Gannett’s rich reward for a failed CEO

Gannett Co. Inc. owns the Rochester (NY) Democrat and Chronicle, where I worked from 1974 to 1998.  Newspaper work was good to me, and Gannett was good to me, but I’m glad I was able to retire when I did.  I am reminded why I’m glad as I read this by David Carr in the New York Times.

Craig A. Dubow

Craig A. Dubow resigned as Gannett’s chief executive [on Oct. 6].  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.

via NYTimes.com.

And also this, by Peter Lewis, formerly of the Des Moines Register, New York Times, Time magazine and Stanford University journalism school.

Mr. Dubow … required many employees to take unpaid leaves of absence, and instituted pay freezes.  He referred to this as “increasing workplace efficiencies.” … …

Mr. Dubow managed to keep earnings high, according to analysts, by cutting costs (i.e. people) more aggressively than any other company in the media industry.  Gannett refers to this as “workplace restructuring.” … …

Gracia Martore, who replaces Dubow as CEO, said: “We will continue our relentless quest to provide trusted news and information and will actively support the people and businesses in the communities we serve.”

These people are lying.  The corporate goal is not to serve the consumer; it’s to maximize profits and pay packages for top executives.  Can anyone argue that Gannett newspapers and journalism are better today, and that news consumers are better served?

How did Mr. Dubow and Gannett serve the consumer?  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.

via Words & Ideas.

Frank Gannett, the founder of the chain, built his company by acquiring profitable newspapers rooted in their communities, mostly in upstate New York, many of them without competition, and leaving them alone so long as they were profitable.

The Democrat and Chronicle was his flagship newspaper, which it still was when I joined the D&C.  Corporate headquarters occupied the top floor of 55 Exchange St. where I worked.  Paul Miller, the founder’s successor, continued to give the local newspapers a good deal of autonomy.  Gannett’s pay and benefits were not outstanding, but I enjoyed the latitude I was given to pursue my own projects and ideas.

Allen Neuharth became CEO of Gannett in 1979 and transformed the company from a regional into a national newspaper chain.  Under his leadership, Gannett became the largest U.S. newspaper chain in number of newspapers.  It acquired the Cincinnati Enquirer, Louisville Courier-Journal, Des Moines Register, Detroit News, Arkansas Gazette and other newspapers, as well as radio and TV stations and the Louis Harris polling service.  Under Neuharth, Gannett became the largest U.S. newspaper chain in number of newspapers.

At a time when newspapers were already in decline, Neuharth founded Florida Today in Cocoa Beach, and then USA Today.  He was an innovator in newspaper design, particularly in the use of graphics to present information, which has been a strong influence on American journalism.  He nursed the new national newspaper through years of unprofitability until it finally was a success, both commercially and professionally.

By all accounts, Neuharth was a hard person to work with, although my few encounters with him were civil enough.  He was an egotist.  He was anti-union.  He famously remarked, when asked whether Gannett was pronounced GANN-ett or Gann-ETT, that “the accent is always on the net.”

His greed for pay and perks was legendary, and the lavishness of his temporary offices, before he moved Gannett headquarters to Arlington, Va., would have done credit to a Roman emperor.  He entitled his autobiography, Confessions of an S.O.B., which he may have ben, but he was an S.O.B. who, in Steve Jobs’ phrase, “made a dent in the universe.”

And he had the good sense to retire at the age of 65 in 1989 rather than, as so many successful executives do, try to hang on past his time.  He was succeeded by John Curley, who followed in the tracks Neuharth laid down and was still CEO when I retired.

During the last 10 or so years I worked there, the trend was for more corporate control, less individual initiative and fewer resources to do the work.  Each newspaper in Gannett was given a profits plan, and a publisher who failed to meet his or her target was demoted in a humiliating way.  Only a few people that I know still work at the D&C, and I don’t keep in touch with them.  From what I do hear, there is even more corporate control, even less individual initiative and even fewer resources.  Good work still gets done, but it is like grass growing through cracks in concrete.

I don’t blame Craig Dubow for failing to reverse Gannett’s decline.  I do blame him for leveraging his position to enrich himself while employees and shareholders are losing out.   He is a prime example of how corporate executives redistribute income upwards.  People like him are why I sympathize with the Occupy Wall Street movement.

Click on Bonuses Worth of Protest for Gannett and Tribune Executives for David Carr’s full rant, which also had choice words for the failed but richly-rewarded management of the Tribune Co., publisher of the Chicago Tribune, Los Angeles Times and Baltimore Sun.

Click on To the barricades! for Peter Lewis’s full rant.

Click on Gannett Blog for ongoing reporting on Gannett.

Hat tip to slacktivist for the first two links.

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