The $38 million exit package going to former Tribune chief executive Dennis FitzSimons is enough to cover the annual pay and benefits of more than 500 journalists in a metro market.
The feet-on-the-street value of the deal is relevant in light of the widespread expectation that the company is headed for some extreme belt-tightening as the new owner, Sam Zell, attempts to produce sufficient cash to fund an estimated $1 billion a year in interest payments on the largest burden of debt ever assumed by an American newspaper company.
Fitz’s handsome parting gift would be enough to pay some 543 reporters, copy editors or photographers at a big paper like the Chicago Tribune or Newsday, assuming average annual comp and benefits of $70,000 a year per newsperson.
At a more expensive place like the Los Angeles Times, the sum might fund the efforts of perhaps only 425 journalists a year, an amount that’s roughly equal to half the newsroom staff. In markets like Fort Lauderdale or Orlando, where journeymen journalize for probably $50,000 apiece, the Fitz package would fund 750 newsies for a year.
The more than $10 billion that Tribune Co. is borrowing to take itself private will be more than eight times its operating profit for the last 12 months, or nearly 2½ times the industry’s average debt burden.
That would be a mound of debt for any company in the most robust of industries in the sunniest economic times, which these ain’t. Unless Sam Zell knows something the rest of us don’t, it is not clear how he can meet the quarterly interest on $1 billion in debt without either aggressively increasing sales, sharply reducing expenditures – or both.
Given the uncertainty about the ability of any newspaper, including the Tribune properties, to quickly reverse years of steadily decaying sales, it would seem that Sam has no choice but to throttle expenses as fast as he can.
And that means, among other things, reducing the work force in his newsrooms, where headcount is more elastic than, say, the number of people needed to run a printing press or pilot the delivery trucks.
While the Fitz kiss can’t be blamed for the bulk of the cost-cutting almost certain to occur early in the new year, it is also fair to note that more newsroom jobs could have been spared – and, therefore, more stories could have been covered in the future – if he could have gotten by on a leaner exit package.
Instead, the Fitz deal, in its own small way, will contribute to fritzing the company’s news coverage for a long time to come.
Stupendous post!
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