A four-man Executive Council now runs Tribune Company, in lieu of actually having a CEO at the helm. Under pressure from a scathing New York Times article and the resignation of Lee Abrams over a racy email, Randy Michaels submitted his resignation on Friday as the company submitted its formal reorganization plan which, if approved, will allow the media company to emerge from Chapter 11 bankruptcy.
The former radio executive had ruffled feathers at the Tribune Company – particularly people on the newspaper side – since he was brought onboard by Sam Zell after his leveraged buyout of the company in 2007. Indeed, Michaels was brought onboard specifically to ruffle feathers, since he and Zell were out to change the newspaper business and make it profitable and viable in the 21st Century. Originally put in charge of the broadcast and Internet operations, Michaels was later elevated to COO of the entire company and then to CEO as Zell moved away from day-to-day operations to remain Chairman of the board of directors.
Michaels’ free-wheeling approach was clearly what Zell believed was needed to reform a company rooted in the past and make it competitive in a multi-media age. The two had previously worked together when Zell became the primary shareholder of Jacor Communications, with Michaels at the helm. Both, but especially Zell, made huge profits when Jacor was merged with Clear Channel Communications.
The financial miracles that Zell and Michaels pulled off at Jacor were not repeated at Tribune. Rather, a deep national recession kicked in and the highly leveraged company ended up seeking Chapter 11 protection from a US Bankruptcy Court. But even while dealing with the contentious bankruptcy proceeding, which has dragged on for 22 months, Michaels continued to push for innovation at Tribune Company’s various units and to integrate content across multiple platforms.
The chain of events leading to Michaels’ ouster began early this month with a front page article in the New York Times. It contained no news, but rather was a lengthy rehash of stories about the very un-corporate Michaels, along with unproven allegations of bad behavior that the CEO unequivocally denied. To people in radio who’d been familiar with Randy Michaels for decades there was nothing surprising or shocking in the NY Times story.
But some members of the board of directors were uncomfortable with the portrayal of Tribune Tower as a bawdy frat-house. Some began to lobby for Michaels’ ouster. That only intensified when one of his top executives, Lee Abrams, resigned after coming under fire for sending out a company-wide email with a link to a video called “Sluts” which included a woman pouring liquid over her naked breasts. [Click here to read Abrams’ open letter explaining what happened.]
As the boardroom pressure intensified, the company’s flagship Chicago Tribune reported that Michaels would resign by the end of last week. That indeed is what happened.
On the same day that Michaels submitted his resignation Tribune Company filed the reorganization plan recently agreed to by most of its creditors. There is still opposition by some junior creditors, but the plan is expected to be approved and allow the company to exit Chapter 11. That will begin a new era – and would have, even if Michaels had remained CEO until the bankruptcy proceeding was completed.
As it emerges from Chapter 11 Tribune Company will be owned by its senior lenders, including, among others, JPMorgan Chase, Oaktree Capital Management and Angelo, Gordon & Co. A new board of directors will take over and no doubt one of their first priorities will be to hire a new CEO.
RBR-TVBR observation: The new “CEO-by-committee” approach is obviously a bad choice, but it may be the only one that was left for Tribune Company, since a new board will take over post-Chapter 11 and pick a new leader for the company. What is most strange about the turn of events is that the directors of the Tribune Company let the flagship newspaper of a rival media company tell them how to run their company. What we will never know is what the New York Times felt it had to gain by destroying Randy Michaels.