Why Not Occupy Newsrooms?

By David Carr, The New York Times

24 October 11

lmost two weeks ago, USA Today put its finger on why the Occupy Wall Street protests continued to gain traction.

"The bonus system has gone beyond a means of rewarding talent and is now Wall Street"s primary business," the newspaper editorial stated, adding: "Institutions take huge gambles because the short-term returns are a rationale for their rich payouts. But even when the consequences of their risky behavior come back to haunt them, they still pay huge bonuses."

Well thought and well put, but for one thing: If you were looking for bonus excess despite miserable operations, the best recent example I can think of is Gannett, which owns USA Today.

The week before the editorial ran, Craig A. Dubow resigned as Gannett"s chief executive. His short six-year tenure was, by most accounts, a disaster. Gannett"s stock price declined to about $10 a share from a high of $75 the day after he took over; the number of employees at Gannett plummeted to 32,000 from about 52,000, resulting in a remarkable diminution in journalistic boots on the ground at the 82 newspapers the company owns.

Never a standout in journalism performance, the company strip-mined its newspapers in search of earnings, leaving many communities with far less original, serious reporting.

Given that legacy, it was about time Mr. Dubow was shown the door, right? Not in the current world we live in. Not only did Mr. Dubow retire under his own power because of health reasons, he got a mash note from Marjorie Magner, a member of Gannett"s board, who said without irony that "Craig championed our consumers and their ever-changing needs for news and information."

But the board gave him far more than undeserved plaudits. Mr. Dubow walked out the door with just under $37.1 million in retirement, health and disability benefits. That comes on top of a combined $16 million in salary and bonuses in the last two years.

And in case you thought they were paying up just to get rid of a certain way of doing business - slicing and dicing their way to quarterly profits - Mr. Dubow was replaced by Gracia C. Martore, the company"s president and chief operating officer. She was Mr. Dubow"s steady accomplice in working the cost side of the business, without finding much in the way of new revenue. She has already pocketed millions in bonuses and will now be in line for even more.

Forget about occupying Wall Street; maybe it"s time to start occupying Main Street, a place Gannett has bled dry by offering less and less news while dumping and furloughing journalists in seemingly every quarter.

It"s tempting to write off Gannett"s enrichment amid the ruins as anomalous.

But Gannett is not the only big media enterprise where the consequences of bad decisions land on everyone except those who made them. The Tribune Company, a chain of newspapers and television stations run into the ground by Sam Zell after he bought it in 2007, is paying out tens of millions of dollars in bonuses as part of a deal in which it would exit bankruptcy.

Over 4,000 people in the company lost their jobs, and the journalistic missions of formerly robust newspapers it operates - including The Los Angeles Times, The Chicago Tribune and The Baltimore Sun - have been curtailed. And even though Randy Michaels and some of his corporate fraternity brothers who operated the company into bankruptcy are gone, more than 600 managers who were there while the company cratered remain.

Not only do they have jobs while so many others were sent packing, but the remaining leadership will be eligible for a bonus pool from $26.4 million to $32.4 million under the current plan.

Through the magic of blunt force cost-cutting - about $800 million over the last three years, much of it in the form of layoffs - a lawyer for the senior creditors told the judge in charge of the bankruptcy case that the bankrupt enterprise would generate an estimated $517 million in cash flow for 2011.

Over the past three years, counting the payment scheduled for 2011, the bonuses could amount to $115 million, according to The Chicago Tribune. The drawn-out legal process hasn"t stopped lawyers and the current managers from picking the carcass clean. The Tribune story includes overleveraged purchases, feckless management and a culture of personal enrichment, all hallmarks of the Wall Street way that have left protesters enraged.

This is a not a finger-waving screed to suggest that some layoffs are more damaging than others just because they landed on people like me who type for a living.

(It"s worth noting that Arthur Sulzberger Jr., the publisher and chairman of The New York Times Company, and Janet Robinson, the president and chief executive, were criticized by various unions for a 2009 compensation package that cost a combined $12 million. It"s also worth noting that Mr. Sulzberger chose to forgo additional compensation in other years.)

The newspaper business is struggling, and those of us who have jobs are lucky to still have them. But how in the world could a board, any board, justify such huge payouts to media executives at a time like this? It"s not that any of them were flight risks, in need of incentive to stick out a bankruptcy. Most had no place to go, and even if they did, many would have trouble shaking off the taint of their previous tenure.

Peter Lewis, a former employee of both The Times and The Des Moines Register, which was bought and diminished by Gannett after he left the paper, ripped the Gannett bonuses on his blog "Words and Ideas" in summarizing an approach in which getting rid of jobs passes for a strategy.

"Can anyone argue that Gannett newspapers and journalism are better today, and that news consumers are better served?" he wrote.

"How did Mr. Dubow and Gannett serve the consumer?" Mr. Lewis continued. "They laid off journalists. They cut the pay of those who remained, while demanding that they work longer hours. They closed news bureaus. They slashed newsroom budgets. As revenue fell, and stock prices tanked, and product quality deteriorated, they rewarded themselves with huge pay raises and bonuses."

Sure, he was talking about Gannett, but he could have been talking about the Tribune Company, or come to think of it, much of the American economy that used to make money by making things. Many newspaper companies are working hard against steep challenges to innovate into a new future, but Mr. Dubow and his team seemed content to just ride the collapse of the business.

No one, least of all me, is suggesting that running a newspaper company is a piece of cake. But the people in the industry who are content to slide people out of the back of the truck until it runs out of gas not only don"t deserve tens of millions in bonuses, they don"t deserve jobs.

The optics of the bonuses are far worse than the practical impact. Newspapers are asking their employees for shared sacrifice and their digital readers to begin paying. So, lucrative packages won"t cut it. As newspapers all over the country struggle to divine the meaning of the Occupy protests, some of the companies that own them might want to listen closely to see if there is a message there meant for them.