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12.15.08

How Zell Screwed Up On Blagojevich

If Blago pressured the Chicago Tribune owner to fire newspaper staff in return for political favors, Sam Zell should have shared the news with his editor, his publisher, and the prosecutor.

If Sam Zell, the profane, brilliant real estate dealmaker who owns the embattled Tribune Company, was the object of an extortion attempt, it appears he kept the news to himself.

According to federal wiretaps, Illinois Gov. Rod Blagojevich, who tried to sell Barack Obama’s senate seat, also plotted revenge on the editorial board of my former paper, the Chicago Tribune. He huffed and puffed and, seemingly, blew his own career down, presenting an early Christmas present to news outlets during the post-election December doldrums.

Blagojevich’s chief of staff reported "that Tribune Financial Advisor talked to Tribune Owner and Tribune owner 'got the message.' "

Initial reporting on the Blagojevich melodrama underscored that there is no evidence pressure was, in fact, brought to bear on newsroom personnel. The Tribune’s new editor, picked by Zell underlings, could thus proudly assert the virginity of the editorial staff, making clear that none of their corporate superiors breathed a word of this to them.

And that's the problem.

If the allegations are true, why didn't the Tribune editors know earlier? And why didn’t their bosses proactively contact the United States Attorney for the Northern District of Illinois, the maniacally focused Patrick Fitzgerald?

The criminal complaint asserts that Blagojevich asked his chief of staff to inform both "Tribune Owner"—clearly Sam Zell—and a "Tribune Financial Advisor"—subsequently identified as "38-year-old financial whiz" Nils Larsen—that the state would not financially assist the sale of Tribune-owned Wrigley Field unless members of the editorial board were fired.

In an intercepted phone call, the governor's chief of staff, John Harris, reports back that he's told the Zell advisor that things "look like they could move ahead fine but, you know, there is a risk that all of this is going to get derailed by your own editorial page." The response, according to Harris, was that while the business of monkeying with the editorial page is a "delicate" one, the advisor "will talk to Tribune Owner preliminarily about it."

During a subsequent call on November 11, Harris reports "that Tribune Financial Advisor talked to Tribune Owner and Tribune owner 'got the message and is very sensitive to the issue.'"

But stop right there. If what the government alleges is true, an extortion attempt was thus conveyed to Larsen and Zell. Yet the chairman claims ignorance.

"I'm not personally familiar with any of that," Zell told CNBC on December 10 when asked about pressure to fire editorial writers. "And considering the fact that this is an ongoing criminal investigation, I would feel reticent to comment accordingly."

Has the FBI contacted him, asked Maria Bartiromo? "Yes," said Zell. "I think they are asking questions."

Of course, it is possible that Larsen, despite what he told the governor’s chief of staff, never breathed a word of this to Zell, choosing to shield his boss from such an ugly overture. Similarly, it is possible that Harris, who quit his post after being named a co-defendant with Blagojevich last week, lied about his discussions with Larsen to placate his boss.

In that case, maybe all the wiretapped chatter about how Zell "understands" the governor's desire is folderol.

But Fitzgerald, for one, seemed to believe there was some truth to these conversations, to judge from the uncharacteristically personal comment he made during the press conference about the criminal complaint:

"There is an editor that they'd like fired from the Tribune, and I laid awake at night, worried whether I'd read in the paper in the morning that when there were layoffs, that we'd find out that person was laid off."

So it seems that if Zell and Larsen were approached they didn’t share this with Fitzgerald, who was left awake and worried. They also apparently left the publisher and editor of the Tribune in the dark. It would have been quite a hefty exclusive to break a story entitled: "Governor Tried to Extort Us."

Thus, rather than proudly presenting their ignorance as evidence of virtue in the bosses who refused to meddle, my former newsroom colleagues perhaps should have recoiled from the suggestion that these bosses covered up a crime.

(And they might wonder, too, why the chairman of their company talked to CNBC, not his flagship paper, about this mess shortly after Fitzgerald revealed it.)

I was on C-Span recently with Len Downie, the former editor of the Washington Post, who described being called to the White House to face down requests to curtail coverage. It doesn't get any more high-pressure than that, and I would safely assume that on some of those occasions this pressure was passed down through his publisher (who was also the company's chairman).

If Zell or his advisor were pressured, it would be notable that they did not immediately tell the paper's executives and the U.S. Attorney.

The best owners, like the Post's Donald Graham, know to do that. And the best editors make sure to teach owners not initially steeped in journalism that ignorance is not bliss, but just the opposite – it hangs the newsroom out to dry.

This week will bring the first anniversary of Zell's closing on the highly leveraged purchase of Tribune Company, which he called the "deal from hell" long before the economy totally tanked and he filed for Chapter 11 last week. If what's suggested in the Blagojevich complaint is true, the journalistic learning curve for Zell and top lieutenants may remain as steep as any of his commercial real estate.

"He's a truly imaginative dealmaker," a billionaire who knows him told me at dinner a few months ago. "But he just doesn't see the difference between these and other businesses. When it comes to journalism, and it's role in a democracy, he just doesn't seem to get it."

James Warren is a former Chicago Tribune managing editor and is a political analyst for MSNBC.