul closed the $8.2 billion deal that put him in control of Tribune Co., one of the country's largest media companies. His Lehigh Valley visit was part of a two-day tour of Tribune newspapers in the Northeast.

He called for decentralizing Tribune management and putting ''responsibility and authority in individual business units.''

''Are we a media company or a conglomerate of media companies?'' said Zell, speaking to hundreds of employees gathered at Allentown Symphony Hall. ''I think the truth is we are a conglomerate of media companies.''

Wearing a sport coat and striped shirt but no tie, he scoffed at Tribune's traditional starched-collar culture -- something he suggested made the company inflexible and slow-footed. The audience roared when he riffed on Tribune's policy of requiring new hires to learn about the company's history.

''I would tell you frankly that the thing we don't want to learn is the history of Tribune,'' he said, joined on the stage by his second-in-command, Randy Michaels, and Timothy R. Kennedy, The Morning Call's publisher, president and chief executive officer.

Much of Zell's notes-free speech, delivered with the aplomb of an experienced stage performer, was pep talk for people on the front lines of an embattled industry. He said newspapers have ''a viable, long-term role in society.'' And he told people they now have an opportunity to become wealthier through a new retirement program that will reward them with a stake in the company instead of the typical 401(k) contribution.

''I don't look at you as employees. I look at you as partners,'' he said. ''I want to make you guys, along with me, winners.''

Yet success, Zell warned, would depend on the company's ability to adapt: ''We have to accept the fact that it's a new world.''

Over the past two decades, U.S. newspaper circulation has steadily eroded as people have turned to other media, such as cable TV, for news. The trend has only accelerated in recent years, especially at large metro papers, with the growing popularity of the Internet.

Zell's takeover of Tribune means the company, whose shares were once publicly traded, is now owned by an employee stock ownership plan created to finance the highly leveraged deal. Tribune owns 23 television stations and eight other newspapers, including the Los Angeles Times, the Chicago Tribune and Newsday of Long Island, N.Y.

As a fresh face in the news media business, Zell has been met with a combination of excitement and apprehension. Maryland industry analyst John Morton was reluctant to make any predictions about him.

''How do I know?'' he said. ''It would be wonderful if he has some vision that nobody else has had that takes hold.''

Zell said Tribune's smaller newspapers, including The Morning Call, would serve as a ''petri dish'' of innovation. He disclosed little in the way of specific plans, although he made clear that he wants compensation of The Morning Call's advertising sales force to have a greater emphasis on incentive pay.

When Zell was finished speaking, Michaels stepped up to the microphone. Michaels, whose title is chief executive officer of interactive and broadcasting, exhorted employees to look for new and better ways of doing their work.

''I'm ready to play offense. Defense means losing slowly,'' said Michaels, who said The Morning Call is financially ''pound for pound'' the best newspaper in the chain.

Change, however, would not result in diminishing the newspaper's news-gathering abilities, Michaels assured.

''I understand who is most important,'' he said, ''It's the people who make the product.''

That statement also triggered a round of applause. In recent years, Tribune has cut costs at The Morning Call through the rounds of layoffs and early retirements that have become commonplace in the news industry. The newspaper's total employment at the end of last year was 790, a decline of 15 percent in five years.

In the question-and-answer period that followed, Zell's in-your-face manner was on full display.

Asked about his thoughts on workplace diversity, he responded: ''I'm f------ color-blind. I'm interested in excellence.'' Tribune should be a meritocracy, he said, ''If you are good, I'm going to keep you.''

He was also asked about the possibility that he might opt to sell The Morning Call. Zell said he had no plans to do so and noted that he has a tax incentive to keep Tribune intact.

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