Rewarding failure at the Baltimore Sun

On Oct. 6, one of the five daily newspapers I read was the Baltimore Sun.

Just possibly, somewhere in what I would call "a parsimonious position" of "editorially well-designed obscurity," there has been (today or earlier) something in the Sun approximating what was an extensive story on Page 1 of the Business section of the New York Times.

Yet I really do doubt that the Baltimore Sun has ever reported as much bad news about itself as reported that morning by the New York Times under the grim headline: "Of Layoffs, Bankruptcy and Bonuses."

The Times' David Carr reported:

"Let's say that a group of corporate executives uses scads of debt to take over a struggling company, sells off some profitable assets, lays off thousands of employees while achieving miserable results. And then, less than a year after saddling the company with $8 billion in debt, they opt for bankruptcy.

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"You'd expect them to walk the plank, or at the very least spend a good stretch of time in the naughty corner. But you wouldn't expect the top 700 managers to collect $66 million in bonuses.

"But that's just what might happen at the Tribune Company. A week ago Friday, lawyers for the company, which publishes The Los Angeles Times, The Chicago Tribune, The Baltimore Sun, and owns other newspapers and television stations, were in Federal Bankruptcy Court in Delaware suggesting that the proposed 2009 bonuses were critical for the health and survival of the company.

"Under questioning, Chandler Bigelow III, the chief financial officer, said the bonuses would help 'incentivize our key managers to battle all of the intense challenges that unfortunately our local media businesses are facing,' according to The Associated Press.

"The unsecured creditors of the Tribune Company filed a letter in support of the incentives, and its senior lenders support the plan as well. But both the company's union and the trustee appointed to oversee the bankruptcy raised objections, arguing that the bonuses would be the highest ever paid – even as the company has its lowest cash flow in 10 years."

Ladies and gentlemen: Most unfortunately, this fascinating – and enraging – newspaper story does not break it down so that Baltimore can see how many of the Sun executives are being paid bonuses as circulation plummets, as does advertising.

But the outrage of big-exec-bonuses-in-Baltimore is evident in the following quote from Cet Parks, executive director of the Baltimore-Washington Newspaper Guild, who told the New York Times:

"It is sort of along the same lines as the Bank of America and AIG bonuses, except it is not taxpayer money. At the same time they are asking employees to make sacrifices, they want to reap the rewards of all these cuts they have been making."

So the Baltimore Sun is right down there in financial crisis along with its bankrupt owner, the Chicago Tribune Company. And it is hard to imagine that among those 700 managers who will receive $66 million in bonuses there are no executives of the Baltimore Sun. And this even as the Sun has laid off so many people who were not of the Big-Bonus-Come-What-May Crowd. These Baltimore Sun biggies continue raking in big checks even as the Sun goes on setting. How long can this last? I doubt very much longer.

The Times reports the following grim news about that wild man who now owns the Sun and its sister papers in Chicago and Los Angeles:

"As it turns out, Sam Zell, the real estate mogul known as the grave dancer for his willingness to take on distressed assets, seems more like a grave digger. There is litany of infamies surrounding Mr. Zell's ill-advised employee stock ownership plan in 2007 to take over the Tribune: its original creditors are currently investigating whether the sale qualified as a so-called fraudulent conveyance; cash flow fell to $789 million last year, from $1.5 billion in 2006; the costs associated with bankruptcy are now more than $7 million a month; and about 2,000 people lost their jobs in 2008 alone.

"But the bonuses at issue in the court in Delaware offer a nice window into the entitlement and tone-deafness that has prevailed at the company better than any of those other big numbers.

"The proposed bonuses come in two gilded packages. The annual management incentive program would pay more than $45 million to about 720 managers along a sliding scale based on achieving certain targets. About $11.6 million would go to 70 core managers and other personnel, with $9.3 million reserved for just 23 employees in a pay-for-performance arrangement."

Think about that! In this bankrupt company, hundreds of managers will be paid $66 million with a considerable number of these Big Bonus Boys and Girls in Baltimore. And how is this MMM (meaning Millions-for-Management Movement) going over in the company's newsrooms? At the Los Angeles Times, columnist Steve Lopez told the New York Times:

"'We've got empty desks throughout the newsroom. Working journalists used to sit at them and serve up good stuff daily. Then there's the issue of our bankruptcy,' he wrote in an e-mail message, adding, 'Yeah, I'd have to say the brain trust was tone-deaf, to say the least, in handing out bonuses to the big dogs.'

"The chief judge, Kevin J. Carey, who is presiding over the bankruptcy case, said that a company fighting for its life needed top-tier talent, but also said, 'in a troubled industry as this one, the argument could be made that bonuses should not be paid, or certainly not of this magnitude.' He will make a decision soon, perhaps in the coming weeks.

"But regardless of whether the bonuses have been earned or not, James Warren, a former managing editor of The Chicago Tribune, wonders how necessary they are.

"'Without denying that many of these folks are toiling hard and diligently, the basic arguments underlying this request are laughable and beg at least one simple question,' he said. 'How many of those that are being enriched by the bonuses have been contacted by headhunting firms seeking their talents? After what has happened there and what is going on in the broader economy, where are they going to go?'"