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Chicago Times: Back to You, Todd; Trib Distributor Wins a Big One

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Chicago Times: Back to You, Todd

For $10, Todd Fandell got his magazine back. It's cleansed of his enemies and nothing confronts him now but questions: after the preposterous events of the past three months, who would want to subscribe to Chicago Times? Or invest in it, or advertise? Or even work there?

"Yes, beware of what you wish for, because you might get it," said Tom Small, the interloper who took away Chicago Times and then returned it. "If the lawsuit had gone on, Todd could always have blamed us for his troubles. But he cannot blame us for his troubles anymore."

Small and Fandell despise each other. So it goes at Chicago Times, last untroubled in 1986 when it was only a business plan, a set of elegant mailings, a notion of founders Fandell and Timothy Jacobson about some sort of stylish writers' forum that would take the long view of Chicago's affairs. But then, Fandell and Jacobson didn't like each other, either.

The first issues of Chicago Times failed to arouse the public. Last year the family-owned Small Newspaper Group of Kankakee, the primary financial backers, awoke to the danger of their investment being squandered and sent in son Tom Small to keep an eye on things. Small began coming around the office "in uninvited and unannounced visits," according to the suit Fandell would one day file.

Late last year Fandell began looking for a new editor. In his thick report introducing and defending his nominee, he declared: "The vision for the magazine, as it had been developed and shaped over a period of more than two years by the publisher, had far outstripped the ability to execute it on the part of the person from whose 'Idea' the actual magazine eventually evolved." This meant Jacobson.

But Tom Small was busy too. In his own report, which he submitted to the board of directors in January, Small wondered, "How could a magazine have failed more convincingly than Chicago Times has failed with respect to its business plan of 12/86?" That plan, subtitled "Meeting the Challenge of Change," had "met no challenge except persuading investors to buy the concept." Small didn't want Fandell's nominee. He didn't want Fandell. He proposed stepping in himself as "editorial director" and giving Jacobson a free hand "to exercise his good judgment."

In February, stockholders of Chicago Times Company ousted Fandell as president and publisher, when Jacobson and ad director Peter Cosyns voted their few shares with the Small bloc to give it the two-thirds majority the corporate bylaws demanded. On behalf of himself, his father, and friends who'd invested in Chicago Times, Fandell sued.

The suit alleged that the Small Newspaper Group jeopardized their investments and breached Fandell's contract by booting him off the magazine and turning it over to Tom Small, a fellow "deficient in leadership . . . a disruptive influence in an office." A Small countersuit accused Fandell of concealing from the family the magazine's financial crisis.

April 19 found Fandell composing a newsletter to inform the other plaintiffs about a fresh development: the Smalls had ousted Fandell from the board. "Playing by any sort of rules of common decency and courtesy, formal or informal, simply is not their game," wrote Fandell. Ten days later these same scoundrels offered Fandell the magazine.

The Smalls had come down to two choices: give it to Fandell or bury it. Chicago Times was a financial black hole, and they wanted out. They also wanted to be rid of Fandell's lawsuit, which to Tom Small was groundless, vindictive harassment.

"It's been a real education for me about the legal situation in this country," Small told us. "They say the law favors the rich. In some cases it favors those with idle time." The suit plagued him. "I had to sit for a deposition that amounted to a hostile interrogation for over 15 hours. It was really awful. . . . They were going to have long depositions from my 75-year-old mother who's in bad health."

Tom Small had brought in various consultants to tell him what, if anything, could be done, and none of them had good news. There just didn't seem to be an audience for the kind of highfalutin book Jacobson was trying to cook up. Chicago Times would have to reposition itself, add service features, market itself completely differently. These moves would not be cheap.

"It would require as much money as we've lost already, over $2 million," Small said. The family came within an inch of declaring the magazine bankrupt and shutting it down. But possibly there was another way . . .

And so on April 29, Todd Fandell, the one person in the world who would gladly, perhaps gloatingly, take Chicago Times off the Smalls' hands, was astonished to receive a phone call proposing that he do just that. "This happened very quickly and we'd have preferred more time," says Fandell. "But my attorneys and I feel we have nothing to lose."

The Smalls agreed to pay the bills of various vendors through the May-June issue, and three months severance for anyone who wanted to bail out. Three would leave immediately: Fandell made it clear that if Jacobson, Cosyns, and senior editor Rick Soll were around when he walked through the door as publisher last Monday--they weren't--he'd fire them.

"There will be a lot of money saved right away in salary costs," Fandell reflected.

Three months ago we thought that at long last we'd get to see Tim Jacobson's vision of Chicago Times. Now he's gone, trailing puffs of the contumely that befogged the offices last week as rumor hardened and the staff came to understand what the Smalls were actually up to. Now we get to see Todd Fandell's vision of Chicago Times. Or will it be John Twohey's vision? A magazine consultant whom Fandell brought in to ride herd over Jacobson after the second issue, Twohey's coming back as caretaker editor while Fandell chases investors.

"At this point I have no plan," Fandell said. "I have an opportunity to start over and do it right this time. I remain convinced that with the right management team and a good financial team we can make it. We think a strong base has been established and I hope the credibility of the magazine hasn't been too severely damaged--by all the turmoil."

We think the magazine's credibility has been devastated. But as Tom Small said delicately, "Todd, to put it kindly, is a pretty self-confident man."

Trib Distributor Wins a Big One

Last year the Chicago Tribune offered Frank Rus $268,000 for his Tribune delivery business. When he said no, the paper took it away from him anyway.

A few days ago a panel of three arbitrators awarded Rus $1,883,000.

Rus owns the Leyden News Agency in Franklin Park and he's been a newspaper distributor for 40 years. He is not gloating. "I don't consider that this was a windfall by any means," he told us. "As we told the Tribune all along and I still tell them, just give me my business back without the award and I'll be happier with that. The award doesn't make us whole."

Nobody's whole in newspaper distribution, and that includes the papers themselves. Rus has been struggling with 30 percent of his old business since April of '88, when the Tribune cut him off. The Trib had given its independent distributors a choice: take "a fair market value" for your lists now and go on delivering the paper as "agents" for a set fee, or let an arbitrator set the price eventually and never get to handle another Tribune.

About 45 distributors sucked it up and are going through arbitration anyway.

The first of these rulings looked pretty good at the time: $451,000 to a distributorship that originally had been offered $170,000. Two subsequent judgments were on the same order. But distributors insisted these awards did not come close to true compensation and Frank Rus is evidence they were right.

The arbitrators even awarded Rus $383,000 damages on attorney Harvey Barnett's claim that by denying Rus agent status unless Rus settled on the spot, the Tribune was breaching its written contract with the distributor. "It wasn't so bad," said James Klenk, a Tribune attorney. "They rejected the antitrust claims. They'd wanted $7 million."

The Tribune's public reason for taking a direct hold on its distribution was to impose a uniform subscription price that was no greater than the newsstand price. An effect that could not have surprised the Tribune has been the crippling of the Sun-Times, which counted on the same distributors, who made most of their money delivering Tribunes, to deliver its papers too.

The Sun-Times reacted by patching together a sort of captive system of its own. Preliminary results can be seen in recent Audit Bureau of Circulation figures showing that in the past year Sun-Times daily circulation skidded from 625,035 to 554,670, and in Circuit Court, where 34 distributors that the Sun-Times stopped doing business with (and did not compensate) jointly filed suit alleging "unjust enrichment" and seeking restitution.

Tribune daily circulation is down 33,891, or 4 percent, from a year ago, though it actually went up 24,000 over the past six months, with home sales doing particularly well. "As we got conversion on track," says Howard Hay, the paper's vice president of circulation, "the numbers really came back."

But Frank Rus tells us that Tribune sales are "stagnant" in his area. "It's strange," he said, "that this incentive--of reducing home delivery charges and going for a uniform home delivery rate--has not brought in the results for either paper. It seems that if someone isn't a loyal reader of either paper, a small decrease in the delivery fee doesn't make a darn bit of difference."

We asked Rus if he'll plow his award back into his business. "Not in the current atmosphere," he said. "Which, in my opinion, is one main fault of the newspapers doing what they did.

"They discourage people who are knowledgeable in this business and have made substantial capital investments in it. They've taken away their incentive."

Art accompanying story in printed newspaper (not available in this archive): photo/Bruce Powell.

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