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Black Talks, Zell Walks

Of all the topics that gush garbage, the post-apocalyptic assessment of failed newspaper vultures in Chicago is among the most resiliently productive.

The desire to snuggle up to Sam Zell about his misunderstood grandeur never ceases to amaze. The latest in this category is Ben Johnson's new business biography, Money Talks, Bullshit Walks: Inside the Contrarian Mind of Billionaire Sam Zell, which offers a favorable and totally erroneous view of Zell's quirks.

There were those who insisted then and still do that Conrad Black was a charming, rogue genius, rather than a callous pillager of the Chicago Sun-Times Empire. Those of us close enough to Black's various thug hirelings surely could catch the scent of mendacity on the air when they ran the Sun-Times. The interim ownership of the Sun-Times, manifested by affable but totally baffled CEO Cyrus Friedheim, was less evil than merely inept.

Sam Zell is no less a barbarian than Black. And history now suggests a willfully, doggedly, ignorant barbarian whose only skill was possession of money. And because I know a little first-hand about both situations, I can tell you what the two enterprises had in common and why they both ultimately failed.

Sam Zell and Conrad Black neither understood nor cared about the people whose lives were in their hands. This might seem a simplistic can't-we-all-just-be-chums criticism, but that's not what good management is. And thoughtful ownership certainly requires more fundamental strengths than a warm, sentimental disposition. In its least pleasant manifestation, good management can sometimes seem more like surgery where the pain of the present is a necessary down payment on a better future. That results when owners have some rational view of what the future will look like. What Zell and Black exhibited was simply bad management writ large. They were both thumping around blindly in a dark cave, hoping to stumble into the right answers. Neither clearly understood what it was they owned, and they shielded their ineptitude inside brashness.

They're not the first, of course. Sam and Conrad both stood on the shoulders of media dwarfs. For at least 30 years, the newspaper industry has been sliding toward a false insistence that what's in a newspaper is a product. It's a hideous fallacy. Even when moguls such as Black and Zell proclaimed the ultimate value of "content," they were describing "content" as a "product" that reflects "what our customers want."

It's the Keebler Elf view of newspapers. We will crank out better cookies if we get more cookie dough.

But newspapers aren't really factories. They are more like organic farms or perhaps think tanks from which a tangible result flows. And perhaps the only meaningful, useful, worthwhile - and profitable - process inside a newspaper is the intellectual vigor of smart people linked in a common goal. That, and little else, produces profit.

An organic farm has no point to existence if it doesn't produce good food.

Zell and Black were simply confused about what the product was. They thought the product was profit.

But what if - and here comes the biggie - great newspaper owners are good mostly at harnessing the common will of very smart people trying to do good?

Perhaps fixing the world's evils and shining light into dark corners are the only legitimate products a newspaper can achieve. All else simply becomes a metric for how much income the enterprise can reasonably achieve.

This is not to say that newspapers and those who toil for them don't have responsibility in the industry's death throes, though it was never those inside any newspaper who demanded the profit level be 15 (or 20, or 50) percent. That was an imposed, artificial value tied to stock ownership and the quarterly tyrannies of Wall Street.

As both Zell and Black found, managing real thinking people is harder than managing brick and mortar.

First, it's a simpler task to order bricks to sit still and be quiet. The bricks don't talk back when you do something stupid.

When you announce to them that they are your "co-partners" in this grand building, the bricks don't scoff at the smug dopiness of such piffle.

In Zell's case, he had the unctuous gall to suggest to employees he was dragging by a long rope behind his pickup truck that they actually were "Tribune co-owners." He did not even have the courtesy to tell them that the warm, wet puddle on their shoes was not rain.

Maybe newspapers began dying when they stopped thinking. They stopped thinking in part because, at least for some time, they were earning too much money for their own good. This is a criticism that certainly no longer applies.

Against that definition, Zell and Black were not doomed by market forces or recalcitrant employees. They were doomed by their own lack of imagination and understanding.

The Tribune properties are vastly changed now from when Zell bought them, and anyone may judge whether the changes were for the good. They are certainly leaner now, which might make them more attractive to new ownership as individual parcels. But the one reality that cannot be changed is how much Zell indebted the company. Tribune could never have made enough profit to pay off that $13 billion debt. Someone needed to chop up Sam's credit cards.

The new owners of the Sun-Times talk about the massive value of its community papers that ring the city. Previous owners did the same thing without any sign they actually meant it. And there were many signals they thought it was a joke. If you remember the human-filled pods being farmed for their energy by The Matrix machines you'll get some sense of those papers traditional relationship with the Time Lords at the Sun-Times.

Both Black and Zell failed - one because of criminal greed and the other from towering ignorance - for basically the same underlying misunderstanding.

They viewed what they owned as inanimate objects. But beyond the real estate and presses possessed by newspapers, their total value is mostly invested in humans. Not merely a rhetorical, marketing metaphor, but actually and really.

Newspapers are like great universities whose real intangible value is the sum of the hearts and minds inside the buildings, less the building themselves. Put the minds of a hundred great professors and 2,000 great students inside a beach shack and it's still a great university.

Neither of the media giants was very good at playing well with others. In fact, you'd have a hard time proving they were smart at all.

But there still are those who think Zell and Black are merely misunderstood geniuses. Sic Semper Effluvium.

-

David Rutter is the former publisher/editor of the Lake County News-Sun, a Sun-Times Media property. He is a regular contributor to the Beachwood and he welcomes your comments.




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Posted on February 11, 2010


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