The Deal from Hell

Baquet stood before the audience of editors at the Associated Press Managing Editors convention in New Orleans in 2006. He had just pushed back when his budget-cutting bosses in Chicago said “cut,” and he’d survived to fight another day. FitzSimons and Smith may have fired Johnson for his intemperate remarks about cuts, but Hiller had lived up to his word and tried to work with Baquet. Although Baquet didn’t cover any new ground in his New Orleans speech, this time he spoke not simply as an editor, but as a newspaper industry hero. His battle cry for other editors to stand up and fight produced rousing, rebellious cheers (and headlines) from a largely sympathetic and admiring audience. In Los Angeles, Hiller was far from pleased.

I took a call from Hiller at my home just after the first story about Baquet’s speech got traction. I knew that any agreements between Baquet and Hiller were tenuous, but I hoped they could work through their differences. Even though the impossible challenge in Los Angeles had stirred the Don Quixote in me, I refused to undermine a friend for a mere opportunity. And for personal reasons, I was eager to stay in Chicago: I wanted to convince Lipinski that a roving correspondent’s job based in Rome would be a fitting reward for my service to the paper.

Hiller, who seemed stunned at Baquet’s remarks, asked me what I made of them. I told him he had to consider them in the context of the moment and of the news industry writ large, but Baquet’s stance had clearly rattled Hiller. He said he didn’t know if he could work with Baquet and said that I should make sure “my boots were ready.” Once Baquet returned to Los Angeles, he and Hiller had dinner and agreed that theirs was not a match made in Hollywood. Hiller said they should “sleep on it,” but the next day he notified Baquet that he wanted a new editor. For better or worse, I was LA bound.

The honor that accompanies the editor title at a famous newspaper evaded me during the next few days. With Baquet’s support, I accepted the job in Los Angeles and said my goodbyes in Chicago to a newsroom that I had helped build over the past fifteen years. I also had to deal with a surge of news coverage about the change of command. Every editor and journalist should become the focus of a hot news story. I was shocked at the sloppy and shabby reporting, particularly on the Internet, where reporters and bloggers picked up stories on me and repeated them without bothering to phone or verify the facts. Of the hundreds of stories written by fellow journalists, only a handful of reporters—from Tribune papers; the New York Times; and one blogger, the notorious Nikki Finke of Deadline Hollywood—bothered to call and confirm details in reports riddled with errors. Many of my friends thought I was crazy for agreeing to go to Los Angeles, and one asked how I could go help “those people” after the way the journalists in Los Angeles had disparaged colleagues in Chicago.

But I had made up my mind to accept the job if Hiller and Baquet couldn’t work things out. And I actually felt that I could make a contribution. I left my newsroom for another one 1,000 miles west, determined to stay in Los Angeles as long it took to help a newsroom in turmoil and a company that had been good to me. Once I arrived in Los Angeles, the impact of what had happened hit me as I was driving out of LAX and Wolinsky called to ask me how I wanted my name to appear on the masthead.

I pulled my car over and just sat there absorbing the moment. “Just use James O’Shea,” I told Wolinsky, “no middle initial.” I was alone in a rental car with no one to help celebrate a battlefield promotion. (My wife had wisely decided to remain in her job at the Field Museum in Chicago.) After thirty-five years in the newspaper business, my name would appear on the November 13, 2006, edition of the Los Angeles Times as editor of one of journalism’s crown jewels, the largest metropolitan daily newspaper in the county and a major force in news around the globe. As I maneuvered onto the freeway and headed for my hotel in downtown Los Angeles, I started to think about the one thing greater than the esteem that accompanied the title: the challenge I faced as a newly minted editor in the eye of a journalistic storm that was shaking the news business to its core.

I had barely checked into my hotel when Hiller called and suggested we have dinner. He seemed thrilled to see me. His first few weeks on the job had been rough, addressing a hostile newsroom after engineering the exit of two popular leaders. Unhappy newsrooms were nothing new. But entering the Times at that moment was a little like being tossed into a pot of boiling oil: Most of the newsroom hated the paper’s new publisher. Hiller admitted to me that he’d never experienced anything like the hostility he encountered with Baquet’s departure. He hadn’t helped himself when he wrote an op-ed for the Los Angeles Times about his racquetball games with Donald Rumsfeld, the infamous Republican Defense Secretary who had just stepped down after maneuvering the United States into an unpopular war.

The next day I walked into the Times’ historic Globe Lobby as editor for the first time. Three floors above, the staff had plastered the newsroom with pictures of Baquet and Otis Chandler. The building pass I had received from the security guard in the lobby said it all: It was good for one day. I was the paper’s third editor in two years. Entering the newsroom and taking in the images of Baquet and the beloved, late Chandler legacy, I thought: “Okay, I’m up against a saint and a dead man.” The situation was decidedly tense, but it was also thrilling. Across the nation, anyone interested in the future of journalism had their eyes glued to the situation in Los Angeles. Journalists lived for great stories, and I had a doozy. “No matter what you do,” Doug Frantz, the paper’s managing editor, told me, “you will always be viewed as a hatchet man from Chicago in this newsroom.”

Most of the paper’s journalists sat on the second and third floors of the Times’ sprawling six-story, art deco building. The news department on the third floor was a seedy affair with a threadbare green carpet, yellowish lighting that made everyone look pallid, and crowded, grimy cubicles. The remodeled features department on the floor below created a reverse upstairs-downstairs effect. In contrast to many newsrooms with large, open city rooms, the Los Angeles Times’ resembled a maze with reporters and editors crammed into small, crowded spaces surrounded by the traditional newsroom flotsam: discarded zoning commission binders; books and once vital notebooks, outdated City Council agendas; Jimmy Carter political campaign credentials; and long-forgotten, discarded personal effects.

Some of the journalists I would meet in the coming days—who well knew that the newsroom was often its own worst enemy—told me about colleagues who had perfected the art of laziness and had limited their output to one measly story a year. Most of the staff had blithely read about the elimination of hundreds of thousands of jobs in California’s airline and defense industries but treated a relative handful of job cuts in the Times newsroom as a threat to the First Amendment. Journalists across America were in denial, but nowhere was that more glaring and public than at the Los Angeles Times.

Although I didn’t have experience as the editor of a paper, I had run a big newsroom as a managing editor of the Chicago Tribune and had strong journalistic and leadership credentials. The staff was properly suspicious of my Tribune pedigree, but I was determined to do something about that. Journalists are creative people who can’t be ordered to write good stories or great headlines. But if they respect you, they will follow you anywhere, because good journalists traffic in fairness. With that knowledge in the forefront of my mind, I climbed onto a desk in the Los Angeles Times newsroom on November 13, 2006, looked the assembled staff square in the eye, and declared that the new editor was above all a journalist and a seasoned newsman who would make tough calls but would also be fair. “I will make decisions that won’t be popular,” I told the assembled staffers, “but I will also make decisions that won’t be popular in Tribune Tower, just as I did in a variety of jobs in Chicago over the years.” All I asked from the newsroom was an opportunity to earn its respect. Managing editor Frantz told me afterward that he thought my remarks had gone over well. Times reporters videotaped my speech and my Q&A to put it on the web (for the record).

Fortunately for me, Baquet’s endorsement helped me immensely. Key editors like Frantz, Montorio, and Wolinsky rejected rumors of the suicide pact that had buzzed at the news of Baquet’s replacement. But it didn’t take long for me to determine that the culture wars between Los Angeles and Chicago had taken a severe toll.

From the outside, the Times appeared to be an army of journalists united in defense of its defrocked editor and in opposition of the marauding horde in Chicago. In reality, the staff resembled a pack of quarreling tribes. Tribune-mandated budget cuts had ignited intense internecine warfare as editors scrambled to lock in their share of diminishing resources instead of confronting the huge challenges on the horizon. When I met with department heads, metro’s head complained to me about how the national and foreign departments had somehow bypassed cuts. Ditto in business, sports, and features. The budget scrum was really no different than what was happening in Chicago; it was just more intense and more public. The truth was, everything you did in Los Angeles was public; news would be leaked almost immediately to Roderick at LA Observed. When I wrote a memo, I was aware that it was only a matter of hours before it would become public fodder.

As I settled into the newsroom at the Times, I sympathized with Baquet. He hated the budget and management part of the job (he’d delegated that to Wolinsky), and he’d focused the lion’s share of his time and talent on journalism: talking to reporters about their stories, editors about their sections, and everyone about their jobs. By 2006, though, he had started spending an increasing amount of time fighting budget cuts. Over dinner during my first week on the job, Baquet told me he had deferred many hard decisions with the hope that he would eventually prevail and would fix them later. I soon discovered I faced a dysfunctional online operation, an abortive redesign of the paper, chronic misallocation of resources, and a raft of special deals that elevated the status of some reporters at the paper. The Times had three people in each of its Denver, Seattle, and Atlanta bureaus, but only one staffer was covering the San Fernando Valley, home to 1.8 million people starved for news about their community. Janet Clayton, who ran metro, stunned me when she admitted that she had not replaced the overnight police reporter (a footnote in the slew of cutbacks), leaving a paper covering Los Angeles without anyone reporting on the police beat at night. To me, it was unthinkable.

A lunch with California Governor Arnold Schwarzenegger telegraphed the rocky road ahead. When I asked him what he liked and disliked about the Los Angeles Times, I expected him to mention a story that had angered him or his wife, Maria Shriver (like the Times’ infamous election eve story about his tendency to grope women). Instead, he replied that he hated the font of the headlines on page one. I thought: “If the headline font is so garish I have Arnold Schwarzenegger talking about it, I’m in serious trouble.”

On arrival in Los Angeles, I had immediately taken Wolinsky out to lunch and asked him what the hell he’d been thinking about when he decided to meet with Geffen. Wolinsky told me he had been criticized in the Staples affair for not knowing what had been going on, and he’d wanted to have an upper hand on the news this time. He apologized profusely, and I decided that, although he’d clearly stepped out of line, it wasn’t a firing offense. And besides, I needed someone with Wolinsky’s knowledge of producing a massive, complex newspaper in a city I didn’t know. F. Richard Ciccone, a former managing editor at the Chicago Tribune, once pointed out to me that if I got hit by a truck on my way to work, the paper would still come out on time the next day. But if editors like Wolinsky—who knew the production process cold—got hit, the paper might not come out. Wolinsky had the kind of vital knowledge that was crucial to a new editor. I could always move Wolinsky if I wanted to, after I had more time in the editor’s office. During the first couple of months, there were some surprises, but things generally developed as I had expected, except for one challenge I hadn’t anticipated.

Even under the best of circumstances, stress defines the relationship between a publisher and editor. Smart publishers usually delegate deadline duties to their editors and focus on the business side of the paper for good reason. A publisher’s intervention in a story can easily trigger a conflict or signal favoritism—at best an embarrassment, at worst a threat to the paper’s editorial integrity. “When people complained, I always told them there’s nothing I can do about it,” Madigan once confided in me, “because it’s the news.” The publisher’s office is the one place in a newspaper where the line between editorial and the business side can be most easily breached. For whatever reason, that line was not sacred to Hiller.

In a perfect world, I don’t think Hiller, FitzSimons, or Smith would have selected me to be editor of the Los Angeles Times. I had clashed with each of them many times, just not as publicly as Baquet had. I was simply too independent for people who valued team players above all else. I had worked often with Hiller when he was publisher at the Chicago Tribune, but our relationship changed when I arrived in Los Angeles. In Chicago, I had Lipinski, the formidable editor of the Tribune, as a buffer to separate me from Hiller. In Los Angeles, it was just the two of us.

To many locals, Hiller seemed a curious choice for publisher of the Los Angeles Times, particularly given the lasting legacy of Otis Chandler. Otis had worked his way up through the newsroom and resembled a Greek god who could toss a spear across the Pacific. He was muscular and handsome, a motorcycle-riding sportsman who rebelled against his family. Hiller, by contrast, had never worked as a journalist. Slender and well groomed, with wavy gray hair and a relaxed sense of humor, he was a Harvard-educated lawyer from Park Ridge, Illinois. He had joined Tribune Company as general counsel before working in the company’s development arm putting together and sealing deals. Prior to becoming publisher of the Chicago Tribune, he had run the newspaper company’s Internet operation. A single man in his fifties, he lived in a Santa Monica apartment in a building that he was fond of telling people had once been home to Lawrence Welk.

Although Hiller had limited publisher experience in Chicago, his political roots and loyal nature appealed to FitzSimons. A self-described member of the political right, Hiller had served as an assistant attorney general in the Reagan Justice Department but also as a law clerk to Associate Justice to the Supreme Court, Potter Stewart, a judge with liberal leanings. He had also worked at the Tribune’s law firm, Sidley Austin. He communicated his political leanings with the halting, lawyerly questions he used to make a point.

Many Tribune employees back in Chicago liked Hiller, and for good reason. He was friendly, intelligent, funny, and perhaps most importantly, he was the consummate team player. He came off as a kind man, someone who wanted desperately to be liked. The kind of guy who ran for class president. And he loved to sing. In the midst of a crisis, I’d get the feeling Hiller was about to jump up and sing, “Everything’s Coming Up Roses.” As publisher of both the Tribune and the Times, he successfully lobbied the Chicago Cubs and the Los Angeles Dodgers to let him sing the national anthem in Wrigley Field and in Dodger Stadium. At a staff party celebrating the paper’s 125th anniversary, Hiller grabbed a microphone and started crooning show tunes.

Being the editor of a paper is like few other jobs in America; it’s like owning a baseball team—a business that at heart belongs to the public it serves. If you breach the public’s faith in your product, you fail. I viewed my job as a custodian of a public trust—a role that involved a lot more than collecting a big salary. I had to protect the integrity of the institution I ran and by extension the news at all costs.

As I assumed the responsibility of editing the Los Angeles Times, maintaining that public trust had become increasingly difficult. The industry faced an unprecedented assault by everyone from bloggers and blowhards on the political right and left to critics of the so-called mainstream media. Editors of papers large and small struggled with newsrooms in denial and owners under the gun to maintain solid financial returns to their shareholders.

In Baltimore, a wealthy hedge-fund investor had just forced the Knight Ridder chain to put itself on the auction block, and in June 2006, the Sacramento McClatchy publishing chain had stepped up and bought much of the company. McClatchy promptly began selling off papers it didn’t want, including the Minneapolis Star Tribune, which sold the following year for $530 million, a staggering $670 million less than McClatchy had paid for the paper just nine years earlier. The sale shocked an industry where papers had routinely commanded far higher prices.

In my quest to deal with problems that could no longer be deferred another day, I worried most about diminishing the newspaper. The Los Angeles Times put out an excellent newspaper with 1,200 journalists in the newsroom, and I felt I could produce an equally excellent paper with just over 900. But I searched my soul asking at what point the cuts, bureau closings, and newsprint savings would fundamentally dilute the quality of the newspaper. Readers in Los Angeles complained about cuts in the paper far more than they did in Chicago. I told myself that I would not dare leave until I improved the paper that I’d inherited.

I had barely settled in Los Angeles when my worst fears were realized. Almost immediately, the Tribune Company pressured me for a staff cut. My experience in shaving budgets taught me that the Tribune numbers game was a road to nowhere. The corporate staff assessed the needs of the company, engaged in the give and take that public companies routinely practice with Wall Street analysts, and figured out how much excess cash the business needed to prop up the stock price and deliver 20 percent plus returns.

Once the finance guys set a target, each paper had to submit budgets that hit the magic number measured by cash flow. If Tribune needed $100 million in cash flow to keep Wall Street happy (and fund management bonuses) and the Los Angeles Times contribution was $50 million, then the paper would have to move heaven and earth to reach the goal, readers be damned. It was a lazy process in which accountants did the math and ordered cuts to reach a budget goal. The exercise put a premium on cost cutting and devalued the kind of enterprise or editorial risk taking that could actually generate revenues. The unstated understanding was that the newspaper could always be cut, because not that many readers noticed, and most didn’t have an alternative source of news.

I had not entered Los Angeles with a budget or job-cut target. Smith and Hiller had asked me to commit to a reduced staff level, but I told them I couldn’t say how many people I would need to run the Los Angeles Times since I had never worked in that newsroom. “I’m a reporter,” I told Smith, “and a pretty damned good one. If I go out there, I’ll do some reporting. The only thing I’ll guarantee you is an honest answer. If I can do it with less, I’ll tell you. If I think I’ll need more, I’ll tell you that, too.” I was adamant that I wouldn’t weaken the newspaper with indiscriminate, thoughtless budget cuts.

Significantly, Smith and I agreed that I would manage the budget so that it would not exceed an unspecified percentage of the paper’s revenues, generally around 12 percent to 13 percent, which was about the same level as the Chicago Tribune. How I achieved that level would be up to me. The process gave me more flexibility and the newsroom a stake in fixing the revenue drain that most papers faced at the time. We had a revenue problem that we were treating like a cost problem, which would only make the revenue problem worse. If revenues tanked, as they usually did during a recession, I was more vulnerable, but it was a gamble I was willing to take.

In point of fact, my budget deal with Smith was somewhat unusual in a newsroom. Traditionally, editors didn’t concern themselves a great deal with revenues or finances; they were journalists, after all, people who were supposed to worry about the news regardless of financial consequence. But that attitude—that revenue was the realm of the business side of the paper—had developed when monopoly ad markets minted money and newspaper editors were driven to work in chauffeured cars. I had a budget of about $130 million, which sounds like a lot of money until you consider what it takes to cover everything from Hollywood and Washington to the war in Iraq (the Baghdad bureau alone cost me about $1.5 million a year). If I didn’t want to cut the budget, I had to figure out a way to help finance our journalism. I couldn’t just do it by slashing a budget or sitting tight and waiting for things to get better. Those days were over.

At heart, newspaper budgets are really paper and people. In Los Angeles, the newsroom cost ratio for people is about 80/20, or about $.80 of every dollar you spend pays the salary and benefits of the journalist writing or editing the news and $.20 covers expenses, things like travel, meals, notebooks, cameras, and overhead. Bean counters usually place the other major expenses—newsprint and ink—in a separate budget. A newspaper like the Los Angeles Times can spend $160 million to $170 million a year on ink and paper alone. In the Tribune’s top-down budget process, accountants usually gave you the bad news in two messages. In one, they would order, say, $8 million or $10 million in newsprint savings, leaving editors to come up with recommendations to the publisher regarding which sections to slash or kill. In a second message, they’d squeeze your editorial spending, demanding something like a 5 percent cut in a $130 million budget, or $6.5 million. Do the math, and it’s easy to see why hitting that target without getting rid of people is almost impossible. Assuming 80 percent of a $130 million budget is devoted to salary and benefits, you would have to cut $6.5 million out of the remaining $26 million if you didn’t want to axe people. A 25 percent reduction in expense money would seriously diminish most newsrooms.

In our first budget dance, Hiller tried to hit me with a huge staff cut, but I objected in strong terms, actually storming out of the building after arguing that I needed a chance to rejuvenate sections that were losing money and to increase revenues in others. To his credit, Hiller backed off. I truly believed I could resolve the problems in the Los Angeles Times newsroom, but I also knew I wouldn’t make any progress unless—and until—I won the respect and confidence of the staff. To do that, I needed Hiller’s help, and he needed mine. But barbs inevitably developed that complicated our relationship and made me realize that I faced a far larger hurdle than I’d anticipated.

In early December, I walked into my office and noticed my schedule placed me in Hollywood for much of the day at a ceremony in which the Los Angeles Times, in honor of its 125th anniversary, would become the first newspaper to be awarded a star on the Hollywood Walk of Fame. “What is this?” I asked Polly Ross, my assistant. “Are you kidding? I’m not going. I’ve got better things to do with my time.” But Ross reminded me that my newfound stature dictated otherwise. “You have to go,” she said. “You are the editor. They would be insulted if you didn’t show up.”

To my surprise, one of the people who would take offense was Hiller. Later in the morning, Clayton from the metro desk came to see me, her eyes bulging in disbelief that the publisher’s office had called the city desk to ask about our plans to cover the Walk of Fame ceremony. This was not something that a publisher at the Los Angeles Times would have done in the past, and Clayton was shocked by the suggestion we cover something so lacking in substance. I told Clayton not to worry; I would take care of it. I called the photo editor and told him to send a photographer up to Hollywood to take pictures at the event. “As far as a picture in the paper,” I said, “judge it in the context of the day’s news. If it doesn’t measure up to the rest of the news, it doesn’t measure up.” Many of the pictures a photographer takes don’t make it into the newspaper and I couldn’t imagine that such an image would ever appear in the news columns of the Los Angeles Times. It simply wasn’t newsworthy. It was a publicity stunt.

But Hiller saw things differently. When the Times limo pulled up at the Hollywood Roosevelt Hotel, Hiller stepped out, beaming. He was thrilled to be Los Angeles Times publisher when the paper got a star on the Hollywood Walk of Fame. Certainly, there had been a time when being awarded a star had been a big deal, but by late 2006, it didn’t take much to get one. More than 2,000 stars dotted sidewalks in the neighborhood. Even Charlie Tuna had one! Stars were not ceremoniously handed out solely for a lifetime of achievement, either. Recipients forked over $25,000 for their pink terrazzo, five-point star rimmed in bronze.

As the Times entourage neared the sidewalk where our star was laid, Hiller met Johnny Grant, the honorary mayor of Hollywood who ran the star selection committee. Grant, an avuncular, glad-handing legend, shook hands with Hiller, sealing a union of kindred spirits. A delighted Hiller stepped to the lectern and praised Grant and some Times veterans who had shown up for the ceremony. Grant, who died months later, unveiled the star and more pictures were taken. Ed Begley, Jr., spoke at a lunch at the Roosevelt Hotel and then it was finally over. I got back to the office just before the 3:30 news meeting with my editors. No one mentioned the Walk of Fame, and I didn’t bring it up.

As I was driving home, Hiller called me, wanting to know about coverage of the Times star in the Saturday paper. I told him that we had sent a photographer to cover the event, but that the picture didn’t measure up to the news of the day and that we wouldn’t run anything. A moment of silence passed uncomfortably. When Hiller finally responded, he was furious.

“They’ll run negative stories about us all the time,” Hiller barked, referring to the coverage allotted to his dismissal of Baquet, “but when something positive happens, no story.” I tried to settle Hiller down, explaining that the event was the kind of public relations stunt we simply didn’t cover: It wasn’t news. When I pointed out that the newspaper had paid for the star, Hiller shot back, “What do you mean we paid for it?” I told him that I had heard we paid for the event, but that I didn’t have the details and would get back to him. “Well, I want a full and detailed report,” he sputtered in frustration before hanging up.

The next Saturday afternoon, Hiller called me again, asking if I could run a photo of the event, or a story in the Sunday paper. I told him no, a story would be inappropriate, particularly given the circumstances of the award. I had subsequently learned that the deal to honor the paper with a star had been hatched when the head of the Los Angeles Times PR department met Johnny Grant at a party and suggested it. Twenty-five grand later, Grant agreed. “If you want something in the paper, you should run a house ad [an advertisement labeled as a Times ad and paid for by the paper],” I told Hiller. After more back and forth, an angry Hiller agreed, letting me know that he would take the space for the ad “out of the fucking newsroom budget.” Within a week he ran a full-page house ad touting the paper’s star.

The flap over the star exposed me to another side of Hiller for the first time, the one behind the smile. I felt bad for him. He obviously loved the klieg lights of Hollywood, and not to have a story in the paper about the glitzy event would have embarrassed him in front of his new Hollywood friends. But I was also concerned. As trivial as the Walk of Fame incident might seem, it made me realize the depth of Hiller’s blind spots as a publisher. A major part of an editor’s job is to educate the publisher. Lacking any true editorial experience, he honestly didn’t seem to know where the publisher’s job ended and the editor’s began.

From my days in Chicago, I knew Hiller liked to intervene in stories, letting reporters and editors know what he liked and what he didn’t. At first, Lipinski and I dismissed Hiller’s meddlesome notes as naïveté, but they kept coming, and many were tinged with his own political bent. He often queried editors, seeking their views about the adequacy of Chicago Tribune’s and, later, the Los Angeles Times’ stories, compared to accounts sent to him by conservative bloggers or political operatives. In his view, a publisher bore responsibility for the entire paper and should therefore weigh in on issues involving news coverage.

Hiller seemed oblivious to the impact that notes from the publisher would have on a reporter, particularly regarding political issues. Some staffers in Chicago appreciated his tendency to comment on their work; they felt he displayed more interest in them and their stories than former publishers. But in Los Angeles, no one appreciated his interference. Publishers were supposed to stay out of the newsroom, and Hiller made many journalists feel uncomfortable.

There was also a significant difference between the two papers. At the Tribune, the editorial page reported to the editor. When Baquet became editor of the Times, the Tribune Company changed the reporting relationship between the editor and the person who ran the editorial page. Under Carroll, the editorial and op-ed pages had been under the control of the editor, as it was in Chicago. Under Baquet, the editorial pages in the Los Angeles Times reported directly to the publisher of the paper. There was nothing unusual about either system. Some papers put the editorial pages under the editor, and others under the publisher. I told Hiller that the arrangement in Los Angeles made him a more visible factor in the editorial page voice of the paper—something that was different from Chicago. Even if his intentions were benign, Hiller was treading on a minefield. Commenting on a news story could easily be seen by a reporter as an effort to align the story with the newspaper’s editorial position.

I had warned Hiller about the difference in the structure of the two papers before we left Chicago and had suggested he curtail his notes and leave the newsroom to me. But he wouldn’t stop his notes to the staff and even asked if the editorial board should be placed under me. I said no. It didn’t help that many of his complaints about unfair headlines or stories revolved around conservative political issues or influential people in the community. I don’t think he ever complained about stories written about liberals or poor people.

What’s more, Hiller loved to interact with readers, showing them he cared about their views and often inviting them to deal directly with him. I hated to discourage anyone from talking to readers. In my mind, journalists hadn’t done enough of that, particularly at the Times. I spent as much time as possible going to community forums where I would defend the paper against critics and convince readers I was in Los Angeles for the long haul, regardless of how long it would take to fix problems at their paper. I even encouraged them to come in and attend page-one meetings. But when readers and community leaders exchanged views with Hiller, he usually bypassed the reporter who’d written the story or the editor who had handled it and dealt with the complaining party himself—thereby angering staff and engendering resentment. When I suggested to Hiller that it was more effective for all concerned to refer readers to the staffers who’d been involved in the stories under scrutiny, he didn’t listen. Instead, he started his own blog.

Tensions between editors and publishers were becoming increasingly common in American newsrooms. On the surface, newspaper finances in 2006 didn’t seem that bad; the real estate boom that fueled the subprime mortgage crisis was in full swing, generating huge amounts of real estate classified ad revenue. But help wanted and automobile classified ads, a crucial component of newspaper revenue, were in a free fall, partially because of the Internet and partially because advertisers were aware of newspapers’ declining circulations. Were the real estate market to soften—something that was only a matter of time—newspapers would be in real trouble.

In a near panic, publishers ordered marketing studies to help determine how they could reverse the slide. Civic-minded editors traditionally try to balance the needs of readers with their own agendas, providing stories about sports, money, and celebrities as well as reports on the environment, foreign news, and legislation. The marketing studies’ results were music to a publisher’s ears. Newspaper readers wanted local news about their communities, the surveys said, not lengthy expensive reports on the foibles of the Bush administration, the war in Iraq, or the political implications of some arms treaty. Of course, the answers to questions in these surveys depended a lot on how the question was asked and who was asking it. But it soon became pretty clear that things near and dear to the hearts of journalists—big, expensive foreign and national news bureaus that grappled with the weighty, significant subjects of the day—were the next targets for budget cutters. As accountants sharpened their knives, editors scrambled to protect their journalistic assets, while publishers felt the heat from stockholders and Wall Street. Tensions escalated sharply across the country as journalists and publishers squared off over which journalistic assets should be cut and which should be spared.

In Los Angeles, Hiller had inherited a gimmick to attract readers’ attention when he took over from Johnson, in the form of a “guest editor” venture. In an effort to make the paper more relevant or entertaining to the local community, the weekly Sunday opinion section would be assigned to a famous non-journalist. The guest editor would select the stories, get writers, edit the copy, and give readers a perspective on his or her choices when the section was published in the biggest paper of the week. The Times editorial page editor, Andrés Martinez, who had been recruited by Hiller’s predecessor, had selected an all-star team of news makers as guest editors, including celebrities such as Hollywood’s Brian Grazer, the spike-haired producer of big hits like TV’s 24, and film’s American Gangster, A Beautiful Mind, and The Da Vinci Code. I didn’t see much harm in the idea, particularly since it involved the editorial board, which was out of my purview. Hiller loved it.

Problems soon surfaced in its execution, though. The newsroom was abuzz with gossip that editorial page editor Martinez had separated from his wife and was romantically involved with an attractive woman who worked for a public relations firm where Grazer was a client. I didn’t know a lot about all of the personalities involved, but after thirty years as a journalist, I knew how this story would read:

The editorial page editor of the Los Angeles Times relinquished the paper’s Sunday Opinion Section to a big-time Hollywood producer represented by a PR firm where the editor’s girlfriend works.

Hiller had sent me an e-mail saying he might need my counsel about something. Then Wolinsky dropped by my office to report on the newsroom gossip mill. “I know this isn’t your area, but somebody’s got to do something,” Wolinsky said. Soon Nick Goldberg, Martinez’s deputy, came into my office and implored me to intervene.

When I met with Hiller, I didn’t have to raise the subject. He told me about Martinez and said he felt we could explain the situation in a note and publish the section. He asked me for my thoughts. I told him to kill it. Hiller was shocked. “You are the only one to suggest that,” he said. I told Hiller I had been a journalist for thirty years and I felt strongly that we’d be crucified for publishing Grazer’s section, with or without a note.

The discussion went on for quite a while and spilled into the next day as Hiller called others seeking their views, a lawyerly tactic but one that also spread the story. Martinez was furious with me, and the blogs had a great time with it. But Hiller seemed far more worried about how Grazer would react. In the end, Hiller listened to me. He killed the section and the guest editor’s project. Martinez resigned, a baffled Grazer was miffed, but Hiller got positive reviews from most observers.

More significantly, the incident seemed to bolster my credibility with Hiller in our ongoing wrangling over the budget. He was honest and would listen, but was vulnerable to adopting the position of the last person to get his ear. I learned with Hiller that I had to make sure that I was the last in line. Hiller had originally sought a budget number from the newsroom that would have required me to chop seventy-five to eighty people from the staff in addition to numerous space and expense cuts that were wrong for the paper and that would undermine my credibility. I reminded him of the agreement that I had struck with Smith and I argued for a less ham-handed approach.

Cutting staff is a horrible exercise under any circumstances, but it is particularly hard in journalism because many readers and sources in the community establish a bond with the reporters who cover them. Every single item in a newspaper has a constituency, whether it’s the bridge column, the comics, a star columnist, or sometimes even a secretary.

Just months after I arrived at the Times, I started preparing my senior editors for an imminent staff reduction. We crafted a list of people who should be canned for performance issues. That was easy. Then I announced an open-ended voluntary buyout in which anyone who wanted to leave would receive a week’s pay for every six months of service up to a year’s pay. We gave the staff a few weeks to think about their options, as my editors fanned out through the newsroom and advised people on the poor-performance list that they should agree to the buyout, lest they be fired and get nothing. The open-ended nature of the buyout was dangerous; people who you didn’t want to leave might take it.

Accountants arrived at the number of jobs I needed to eliminate in a buyout by assigning an average salary to a job. If people with salaries higher than the average accepted the offer, I wouldn’t have to eliminate as many jobs. In my case, fifty-seven people, some who I wanted to leave and many who I didn’t, raised their hands, giving me far more in total salary than I needed to meet my goal. I convinced Hiller to let me use the excess dollars to hire back about twenty-five younger journalists who were cheaper than some who had left. The deal left me with a net reduction of only thirty-two journalists and allowed me to inject some fresh blood into the staff, which was always good for morale.

In keeping with my deal with Smith, I also began looking for opportunities to increase revenues at the Times. Scanning a Baquet memo about future plans, I noticed a proposal for a fashion news section for Los Angeles. All things being equal, I probably wouldn’t have dedicated precious resources to coverage about Ferragamo and fedoras when rampant corruption and war plagued the nation and the city. But all things were not equal. Fashion, properly covered, was news to many people and reflected broader social trends. Plus the section could generate fresh revenue from new advertisers, money that would help me finance stories on budgets and battles. Working with colleagues in the advertising department, John Montorio and his editors had proposed a brilliant section called Image that offered full-color, sophisticated coverage on a national scale.

We convinced Hiller to authorize the section and to approve an additional eight to ten hires to generate news that would result in revenue. Over a nine-month stretch, Montorio’s editors produced thirty-eight sections to rave editorial reviews. Image attracted new advertisers, and while it generated more than $5.5 million in new revenues, it made more than $2 million in profit to prop up the paper’s struggling cash flow. In effect, I had paid for the Baghdad bureau with coverage of shops, shoes, and Chanel.

By accident as much as design, I had started to achieve my goal of combining revenue enhancements with modest cost cuts to stabilize the newsroom and meet the budget. Sean Reily, an editor and a budget ace, proposed that we go through the entire paper and select sections where we could replicate our experience with Image.

The Los Angeles Times that I inherited was an excellent newspaper that regularly won Pulitzer Prizes. Consistent with Puerner’s philosophy that paid content was a winning strategy, Carroll and Baquet had built exceptionally strong foreign and national news coverage, a vibrant Washington bureau competitive on major stories, and a stable of investigative reporters who regularly rooted out corruption and neglect with huge multipart stories. Under Montorio, the paper also had a collection of excellent feature sections, many of which Reily began to assess to determine whether they had the revenue potential of Image. But the paper had always had trouble crafting a strategy to cover the huge, sprawling city it called home. Anyone reading the Los Angeles Times didn’t really get a good sense or feel for this fascinating, diverse city and region. I was determined to correct that imbalance and told everyone that metro was my highest priority in new hires and budgeting.

But the controversies kept coming. “Editors here have always had to live with controversy,” Reily told me one day. “But I don’t think I’ve ever seen anything like what’s happening with you.” Controversies over the paper’s content were raised left and right. When Frantz had a problem with a story about the Armenian genocide (the writer, of Armenian descent, had shown that he had an opinion on the issue and we had reassigned it to another writer), there was an uproar in the strong and impressively large Armenian community in Los Angeles. Unlike me, who had once run a newsroom under attack by the powerful Chicago Israeli community, Hiller had never been at the other end of a gun aimed by a special-interest group. And the Armenians knew how to attack: They flooded the company with complaints. At one point, my BlackBerry was immobilized by the number of e-mails I received from Armenians.

Meanwhile, the circle of investors hovering over Tribune Company in hopes of buying it became far more controversial when Chicago real estate billionaire Sam Zell joined its ranks. Then, just as I was telling the newsroom who had agreed to the buyout, Mike Oneal of the Chicago Tribune broke a story about huge bonuses being awarded to key executives in Chicago who had agreed to stay on until the company had been sold, making it appear as if managers like me were cutting budgets to finance huge bonuses. I was livid and drafted a memo to the staff announcing the buyouts but also addressing the bonuses, which I characterized as indefensible. The blogosphere had a field day, of course, and Hiller called early the next morning to say, “I just got off the phone with one pissed-off chairman.”

Gradually, though, the newsroom started to settle down. Some staffers privately said I spent too much time in my office and that I wasn’t as open and charismatic as Baquet. Unfortunately, that was true. I didn’t make time in Los Angeles to demonstrate my journalistic skills as an editor. That was my fault. But the newsroom had changed for the better under me. There was more hope in the air. The staff had removed most of the pictures of Baquet and Chandler and was busy getting back to work. I started hiring some new staff members and replacing others and the first Image section debuted.

About six months after I had arrived, FitzSimons came to Los Angeles for a visit. Over breakfast, we engaged in ritual chitchat. But after a few minutes, FitzSimons’ brow furrowed, and he pulled from his briefcase my original memo on the Los Angeles Times. “Well, Jim, it’s been six months,” he said, “and I’m not too impressed.” He wondered why I hadn’t done more, a sly reference to my failure to fire Wolinsky and others on my masthead, and why I criticized the bonuses in my statement about staff buyouts. “You didn’t even know what those bonuses were about,” FitzSimons erroneously chided me, noting that the tone of my memo implied that I had an inflated view of myself and my role. “The day of the imperial CEO is over, Jim, and so is the day of the imperial editor.”