the financial salary sucks, but the psychological salary, and this absolutely applies to everyone in this room, 1 knowing that you're part of a core, you know, i don't need to repeat it. you know what it is. he says -- so that psychological salary is honor, and that is something that is worth a lot. how can you put a dollar figure on that? >> you can watch this and other programs online at booktv.org. and now james o'shea, forming managing editor of the chicago tribunes look inside the acquisition of the times mirror company by the tribune company and the later acquisition of the tribune company by investor sam zeal. this is about an hour and 10 minutes. [inaudible conversations] >> hi, and welcome. i thank everyone for coming. it is my great pleasure to

introduce these two wonderful gentlemen, james o'shea and james warren. [inaudible] general o'shea is a very good friend of mine. it's fitting for him to host this. [inaudible] what's more tonight is that i'm doing the favor to james o'shea by doing this, and something you may not know about him is that jim o'shea is a master electrician. he put himself through college -- i don't know if you know this -- by doing electrical work, and so we have a lot of work that needs to be done around here -- [laughter] and i was hoping, jim, that you'd stick around afterwards and fix lights and things like that. [laughter] obviously, you all know james warren. he is a real hell raiser and a

fabulous human being, former managing editor of the chicago tribune and now writes for the chicago news cooperative appearing twice a week in the "new york times" and also on cnc's website. he's a fixture in journal. i. you're all aware of that. he's known all over the country and, indeed, all over the world for frequent appearances on shows like capitol gang on cnn. he was the washington bureau chief for the chicago tribune. he writes for everyone incoming the at -- including the at atlantic monthly, huffington post, sun times, and he's basically done everything. these two guys i'm sure most of you know have worked together for years, and we've heard a lot of different stories about them working together. one of my favorite stories 1 a story that both of them kind of tell about how jim o'shea was so

mad at james warren that he screamed at him and hung up the phone, and they didn't speak for awhile. you remember that? [laughter] you don't forget that. we hope they are not here to retaliate tonight. i know jim warren will be giving you a lot of jim's background. everybody's named jim basically. [laughter] i just wanted to say quickly that i have huge respect, and i know many of you do for jim o'shea. it is amazing to me all he's accomplished in his life, and you know he was a very much loved journalist and managing editor of the tribe biewn, and everyone feels very deeply about him in general and chatting with people tonight, it's nice to see how much people love him, care about him, and respect him, and so i'm honored you guys are here. i think it took a lot of courage to write this book. you know, jim is used to more

writing about other people and to write about himself, i think, is not always so easy, and so it's really especially great to have him here talking about his life in his book. i also want to mention this is being taped for c-span. i think you know that, and c-span has asked me to ask you if you're asking questions during question and answer time, please wait until the mic comes over to you before you start asking your questions, so with all of that, i'd like to introduce jim and jim. [applause] >> thank you, everybody. i am jim warren with my colleague, friend, and former boss, jim o'shea, former editor of the "los angeles times" former managing editor of the "chicago tribune" and i thank you for the space that i didn't

realize until an hour ago is an appropriate place begin the title of the book because the book reinvolves around two deals, one clearly an auction. what you may assume is that given our relationship, the, you know, the fixes in here, this is going to be 45 minute or an hour of mutually agreeable score settling, and there are a lot of scores to settle, but indeed the fact is that if the fbi had wiretapped our conversations in the same way they had wiretapped those of happen less former illinois governor, you would find the no shortage of creative tension between us for periods of time, and as one late former colleague of ours, former foreign editor of the paper put it, evidence of jim's celtic wage.

i occasionally was the target of. i'll be very, very short. the most interesting thing in the book about jim o'shea personally refers to him being a st. louis native and graduate of a military high school run by the christian brothers where he writes "the only thing i really learned was how to take a punch." [laughter] the man before you finished third lowest in his class. [laughter] his older sister's suspected he was destined for a career in newspapers when at age 9, he stole her diary and sold it to her boyfriend for $5. [laughter] at the point tonight you just start taking him seriously, just remember that. [laughter] so, let's start off, and just housekeeping things, there's a bunch of seats here, maybe ten

seats in the front if folks want to very subtly come on down and sit for awhile rather than stand. jim, all these years later after we met, we have this book called "deal from hell," so what's it about basically and why should we care? why should people watching us far away care? >> well, really this book talks a lot about the differences between journalism today and journalism when i started. when i got into the journalism newspaper business, it was largely controlled by families. not all of them were angels by any means, baa r but they -- but they had a public service montra they followed, and basically it was -- no one could ever put it better than mike

coles, a leading member of the family who owned the first newspaper i worked for, "the des moines register," and he said the only thing a newspaper has to worry about is if the public respects it. if the public respects, you'll have readers, and if there's readers, there's advertisers, and that's the main source of revenue for newspapers. you have to be respected by the public to be have a successful business. around the 1960s and the 70s that was turned on its head when the families wanted out of the business and they started selling off the newspapers, and a lot of times they sold them to people, to corporations that were owned by stockholders, and the people who ran those corporations had a duty to journalists, and journalism, but they also had a fiduciary duty to stockholders. first things worked fine because there was a lot of money rolling

in, and it was easy to balance those two things. sometime after 9/11, that changed, and we began struggling with revenues, and as we tried to maintain the profit margins which were considerable, we began cutting and we began diminishing journalism, and i suspect we were all a little bit guilty of sub board nateing the interest of the public to the fiduciary duties to produce the term that is wall street and others expected, and i really think that that kind of led us down this path to where we are today, and in the case of the tribune company that led them to bankruptcy court, and a great institution that was a fixture and today is an institution in trouble, and i think it has -- it's an institution that has -- in all newspapers like it -- i don't think people understand the fundamental role that

newspapers play in giving voters and people in the democracy the information and news they need, and they are under threat today, and i think it's troubling to me and a lot of people, and i think we, you know, so everybody i think should care about the story, not just because it's about me or not because it's about the chicago tribune or l.a. times, but it's about journalism, and that's something vital to a democratic society. >> now, this book is called "the deal from hell". it's really about two deals. the first comes in the year 2000 and involves the purchase by tribune company, chicago based owner of several dozen very respected television and newspaper stations and give us the economic become drop at the time, the newspaper industry become drop, and the rationale

for first of the two big deals. if you want to mention a fellow who became known, i think, as the serial killer -- that's not serial, but cereal. tell us about him and why he crucial to the deal? >> the tribune made a stop in purgatory first buying times square, and it was -- [laughter] it was -- you know, basically the atmosphere at the time was buy or be bought. aol and time warner had just merged and things were going quite well, and so when the tribune decided to buy this, things look good, future looked

bright. we paid a lot of money for it, and it was -- and the way the deal was structured as we brought the company even though mark wallace, the cereal killer who was the ceo of -- by the way, he got that title -- he used to be the co-chairman of general mills where they made all the cereal, and the staff of the l.a. times was phenomena and if the staff would have done as well at journalism as they did at nicknames, we would not talk about this. [laughter] they named mark the cereal killer because he came in, cut things, cutting staff, went and closed new york news day and therefore he got that name, but when the tribune bought it, mark willis didn't know the tribe biewn was buying the company. they bought it when they were not looking. it was back stabbing drama in a

place where they made drama in los angeles, and i think because they were trying to really do the deal in secret, a lot of things that we should have known about that we didn't know about came back to haunt us later, and the company got in this -- the things 245 we didn't know about like huge tax case circulation problems at news day and circulation fraud, these came back to haunt us and really butt -- put us into troubling conditions and made us vulnerable. >> the tax case jim refers to is one that was ultimately settled with the irs for how much? >> a billion. >> somewhere -- or maybe south of that, but anyway, it was big. also, the circulation problems that jim refers to was in the long island newspaper, newsday which was what i gather part and parcel of the double-edged sword of doing the deal in secret behind the back of the ceo; am i

correct? i'm not doing the due jill gens -- diligence one might have normally. >> that's true. you can fault a lot of people, but the due diligence didn't last long, and we didn't see it coming even though there was evidence. one of the things i found and what surprised me 1 i found letters that were written to people involved in the circulation scandal six months after the letters went to the guy who was involved in the scandal, one of the guys that was making up fake computer programs in september of 2000 which was six months after we completed this deal, and what was even more surprising is the lawyer responding to him was a lawyer for a law firm in los angeles which represented the chandler family, the family who sold us the l.a. times, and so i

think those were sorts of things -- there were signs there we just didn't pick up on them because we were trying 20 get the deal done, and we were in a situation where we didn't want to ignite a bidding war and pay more for the papers, so we did it in secret. the price for that is there's a lot of things we didn't catch. >> chandlers for reasons were unhappy with the ceo whom they picked to run their company. what was the lure of the tribune company to the chandlers? >> the chandlers wanted to transform the l.a. times 23r a newspaper company to something different. i don't know they were clear on what they wanted, but they saw the tribune come along, and we had newspapers, television -- we were early into the internet -- probably one of the more innovative companies at the time, and i think they also felt

very strongly that the leadership of the tribune company, particularly someone who's in the audience, jack fuller, gave the company credibility because of his journalistic principles and because he had just written a book about news values and was considered someone who they trusted, and so i think they really saw a lot of good things about the tribune company, and they wanted to diversify and they wanted cash. they wanted a lot of cash because they're a family that loves dividends and hates taxes. that was a good way to get some money, and it was kind of a tax-free transz fer. >> what did they get out of the deal money-wise? what's the economics? >> oh, a $7-$8 billion deal. they got stock, and one was

dispute in the thing was the chandlers wanted their money in stock so there's no paying taxes. it was a tax free transfer and some didn't like that because they were going to get cash and have to pay taxes on it. it get settled out, but it was at the time the largest newspaper merger in history. >> i apologize with my obsession with a particular illinois governor, but in the same way we discourage him for forgetting there's some in the audience who may have voted for him six different times, there's also an impulse; correct, to disparage the deal now. is it not true that for some period of time the conventional wisdom was it was a smart move and things were headed in the

right direction? >> a lot of times it was thought the deal was working. i mean, in the early years it was doing well. the company took a lot out time managers, a lot of duplication. they did something that frankly was almost -- that no one else has been able to duplicate, and that's they started career builder, a jobs site and monster was considered the internet guru to wipe out everybody, and we started career builder, and it's one of the few times a legacy media company starting and operation that was highly successful and eventually overtook monster. it was working well. journal lis tickly, the l.a. too manies was wheeling from a scandal, and we turned that paper around, and it was winning pulitzer prizes right and left under the leadership. people were disparaging the chicago tribune, they were

praising the editors put in charge. >> for sure, the book details no shortage of frictions fairly quickly between some factions in chicago, us folks in the newsroom, and our counterparts in los angeles which increasingly, you know, seemed to us sort of this, you know, wayward western empire doing what they wanted to do, but let's past all of those, the original responsibility, the score settling which i love to do now, but i won't. i'll take the higher road. let's fast forward to the core of the book, the second big deal, the deal from hell, and tell us what was going on in the industry, at the company, in the economy, and the period around 2006-2007 that prompt a de facto onyx of this faye -- auction of the famous media pour house and brings into the spotlight a gentleman named sam

zel. >> at the time there was a lot of turmoil in the industry, a lot of budget cuts, everybody was struggling with revenues. those kind of tensions really created a lot of, you know, it was who is going to get it? who is going to lose staff? the l.a. times or the chicago tribune, everybody's fighting for their reputation. personally, you know, i went to -- i was asked to go out to the los angeles times in 2006 in november of 2006 after the staff had rebelled against the tribune company numerous times. they'd -- john carroll, one of its editors left. a year later, a good friend of mine left, and i went out in november of 2006 to take over the l.a. times, and i'll never forget, the first day i walked in, i walked in the door of the l.a. times, and the security guard says who are you?

i said i'm jim o'shea, the new editor. he says okay, he gave me a pass into the building that was good for one day. [laughter] i thought that says a lot right there. [laughter] i walked into the newsroom and all around the news room are plastered pictures of dean bakaay and otis chandler, the god, zeus. i thought, okay, welcome. i had decided that i was just going to go there, and i was going to get up in front of the newsroom. i said right away, assemble the staff. i went out and i basically, you know, said, okay, i'm a journalist. i'm here. i think i can help you guys, and i just basically tried to be real honest to them. it appealed to the sense in journalists that they'll give you a fair shake. they traffic in fairness and balance, and if they think you're honest, they'll give you a chance even if they can't stand you.

i basically did that, and we went to work and tried to do it, but all throughout the industry, you have to understand people -- we had gone through three or four years of trying to figure out, you know, the right size of the newsroom, how to downsize the newsroom. there were real economic whims blowing through the whole industry forcing us to do a lot of things we didn't like, and that included laying off people, eliminating jobs, and it got to the point you didn't want to do anything because you were afraid to stick your head up and somebody said, oh, you're going to switch somebody? do you need them? so you kind of got to the point where it was being really sick of cutting back and looking for an opportunity to do something about it. not a lot of people knew what to do, and that's when sam came along. >> okay, but what were the factors that prompted the company to essentially put itself up for sale. why? why did it need anybody to come

in? stock price? what was going on with revenues? why was it not on the same course? >> the cash flow began being challenged we could say. i think part of it, too, was that the one of the happy chandlers came into play. the chandlers did not -- they were unhappy with the direction of the company under dennis fitzsimmons and dennis went out -- revenues were down, and to kind of get the stock price up, he engaged -- he created a stock buy back to buy back a chunk of -- borrow a couple billion dollars and buy back the stock, and that really jeopardized the trust that the chandlers had, and they were worried it would make it very difficult for them to unwind these trusts 24 a way that wouldn't cause them to pay 5 lot

of tax, so they wrote a letter to the board and made it public attacking the management of the company, the direction of the company, and when you do that, the company goes up for sale, and so that's when the company was put up for sale. >> why was it so many people trooped here from various places, wall street, a lot of other media companies looked at the books and head back to o'hair as quickly as they did? >> it was at that time the newspaper business -- companies were coming up for sale. ritter was forced into a situation where a hedge fund guy forced it to be put up for sale and it was the minneapolis tribune that sold for a billion and a half dollars like nine years before -- they got about $5 billion for it, and everybody was shocked that it wouldn't bring anymore money than that, and people began doubting it. the internet was coming along, the newspaper industry really

didn't know how to deal with the internet, and so stock prices started tumbling, and it was an uncertain future. nobody wants an uncertain future or take that risk so they all looked at the books, couldn't figure out how to make it work, and walked away. >> now, to me, the most fascinating stuff in the book involves the period of time where sam comes into the picture and there is this feverish activity behind the scenes to put together this deal. tell us a little bit about his entry on the scene and the feverish activity you disclose particularly as it involves some well-known firms in this country, general -- jp morgan, chase, all involved, and as you characterized it seemed to be doing out of less than the most noble of

interests, not necessarily caring about things like social mission and a lot more about significant fees and expenses to be paid and tell us also how that relates to something called a solvency letter which you spend a lot of time on. >> well, when sam, he's kind of nicknamed himself the grave dancer, and his big thing would be to -- he wants to buy disstressed assets, so he wants to come in when you are not doing well, get a dime on your dollar from your company, ring expense out it, reform it, and sell it off a few years later for money. he was successful in that in some cases, not always, but he was pretty successful at it, and he looked at the tribune company and thought this is a company -- he thought it was worth about $16-$17 billion and he could buy it for $13 billion and just borrow a lot of money to do it.

he put $300 million down. he's worth billions and billions of dollars and $300 million is a lot to us in the room, but it was not that great of a risk for him. he put that is down, probably laid off some of that on it, borrowed money, and buys the tribune thinking 245 he's going to hold on to it for awhile and make it killing. >> but he was not just a matter of putting down $2 -- $300 million and loans, but it was a complicated deal a great fascination to people in the financial business. i remember the first and probably last time i will have gone skiing in my life. my wife took my to park city, utah following the deal, and we shared a house with folks including a cfo of 5 big wall street firm who was more obsessed with the deal than i was because he just couldn't figure how it would work. he knew everything about it.

he knew the involvement. you'll have to explain that of an esop and he said in his world, if this deal worked, it was going to be of historic consequence, but he didn't know how it'd work. tell us about some of the intracay sighs of the deal itself. >> and for the question -- were the ranking file workers shafted? >> okay. [laughter] >> well, i'll do that first. the people who were working at the tribune company when the deal closed got $34 a share for the stock they owned. 23 you purchased -- if you purchased stock and it was your compensation plan, there was nobody else paying you $34 a share. some of the people didn't come off badly and said thank god sam came along. it was unique.

he created an esop, and employee stock ownership plan, and throw a bunch of financial maneuvers used that to kind of buy the company with it and called it -- he and the employees were partners. they were going to buy the company, and because it was an esop, they didn't have to pay taxes. the tribune company was paying $300 million a year on income taxes. the way that goes -- he could eliminate the 401(k) things. there's another $70 million. he's looking autoall the expense savings, and it was unique a. lot of people on wall street did not understand this, and when he went and sold it, he convinced him it would work, but he constructed this elaborate kind of two-faced deal, and it's really complex about the way he did it, but the first phase brings in 50% of the stock, and

then he was not going to buy the next 50% until the end of the year so it was in 2007, may of 2007, they buy 50% of the stock, and it leaves you a six month period where the whole company's in limbo and people in wall street begin taking 5 closer look because they say can this guy close this deal? they are looking at all the debt involved and what's happening to the revenues, and they begin doubting 245 he can close the deal, 10 the stock out there, still out there tanks, and everybody's trying 20 figure out if he's going to be able to pull this off. he says, i can do, i can do it. hehe has the money. the banks say -- the first phase of the deal, the investment banks earn $161 million in fees. that's enough for me to run the l.a. times newsroom for a year employing 970 journalists, so that was a huge amount of money, and then they -- but then the

second phase comes along, and there's another $122 million in fees. all together it's $280 million in fees they have riding on the deal, but the deal has to close. there's enormous momentum to close the deal despite people saying, you know, i don't know if this thing's going to work. this could bankrupt the entire company. if you're a banker, you're not -- it's against the law to lend somebody money when you know that the loan will put them this bankruptcy. the big deal became a solvency opinion. that's -- it's a good housekeeping seal of approval from some financial dpie who says 24 okay, they're going to make it. they went to several firms that didn't want to touch it, and then they went to one in milwaukee, evaluation research corporation, and they paid them a million dollars, a huge fee to do a very quick solvency opinion on the second phase of the deal. they issued the solvency opinion

even though most of the people that worked for e volluation research corporation was suggesting not to do it 6789 they got that deal. that's how the deal closed, banks got the fee, sam got the company, and the employees were screwed. they were in a company where they couldn't carry the debt, and they laid them off so that when i think i was at the chicago tribune, we had 7 -- a little over 700 journalists working in the newsroom. at the l.a. times, we had over 920 journalists working in the newsroom. probably too many, but right now i'd say i know the l.a. times 1 down -- probably around 550 to 575 journalists, so all of the people lost their jobs. i don't know the levels, but i suspect the staff is smaller by 5 third to a half by now, 10 all these, you know, looked great, and we were all, when sam came

along, we thought, hey, maybe he's got the answer. we tried. we can't figure out. sam's successful guy. he comes along, and he's saying to us you can't cut your way out of this. yeah, man, let's hear more. you got to grow revenue, and we're struggling to do this, but in the end, the debt was just, you know, it was so narrow that if we missed our projections by like 2%, the esop didn't get my funding or benefits for five years. it was that close. the thing just finally it went into bankruptcy at the end of the year, and now they are still struggling, 5e7b right now, right -- and right now, these papers are far better off in bankruptcy court than out of bankruptcy court because when they are out of bankruptcy court, they will be owned by banks, and the banks don't want to be in the newspaper business. they want the money back. when they want money back, there's one way to get it back. they'll cut m i think it's a

pretty grim situation for the employees. >> is there any jack daniels around here? [laughter] that i could -- [laughter] i was going to meet my wife later, but if there's a flask out there, send it up here after that cheery assessment. jim, sam can be a pretty convenient foil particularly given the sort of larger than life personality, profane guy, but to what extent should there be a fair amount of responsibility shared by the previous tribune company board of directors? what about their role including some bashing the community who thought they were upholding this legacy? >> i department drink enough wine to answer that one, but the narratives -- there's a couple responsible for the board. you know, i think everybody was

probably guilty of wanting the deal to go through. everybody was guilty of hoping against hope that we could get out of this, and so i think people kind of closed the blind eye to some pretty disturbing reality. i think, you know, journalists, we all were wondering -- well, we wanted to be successful. we wanted this thing to work, so, you know, here's -- i would imagine if we would have been reporting this deal, we would have gone, hey, this debt, are you crazy? it's not going to make it. we didn't. we turned a blind eye to it too. i think there was a lot of responsibility all the way around, but, you know, in the end, what i try to do in the book is not assign blame or point fingers, but say this is what happened and let the reader figure that out. >> oh, come on. let's not be so charitable here. [laughter] take us a little bit inside the zel camp, and you suggest

there's two conflicting visions about what to do with the company and its assets within the camp, and as you tell us about that, please do tell us about a fellow named randy michaels. [laughter] >> no, don't. [laughter] >> well, in the camp, there's one camp that said we should work with the existing editors. these are really solid good editors, solid good papers. we should really try to work with them and see what we can do to improve it, and that was kind of a memo drafted by sam and to his chief investment officer talking about the first 100 days. the second memo was by randy michaels, his chosen coo, and it was totally different. it was -- i don't know -- 12 or 13 pages of bullet points not

mentioning the word "journalism" and said cut the crap of giving the people what we need to know. this is a attention-deficit disordered society. give them what they are going to read and give them what sells ads, and that is the philosophy that prevailed, and then he wanted to say let's have fun. his idea of fun was not much fun for a lot of other people, particularly women. he was a pretty abusive kind of guy in that regard, and it's well chronicled about some of the incidents that occurred, and so they went with randy, and it was a disaster. they, i think, dumbed down the paper, and i don't think it with the citizens in chicago benefited -- i think the citizens of chicago spoke fairly clearly because i think a lot of them had quit the paper and walked away from it. >> there's a chapter in this

book that's titled "count kern". explain that title, and why you decided to write about that topic. >> well, because -- >> count kern. >> jerry kern was the -- he was -- he 4 a position in -- he 4 a position in tribune publishing, and he really -- he decided to that he could, he and i were kind of competitors for a managing editor job once, and i was the managing editor, and jerry went upstairs, and i don't think he ever got every not being named managerring editor, and anyway, that point aside, he began really examining the operations. you know, there's good reasons to do this. you could eliminate some duplication, but, you know, i think he really focused on it and began counting how many people if the hurricane katrina occurred, how many people are we

sending to cover this thing? how many does the chicago tribune send, news day, how many? he examined it in a gran nuclear way -- granule way. i didn't think of him as a guy who counts everything. he counted how many people and trying to second guess why we did this, and i think in the end that gave people some ammunition that they needed when randy michaels came along to basically really cut back the staff pretty severely, and they closed all of the foreign and national bureaus of the chicago tribune and basically determined that no one in the city of chicago was interested in anything other than local news and they didn't really need their own foreign reports, and they didn't need their own national stories, and i totally disagree with that, and so i felt like it was an important part of the story that shed light on why these guys

would come along and just decimate the place like that. >> meanwhile, i'm in los angeles, you're the editor-in-chief of the language times, your boss and publisher, now head of the mccormick foundation here in chicago. explain your relationship with him and in ultimately you departed the l.a. times? >> well, i think david, he's a nice guy, really trying to do the right thing out there, but we got into a big difference of opinion, not about cuts, but what about -- but if you're going to cut the budget, what do you do with the savings? you know, he was under pressure from sam to put the savings to the bottom line. i kept saying we need to reup vest that in the paper. i started to convert the paper from a news organization that broke stories online and explained and amized them in the

paper. we needed investment. no one was giving me the investment. i said i cut budgets five years now. i know how to do it well. this is not working. you cut the budget, things get worse. we need to take this -- i did a couple things with a couple sections that generated new revenue, and i wanted to go through the paper and examine each section and generate more revenue and try to deal with the problem with the balance of budget cuts and revenue enhancements, and he didn't want to go that way, and so he decided that, you know, he was going to make a transition, and so david always said, you know, he still says i didn't fire you. i said, well, i don't know because i had never been fired before, but when somebody takes you to lunch and they say to you, i'm going to put somebody else in your job, i kind of think that qualifies. [laughter] so we probably still disagree with that, but we just could not see eye-to-eye on the future,

and, you know, i said, you know, i'm not -- i told you when i came out here i was not just going to cut this place indiscriminantly, and if that's what you want to do, and he said this place needs to be smaller, smaller, smaller. i said you need to get yourself an editor to do that because i won't do it. he said, okay, i'm getting an editor to do it, and he did. >> part of the book is personal and poignant. let me ask you -- what was it like -- whether fired or quit -- what was it like to be out wherever you were, condo or at the beach and presumably for the first time in your adult life unemployed 1234 >> well, it was interesting because in a way it was a little bit liberating. i'll never forget the first day because i went, sat, looking at the ocean, waves coming in, drinking a cup of coffee, and i thought holy -- i don't have

anywhere to go today. it was the first time since i was a kid that i had not had a job or somewhere i had to go out and do something that day. i thought, what am i going to do? i thought, well, i'll ride my bike, clear my head, and then i thought, well, there's a lot of things i've always wanted to do. i wanted to write a play, so i sat down, tried to write a play. i wrote a play. it wasn't very good. i decided i wanted to, you know, i started reviving my interest in photography. i thought about, okay, there's a lot of things to do in your life, and now here's an opportunity to do them. you don't have to sit down anymore and, you know, worry about, you know, go into the office every day and think how will i save the -- what do i do to keep the people working and avoid laying them off? i looked at it as an opportunity. it was unsettling though because, you know, you just get

fired in a highly publicized incident and how you're in the 60s -- another job trouble -- [laughter] my daughter was still in school, son in graduate school. it was a scarry thing, it is, to look at it and say, but then you look and say, well, i always look at bad situations and say where's the opportunity? i saw an opportunity in being able to do different things, go in a different direction, and i got basically bailed out by 5 guy named erik joans at harvard who said you want to come here and be a fell loy. i thought, i've never been a fellow. [laughter] i thought that sounds better than a nobody, so i'll go be a fellow. i never dreamed in a million years i could get through the door at harvard. i mean, like you said, i graduated third lowest in my

class. i went to harvard and sitting 234 kennedy school, got a researcher, and i could tell her -- she was helping me research the book, and then along came this opportunity. .. i began thinking about that and i became friends with some of the people in the program, and i

began -- they were all very and here were the journalists, talented people, the best in the business and they were all worried when they went back to the papers they wouldn't have a job and then i started thinking in the newspaper business was good to me. a kid from nowhere and i got to edit to great newspapers and maybe i should try to give something back and so in opportunity came when my publisher called me and said they were trying to form a new organization in chicago. so what i did, i told them i will be a catalyst. i will help you get this off the ground. i will work for you for a year for no salary but i don't want to run another news organization. and here i am almost two years later the editor of the chicago news cooperative, we are out there trying to figure this out. you know, how are you going to finance and how are you going to pay for serious public-service

journalism, the kind that is really needed in any city, any county, anywhere. how are you going to do that? we are trying to figure that out right now. nobody has figured that out. no legacy news organization, no one but i feel strongly that it's important, and it's important to this community into the country and it's important to the world to have strong edited information, not gossip, not junk or stuff that is put up some where someone can justify. you have to get out and figure that is what we are trying to do and that really kind of let me to another point where i thought i'm glad i got fired because i would have never done this if i hadn't been fired and i am out there and it's fun and it's interesting. it's scary. sometimes it's the same thing you walk into a place and find out how are you going to get money to keep these people employed? and so i've learned what many people in this audience probably experience, fund-raising.

i don't like it, i'm a journalist. i never ask for anything and there i am going out to raise money and that's what i do now. i am not really a journalist in more and a fund-raiser and i am probably not very good at it but i'm trying at it and the whole thing is to try to figure out how are we going to provide the money that does this vital service because nobody's going to buy an ad and say to you want to buy an ad and sponsor a story that puts somebody to jail? noeth thanks. so you have to kind of figure out how were we going to do this because this is the kind of journalism that's really going. it's the coverage of the government and institutions in the state house and all these things where a lot of our problems were routed. so that is right now what we are trying to do. so in the longwinded answer to your question of what it was like, it was scary at first but in the end was a pretty enlightening and for dillinger thing and i got an opportunity to try something and maybe help people and teach kids journalism

and the kind of journalism i believe. >> you guys can ask you questions and if you do there is a microphone from c-span's if you can hold off a second before it comes. since we just mentioned in passing a thing called the internet, and i see a friend, howard tallman, the great chicago entrepreneur who had something called flash plans academy which is a media school and i saw him get a speech a couple of weeks ago which laid out how consuming media these days it's a frightening and challenging and you see the amount of folks that get their news every day from youtube for example and the excellent reading changes. so you took over some big media company today. how do you deal with monetizing

what you're doing particularly online in a way that can pay for that great journalism of which you were part of we were trying to create communities of interest from organized around the subject you can't put any more of a mass audience it's not bring to be there. so you look for let's find the people in chicago that are intensely interested in education the street and is interest network and online that gets into the good education coverage and you find ten or 20,000 people less than one-half of 1% of the population of the county can you find something like the would pay $2 a week for the education coverage and then you use that money to higher education reporters, go out and cover the subject and then they create just the real good solid

education coverage on line and then you create another and out of that you kind of cherry pick through that and create a broad site for people that don't want to pay for it. so can you go out and find people interested in politics and education, all these subjects and creed these narrow audiences that will pay for this because they care about it and they are committed to it and there are people out there like that, and can you use that money to haulier that 40 or 50 reporters to go out and cover the city and get that kind of coverage that is sorely needed, and can you use that to create a -- the way we do it we did one little experiment with a finger early and often as a political website and we got people to read was a granular political the information and we took some of the information and created something which is that everybody gets for free. so we are getting money from certain people better interested in politics are using that money to do two things, higher

political reporters and then support a website that sends it off to the general public so that that's kind of the idea, but i think that in the legacy news organization you've got to start, you've got to do two things. the first thing you've got to start doing is get out of the printing business. it's too expensive and people are not going to pay you $5 for a newspaper every day or three or four and that's about what it takes because that is the big cost it's not the reporter it's the printing press, the eink, the drivers, the paper. that's it costs you all the money, 70 to 80% of your budget. steve got to get out of that business so it's not economic. the price the people are used to getting the newspapers you have to go on line. maybe you don't have a daily newspaper, in its bitter three days a week. maybe one day a week and an online business and then your costs are way down because you are no longer delivering these

things every day, and sometimes they aren't even looking at it. so if you to take it and you also have to go on the business side of it and quit selling said coats and abs and start selling people. how do you want to reach we got the data. how're you going to get them there? how do you reach your audience, that's what we have to become, newspapers have to become modern formation companies. the help people that our business and where ever get their message across to the people in the audience. we do know the audience and we have to figure that out. i don't know if that is the answer but it's a helluva lot better than sitting here and watching everything go to hell in a handbasket. >> my last question is about methodology and writing the book and inspired by a couple of years ago in the book showed up

and you gave me a copy and i said thanks a million and 2 feet outside of your door of the instantly looked at the index and as vain as i am briefed a sigh of relief mentioned one. competent washington bureau chief, something like that, which was fine by me. there's a lot of other people who mention many more times. a lot of people who we spend a lot of time with particularly corporate executives, and some of those aren't treated quite as benignly as i am. tell me a little bit about that. about i don't know if you recall what and applicable matter of how you use that information that originally came to you and distinctly private business meetings with some of those folks, and then just talk to me about i don't know what you call the more emotional side of it.

i cringe at occasional sentence here and there and we're only talking to a few people here and a few million on tv, may be. [laughter] the former ceo of the company and we spent a lot of time particularly named john madigan, and he's not going to necessarily be a happy camper. tell us about the challenge of writing about people who you knew in a pretty intimate way. >> welcome i could say respond to john i don't care what i was going to read. i knew in the end he would be mad at me. i pretty much took that as a given because i don't think that he's going to like -- she doesn't like the idea of me writing about this but i kind of went back to almost everybody in interviews went over a lot of what happened, so that there were still some instances of it may be a private meeting that i was there a plea involved in

that i used but i didn't do it unless i thought that really a flint to the story of it contributed to the narrative and characterized something. there's a couple of incidents that are pretty embarrassing to people. i went back and forth. i would go back and then i would sit back and say this specific thing there's a country, does it land, understanding to what happened? it's hard because i don't want to embarrass people. i really don't. i'm a journalist and in the end any journalist is the same way. when you sit down to write your only friend in the world as the reader and if you look at it and it is a screen it is a reader and you've got to be loyal and faithful to the story.

and so that was. it lets them understanding insight or context of the story that's what i would consider using it. if not and there was a lot of other stuff but frankly i didn't use. so i didn't. >> and one of those acts that offers a great deal of insight and context does involved oral sex. so when you go to amazon tonight, a little bit of titillation in there which is in its own way very, very revealing fox with of people like magazines like sec'y what's ( a few questions. >> what was he talking about?

[inaudible conversations] >> you and i know each other so you know i'm not looking for a job. i'm gainfully employed. for how much longer, i'm not sure. but here is my question. fossil's like me have always taken a great deal of comfort and the integrity of the news gathering aspects of what you've done for a living niquette and integrity to the publications you've been involved with that model was vanishing. i love telling everyone as you and i talked about tonight i have daughters 21 and 24 and i don't think they have ever read a newspaper. and of course you folks in journalism have all seen that and are trying to make the transition into the digital media. you are doing that at the same time that there is so much pressure, economic pressure

[inaudible] >> [inaudible] >> i think in the future my concern is the high standard for people who speak [inaudible] for the rest of the people there won't be.

one of the duties of the newspaper is everyday the same information, rich or poor less than the price of a cup of coffee. always an amazing thing. and that is not going to be as true in the future because it is a model that is broken. so i think that's why i kind of got involved in cnc because if we don't figure out we will go away. and i think the best thing, i do see that these organizations are springing up and i am just hoping that the traditional newspaper organizations can learn from us and learn about how we can maintain that. >> in the front here.

he started to think about the online aspect of things and being a source of breaking news and that you were going to use the newspaper ads and extended the analysis of the story. >> [inaudible] >> do i need to repeat that? >> can you expand on that and tell me what your thought process was and what you hope to accomplish with that? >> the question is what was jim's if your article strategy when he was running the l.a. times about how to divide the role of the internet, the online version with the print version. >> we see them as two separate entities. >> i think at that time there is a divide in the newsrooms and online newsrooms and print news room and was very difficult. you have to make people realize

that this is one news organization and each media has its own strength and journalists like to tell stories. so if you can kind of convince people that the important thing here was telling your story for the media that it's in and so i think my thought was a kind of explain that i made out for them here's what is happening in classified automobile at advertising. we lost $200,000 in print advertising last year and a gain of $50,000 in online and if we don't get the online going, then next year it is going to get worse so let's get with the program coming and there was a pretty successful message out there and people began taking it too hard and looking at it and it's just it absolutely started and it's still going on and i think the "l.a. times" has been pretty successful with its online operations because the

kind of adopted that. but it's a very, very difficult proposition for all of journalists at that time. to appear on line before they appeared in the paper it was hard to break that down. there's a lot of people in this room that wrestled with that and they can tell you it's tough. can we talk about classified ventures in terms of to the online internet world is that what you were referring to? >> i was referring to the company added entity called classified ventures which was pretty early to the online world. >> the one that i was referring to was a different one. it was called careerbuilder. and careerbuilder was an out of a job section in the newspaper. and we basically took the careerbuilder and made it an online jobs and information and

classified advertising vehicle the monster hit to get over the newspapers and thought that's it. jack fuller is one of the driving forces behind it. careerbuilder her and one of the few examples of the legacy news organization creating an internet vehicle that became a very powerful force in the industry so i think that is what i was referring to and that saved some of the classified advertising. but craigslist was going along with free classified which killed us. >> in your book you talk about the greatness mifsud of the

editorial voices of the tribune and the l.a. times when they were at their peak. what's the future of an editorial voice and a model like the chicago news cooperative i don't really understand. can you give -- >> the influence of otis chandler, the influence of the colonel mccormick to set the tone from the publishers perspective. estimate how we do that at the chicago -- >> it's your values. part of the reasons the people that you mentioned chandler and mccormick and the people that gave the tribune, made the tribune a great newspaper is that they had strong journalistic values and they

believe in the journalism and i think that it's we kind of got out of fashion that journalists should be in charge of the business operations and be involved in it. we have a law to protect us and we would remain pure and would never do that. i think that has to change and i think that journalists have to assume the business responsibilities that we didn't do for a long time and kind of figure this out because i think what might said the lives talking about before. it has to be based the public respect for you and your values and the institutions that you run so you have to really be strong and racist and i think that it will be easier in an organization like the chicago is cooperative can i, as a bunch of revenue streams and that gives a bad appearance. and i think a lot of it is in the value of a journalist and in the value of what you are really driving for and what you are drifting for is a respect of the public and if you have the respect of the public and the

readers you can figure out some way to monetize that. >> we have one or two why don't we just take those and then call it a night. you see model or a future where people are going to pay for online content of any quality? >> the question is do either of us see future in which folks will pay for high-quality information online. >> well i think you're seeing that. you see that in bloomberg they pay a lot of money for high-quality information. i think as the newspapers shrinked if and as it becomes difficult for them to keep providing this information in the smaller papers throughout the country they are charging for online content and they're doing it pretty well they really aren't doing that and they have

to because this is unsustainable. you can't give away information and pay journalists to gather information and give away for free but expect to get in and add a market like that. >> maybe one last one. an esteemed former "chicago tribune" correspondent dorothy psp mick i was going to ask you something other critics last few they will claim you were trying to settle scores what is your answer to that? >> you are going to be hammered for settling scores. i gave the but several people have time does it look like i'm selling scores, if you do, tell me, and i changed them a lot of things for people said you are being a little mean and there's

a turn of the phrase it looks a little like a dagger so i kind of eliminated a lot of that and i tried not to. i really did try to say if i were reporting the story as a reporter even though i am involved in a, you know, could i just do an honest job of say what happened. that's really what i wanted to do. this is what happened and i sit up front this is from the bias of a journalist the port in the trenches, this is not -- i try to be pretty upfront about it. but, you know, you're going to get all of that and so i've taken a lot in my day i can to give you more. i would like to thank lesley for offering this space. thank the folks at c-span, and i'm one of the ones, dorothy, to

be a lot of score saddling. much of it as a kind of would have liked to have seen on the one level. but when i put the last page down, i sent jam an e-mail saying you've got more self restraint and i would have had, and i think at the core of it is a book less about personalities who damn about some very significant societal and cultural shifts all seen through the prism of a very important american institution that just happens to be based here in chicago for a long, long time and was central to the workings in many ways of democracy and a major american city, and i think that will ultimately between what jim is talking about and our citizens in a democracy you can read it and either find things to be hopeful about or

see if there is a flask of jack daniel's around. but it's a good, serious important work and congratulations and thanks for spending time with us. [applause] >> [inaudible conversations] >> >> [inaudible conversations] >> kent masterson brown while touring kentucky is one of the series examining the landscape of the southeastern cities. mr. brown recounts the military

career of the john porter who served in the mind kentucky calgary during the civil war and his remembrances of the service following the end of the war. it's about 40 minutes. >> jon porter was a young fellow from butler county kentucky, which is a county down in south-central part of the state who joined the confederate army in october of 1861 the confederate armies occupied southern kentucky, and ultimately became a lieutenant in the ninth kentucky calvary that road with john morgan and he was probably prouder of having ridden through the war with john morgan and he was

almost anything he ever did alive, and he handled this memoir for his daughter whose name was bill and he married shortly after the war was over, and his wife died after giving birth so he raised this child along with his two sisters and brother in bowling green kentucky in the county, warren county as a neighboring county to butler and it's the county seat so a rather large community in southern kentucky. and so he raised many bell and wanted many bell to understand what he did during the war. and so in 1872 he set about writing the memoirs, and they were titles then memoirs of my experience in the war for southern independence, and as he

says in his little preface to these memoirs that they were met for her and he bemoaned repeatedly in his memoir how she had ancestors who were in the revolution from virginia but knew nothing about them and said that's really sad, i wish i knew more about my ancestors who served in the revolution and he literally set about making sure that wouldn't happen to the subsequent generations thinking about him coming in these memoirs were actually handed to me by a member of his family some years ago and they were a tight script. the hand written memoir was reduced to typewriting in 1927 and you can imagine what a 1927 typewriter did to a pa