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Bankruptcy filings show Tribune publisher earned $334,000 last year

Bankruptcy filings show Tribune publisher earned $334,000 last year

It’s a familiar story these days: Top executives reaping disproportionately large salaries and mind-boggling bonuses while executing poor business strategies and laying off hordes of employees.

It’s happened in the finance industry, construction, automobile manufacturing, computer software and beyond. But now, we can count the newspaper industry among them.

Julie Moreno, who became the publisher of the East Valley Tribune in 2008, was paid more than $334,000 in salary, benefits, bonuses and expense reimbursements during the past year, according to Freedom Communications Inc. bankruptcy documents filed Oct. 31.

As part of that package, Moreno was paid a lump sum of $57,949 to relocate to the Valley from Yuma, where she was publisher of Freedom Communications’ second-largest Arizona paper, the Yuma Sun. Yuma, by the way, is 203 miles from Mesa.

She was given two bonuses in early 2009 that totaled $65,456. The first bonus of $37,123 under the company’s MBO program was paid on Feb. 13. The second, for $28,333, was paid on March 13.

The filings detailed Moreno’s compensation from Sept. 1, 2008, through Aug. 31, 2009. During that 12-month period, more than 150 employees were laid off, low-level employees were forced to take unpaid furloughs in addition to 5 percent salary reductions, the 401k match was suspended, and the company’s net revenue plummeted.

Then, on Nov. 2, the 118-year-old paper announced it will cease operations entirely at the end of this year.

The East Valley Tribune’s demise was swift; during the past three years, the company went from an 83,000-circulation daily newspaper that was adding staff and trying to expand its coverage across the Valley to a free paper distributed on racks three days per week.

Since the beginning of 2008, more than 40 percent of its staff was fired, pages of news were eliminated and what was once a proud broadsheet became a tabloid.

The changes resulted in drastically reduced revenue figures. Freedom Communications reported its Arizona operations garnered revenue of $70.2 million in 2007, $53.3 million in 2008 and $17.5 million so far in 2009. The bankruptcy filings also show Freedom’s Arizona division hasn’t been profitable for the past two years.

The worst of times occurred while Moreno was in charge of the paper, but it would be unfair to say she caused the paper’s problems. The economic downturn and increased marketing opportunities on the Internet represent a double-edged sword that has cut the heart out of the newspaper industry.

Newspapers across the country, in a panic, have reconfigured their business plans to meet the needs of the new marketplace. Cutting expenses has been the norm, and wholesale reformation has been tried in some instances.

The East Valley Tribune was one paper that tried an entirely different approach, and it didn’t start under Moreno’s leadership. I should know – I was there.

In April 2007, former Arizona Republic executive Terry Horne replaced longtime East Valley Tribune publisher Karen Wittmer. While Wittmer was respected by the staff, there was great fanfare when Horne took over. He was hard-charging, spoke frankly and, in a way, had declared war on his former employer. It was exactly what we wanted to hear.

Before he took over, Horne tasked everyone on staff to list what each of us thought the paper was doing wrong and what should be done to improve it. Some of us wrote lengthy responses. I was a mid-level editor at the paper at that time, and my response was eight pages long. A reporter on my team wrote 12 pages.

Several of us noted that the paper was focusing too much energy and money on trying to retain its position in Scottsdale and Tempe, while the Republic appeared to be devoting far more resources to those areas. We suggested redirecting our resources to our stronghold in Mesa and Gilbert, as well as northwestern Pinal County and the eastern cities in Maricopa County, where the Republic was almost non-existent.

Horne, in one of his first acts as publisher, called a series of group meetings to discuss our share of the market in various cities as compared to the Republic’s. He produced compelling figures that indicated we were, indeed, losing the battle in Scottsdale and Tempe. And, frankly, we weren’t doing so hot in some areas of Mesa. In short, our circulation was falling in almost every area.

Weeks later, he unveiled a plan to recreate the paper. The daily edition was going to be distributed free and we were going to publish fewer news pages. In fact, rumor had it we were going to stop publishing the larger broadsheet editions and switch to a tabloid format.

Despite these landmark changes, most of the staff was excited. We believed in Horne. We thought it would work. After all, Horne knew what the Republic knew, and he was ready to do battle.

He must have impressed the corporate folks as well; a few months later they promoted him to president and publisher of Freedom Communications’ flagship paper, the Orange County Register. He was replaced by Moreno, who also served as regional vice president of Freedom’s Pacific Region.

Moreno told me during an interview on Nov. 4 that she was largely an observer during the time Horne and other Freedom executives discussed the new strategies. But she said she believed the plan was solid and she was on board to implement it when her time came. In fact, she still believes it was a good strategy.

“I think that, directionally, the changes make sense, given what we face here in this particular market,” she said. “What we’re dealing with is an economy that has presented challenges for all of us. It becomes very difficult to separate what might be an impact from the model from what might be happening in the broader economy in general. But, directionally, I don’t believe the model was wrong.”

Wrong or not, the concept didn’t work.

During a meeting in October 2008, Moreno announced the elimination of 142 positions, saying “We must turn the boat while we have the opportunity to do that. … We have to position the Tribune to be part of the community for the long term.”

On March 20, a week after Moreno was given a bonus of more than $28,000, the company forced remaining employees to take unpaid furloughs.

That day, Freedom CEO Scott Flanders said: “Freedom continues to generate positive cash flow, and we see the furlough program as a sound business and financial move to help weather the present severe economic conditions that we believe will improve by year-end.”

Conditions didn’t improve. On April 13, more layoffs were announced and the paper transitioned to three-day publication.

Moreno said the layoffs and, later, the decision to close the paper were “gut-wrenching.”
“You never want to see the day happen, because you’re impacting your work force,” she said. “And with the newspaper, it’s not just a job for a lot of people. It’s an organization with a unique identity in the community. When you tell people you work for the newspaper you get, in some circles, a lot of respect for that. For associates who work here, they’re extremely loyal. It’s very difficult. And you know you’re leaving a void for your readers. Words cannot describe how that feels. It’s just not a good day.”

Moreno refused to discuss her compensation package.

“I’m really not at liberty to discuss my compensation,” she said. “It’s not something I care to discuss at this point.”

In the end, hundreds of people will lose their jobs as a result of the Tribune’s demise. But Moreno is not one of them. She will continue on with Freedom in her executive role.

“At the time being, I have a dual role with freedom. I also serve as pacific region vice president. I will likely continue with Freedom in some role,” she said. “Beyond that, I don’t have a necessarily clear assignment at this point.”

Neither do the reporters and other staffers, many of whom own homes here and have raised their families with meager salaries during the past several decades.

Full disclosure: I worked at the Tribune from the beginning of 2006 until December 2007. I left voluntarily to take a job as managing editor of the Arizona Capitol Times. I do, however, have friends who were laid off after I left the Tribune.

  1. Noah

    Great job Bunk! This whole thing makes me glad I got out when I did.

  2. Sam

    She got paid more to move from Yuma than most everyone made in an entire year there.

  3. Gabe

    Thanks Matt!
    I think my relocation expenses were slightly lower than hers when I moved here 4 1/2 years ago. I’d have to go back and check the paperwork.
    I can’t recall if the U-haul was $400 or $40,000.

  4. Joe Freedom
    Joe Freedom11-05-2009

    Holy cow! And she keeps her job!

  5. TD

    Out of curiosity, do the bankruptcy filings show the earnings for the publishers of the other Freedom papers, namely Ahwatukee and the Daily News-Sun?

  6. John L.
    John L.11-05-2009

    Great reporting, Matt. Are you aware the Terry the Pirate got a $1 million-plus home after he was promoted for destroying the Tribune?
    Some people thought he was full of fire and brimstone. Others among us thought he was full of a lot more than that.
    He got his parachute and Moreno, who never had or will have a clue, is also safe.
    I can’t say that for the most talented group of journalists I ever worked with.

  7. Former Trib. Reporter
    Former Trib. Reporter11-05-2009

    Really great job Bunk! I was utterly sickened to hear what was happening behind the scenes while reporters were losing their jobs. In fact she was paid more to move to Phoenix than TWO reporters’ salaries. As a first year Trib. reporter I earned $27,000 and worked far more than 40 hours a week. At the time, I was happy to do it.

    It’s pathetically hypocritical that the Trib. wrote stories blasting companies whose bosses took large bonuses while hovering near bankruptcy itself.

    I’m glad to hear she will be rewarded for her failure. Congratulations to whichever paper is led by the illustrious Ms. Moreno:

    “In the end, hundreds of people will lose their jobs as a result of the Tribune’s demise. But Moreno is not one of them. She will continue on with Freedom in her executive role.”

  8. Michael

    Why do all these stories claim that we can’t blame the publisher or Upper management for Newspapers problems?

    They are directly at fault for their lack of skill. They had no clue how to reach out to their community and keep it engaged. They kept going forward with a high fixed operating cost structure even when it made no sense at all. They paid themselves bonuses while they laid off large amounts of staff while the company kept bleeding money. They hired their buddies and gave them tons of ‘consultant’ money while laying off good people with good ideas.

    I think if anything these worthless Publishers and CEO’s are directly to blame! The families owners, employees and stockholders should be irate that they have such imbeciles running their company.

  9. Former Trib. Reporter
    Former Trib. Reporter11-05-2009

    Send Julie your thoughts anonymously by e-mail:

    Password: moreno

  10. Jacque

    Why complain about Moreno accepting what the owners or board (which?) put on the table? Perhaps she was paid so handsomly (by my standards) because the owners knew they were closing down and this was a short-term offer and she was the “hatchet”. Don’t blame her; who approved the payments?

  11. 50GreenDodge

    “The porch light was on but no one was home” is only a slight exaggeration of the impression Julie Moreno made on a number of former Trib employees I know.

    There were moves that could have saved the Trib, but they should have been made years ago. Karen Wittmer’s fascination with all things Scottsdale was a huge impediment to long-term success. Those millions, had they been directed at blanketing the East Valley and the far East Valley might have produced a market dominance that could have re-established the Trib as a force in the area.

    We can all see what the Republic has done: token coverage, at best, of the many towns east of Rural Road. This juicy suburban area was wide open to be exploited by a set of smart managers. The Trib had some. What they didn’t have was a top management with any vision or yen for competition in the slightest. Freedom, like so many media companies any more, prefers to earn the easy money from markets where they are the only dog in the hunt. Colorado Springs, for instance.

    Who suffers? Everyone.

  12. Former Trib guy
    Former Trib guy11-07-2009

    Simply great reporting. You are to be commended, Mr. Bunk, for exposing the hypocrisy of these arrogant executives. But I have to disagree with “50Green” above. Blaming the former publisher (Wittmer)for having a Scottsdale presence and not capitalizing on the “far East Valley”? Really? That’s your take when all is said and done for the Tribune? C’mon. The Trib has suffered from little to no marketing and an identity crisis in just about every community it has covered, from Gilbert to Scottsdale. “The juicy suburban” far East Valley? Spoken like a true ad exec. Are you referring to Queen Creek and upper Pinal County — the foreclosure capital of the Valley? Or do you mean Gilbert, where retail is dwarfed by rooftops? Or is it Mesa’s “juicy” household demographic? No, had the paper focused on E.V. suburbs, you’d now be saying there should have been more state coverage or county coverage. Or less politics, or more lifestyle stories. No, the truth is the content has been just fine; it the managers — I suspect you are one of them — who failed to execute in the areas of circulation, advertising, marketing and customer service. And the paper’s many owners, while constantly changing the vision, never invested in letting the community know it was there.

  13. Phil

    Excellent reporting Matt. Great job of sifting through the numbers that reflect nothing more than legalized theft.

    Clearly, Freedom’s high level execs, including Moreno, devised schemes in the past two years to loot the company’s coffers of all they could for personal benefit, as they knew bankruptcy would one day be inevitable.

    You see, after bankruptcy, none of these execs will be in control of the company, as lenders will be given the reigns. In fact, I would suspect most will be let go post bankruptcy.

    That’s why we see these numbers of excessive greed regarding monstrous unmerited bonuses. They are all taking everything they can before the lose their positions of power with Freedom.

  14. News Hawk
    News Hawk11-19-2009

    The story points out several points but fails to point out that prior to the arrival of Flanders, Horne, or Moreno the paper was losing money. It was in the red in circulation and advertising revenues were not keeping the margins where they needed to be.

    The metro model is broken. The margins at metros have been behind for decades but have been ignored because of “volume.” As new competition came to aleady cluttered markets and revenues dropped even more it became clear that companies should have sold their metro papers and moved to community papers only if they want a margin.

    While metros continue to close the community papers continue to turn in margins that their larger counterparts have not seen since the 1970’s!

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