Chicago Tribune

July 27, 2003


Author: Jim Kirk. Jim Kirk is the Tribune's media and marketing columnist.

Edition: Chicago Final
Section: Magazine
Page: 14

Index Terms:

Estimated printed pages: 21

Article Text:

Last October, a group of well-heeled visitors gathered in front of Window To The World Communications Inc.'s expansive Northwest Side headquarters to celebrate a christening. To be unveiled was a lavish new bauble--a $2.1 million marble-and-brick main entrance to the complex of buildings that houses public television station WTTW-Ch. 11 and classical radio station WFMT-FM 98.7.

The centerpiece of this pricey, three-level facade was a digital master control room housed front and center as a showpiece to visitors, donors and corporate partners, part of a $20 million plan to upgrade the company's telecasting equipment. Though its full use won't be realized for years to come, WTTW wanted to be among the first to comply with a federally mandated plan to move broadcasters from lower-quality analog signals to a new digital spectrum, giving viewers higher-quality pictures and TV stations the ability to broadcast simultaneously over several different channels.

To those familiar with the workings of Channel 11, the freshly minted control room's placement was a bit unusual--the station's old control room is down a long hallway far removed from the building's lobby. But for WTTW President and CEO Dan Schmidt, this new hub had special meaning: It was to be the grand expression of his vision for public broadcasting's future, a road that would be paved in digital gold. And Channel 11 would be the trailblazer for the rest of the Public Broadcasting Service.

Yet, even as pleasantries were being exchanged at the building's new entrance, trouble was swirling deep inside the WTTW headquarters, a sprawling complex plopped in the middle of a bungalow enclave on the Northwest Side.

WTTW was on the verge of a financial meltdown. Equally dire was the fate of Network Chicago, Schmidt's showcase of synergistic programming. Network Chicago's content was supposed to ripple and flow through an interlaced structure of television, radio, a newspaper, the Internet and public events sponsored by the station. Some three years after Schmidt announced its birth and began promoting it, Network Chicago was limping along. And staff morale, along with WTTW's revenue, was falling fast. (That Schmidt hadn't scaled back plans for the opulent entranceway when layoffs were in full swing did nothing to help.)

Many at the station were beginning to believe that they were not watching an executive with a vision for public television's future, but one who was presiding over the financial unraveling of one of the gems of public broadcasting.

"I'm not sure that staff people understood the [Network Chicago] road map or believed that it was going to take them forward and upward," says Len Aronson, a WTTW producer for 15 years before he took early retirement last year. "People don't embrace change for the sake of change. They have to believe in it. For whatever reasons, much of the staff never embraced the concept of Network Chicago--and, it turns out, they may have been right."

A month after the entryway was dedicated, the bottom fell out. Consulting firm A.T. Kearney, which had previously signed over one of the station's biggest underwriting checks ever--$10 million over three years for the business show "CEO Exchange"--revealed that it would not renew for the final year, costing the station nearly $2 million. Then funding for the "Chicago Matters" series, an issues-based show focusing on problems in the city's neighborhoods, was pulled after a lengthy fight involving its major donors, the Searle family and the Chicago Community Trust. Another $440,000 vanished like that.

In a matter of weeks, the new grand entrance that executives had feted the month before became more than a sore point: It was the equivalent of nearly two dozen jobs. Right after the New Year holiday, station executives swung the ax for the third time in a year, cutting 23 jobs. Since January, 2002, a total of 56 jobs have been eliminated at the station, roughly a quarter of the company's work force.

Besides the job cuts, the company's fledgling newspaper CityTalk--launched with great fanfare in November 2000, as part of Schmidt's synergy strategy, and the only part of the Network Chicago initiative with any potential for significant advertising revenue--was eliminated and replaced with a program guide. City Talk's circulation had never risen above an anemic 160,000.

In a staff meeting with management on Jan. 7, the day after the layoffs, tensions boiled over. Employees bitterly assailed Schmidt and other top executives for, among other things, continuing to ride around in expensive cars paid for by the company at a time when jobs were being slashed.

A month ago, the executives finally decided to relinquish the cars. Schmidt turned in his Lexus RX 300, and chief financial officer Reese Marcusson, development director Farrell Frentress and production boss Randy King all turned in their Toyota Camrys. But the public relations move came too late to alleviate the poisonous atmosphere created in January when Schmidt defended the perk, saying the cars were a negotiated part of a compensation package that new executives had in their previous jobs.

At the fiery January meeting, Marcusson told the group gathered in WTTW's underused, 10,000-square-foot Grainger Studio that the job cuts should be enough make up for a $2.5 million revenue shortfall. But more than five months later, the station is no better off, and there seemingly are no immediate alternative sources of revenue. As the station headed into its new fiscal year on July 1, little had changed.

According to its most recent federal tax filing this past May, WTTW's expenses outstripped its $44.5 million in revenue by nearly $3.5 million in the fiscal year that ended June 30, 2002--believed to be the bleakest financial picture in WTTW's 48-year history. Executives said in June that most of the gap was due to investment losses in the endowment. But the company was still roughly $2 million in the hole heading into July, and it is predicted that revenues will be flat for the upcoming fiscal year.

In June, two more high-level executives, including the corporate lawyer, were let go. And the leadership isn't ruling out more layoffs, though in recent weeks, middle management has been imploring Schmidt and other top executives to find other ways to cut costs, including salary cuts and shorter work schedules.

It is likely that some programming will be scaled back or eliminated, unless new sources of underwriting are found quickly. Longtime station favorites, like "Wild Chicago," which never had big underwriting but was kept because former executives believed it fit the station's public mission, have now been mothballed because they aren't tied to a specific sponsor. And if that's not a thick enough plot for a public television melodrama, there's more.

The station's main endowment, established from proceeds of the $17 million sale of Chicago magazine in 1988 and by tradition a funding resource for new initiatives, is dangerously low, thanks to the pummeling it took in the stock market crash. After reaching a high of $26 million in December 1999, the endowment fell to $16.8 million at the end of 2002. The station could not draw cash from the fund to support new initiatives because its value fell below the $19.9 million floor put in place to protect the principal. This year, the WTTW Board decided to end the floor restriction so the station could tap the endowment more easily to cover operating costs.

Marcusson claims the financial crises and unprecedented staff cuts the station has suffered through for the last 18 months are the result of a financial "perfect storm," similar to what other PBS stations are facing. The technology bust, followed by the Sept. 11 terrorist attacks, followed by the Enron and Andersen accounting scandals, have taken significant chunks of corporate underwriting away from public television stations around the country.

Channel 11, Marcusson says, feels the funding crunch more acutely because both Andersen and United Airlines, whose parent UAL Corp. has filed for bankruptcy, were major donors to the station. But according to station records, United's last big underwriting year was 1999, long before its bankruptcy filing.

Critics inside and outside the company contend that, beyond the underwriting crisis, WTTW's synergistic vision was overly ambitious and based on financial expectations that were unrealistic even if the economy had remained flush.

Under the original Network Chicago vision, three new programs were to be set up with seed money from a first-ever capital campaign launched in late 1999. After an undetermined amount of time, the programs were to be slowly weaned from the station's lifeline with the hope that they would become self-sufficient and produce underwriting revenue.

Roughly $30 million of the $55 million capital campaign was earmarked for content, most of that Network Chicago-related. To date, nearly $22 million of that $30 million has been committed to the cost of launching Network Chicago.

The station's decision to start the weekly newspaper, a costly plunge into a competitive business WTTW knew nothing about, cost more than $1 million a year and was launched in late 2000 when the advertising market had begun to weaken.

Some at WTTW believe that even the name Network Chicago competed with Channel 11's so much that confused viewers and potential advertisers deserted the station because they were no longer sure of what they were supporting.

Many place the blame on over-anxious board members who got caught up in the late-'90s talk of a "new economy" and the theory that a company was missing the boat unless it was changing. And they blame Schmidt, a neophyte in television management, who may have underestimated the exorbitant costs of operating a not-for-profit television station as well as starting up a newspaper.

A TV station used to launching one quality new show a year, suddenly was being asked by Schmidt in a matter of a few months to develop three, a task that many insiders say was impossible.

Top executives are also blamed for a lack of operational oversight and for using, in some cases, precious capital campaign money to pay for expensive consultants and to dispatch production crews on costly out-of-town shoots for "CEO Exchange" days before they needed to be there.

Even now, as WTTW tries to find a way out of its financial mess, it is paying $6,600 a month in rent for 4,400 square feet of vacant office space in the financial district at 2 N. La Salle St. The space was secured when WTTW thought it needed sales people downtown to persuade Michigan Avenue advertising media buyers to invest in the Network Chicago concept, despite owning office space in its own building on the North Side. So far, it can't find anyone to take over the lease, which runs through August 2005.

More worrisome, though, is that top management appears to have lost the faith of many of its staffers, who contend that executives have shirked their duty to the public WTTW serves. With its future financial picture blurry, nearly a fourth of its staff on the street, and its futuristic programming model all but gone, many around the building worry about how well WTTW will be able to fulfill its mission in the coming years.

During the heated staff meeting in January, it was clear that top management didn't have answers. "When we sat up here last year, I really thought we were over the hump and over the worst," Marcusson told one angry staffer, according to an audio tape of the meeting obtained by the Tribune. "We're not going to give up. I mean there's hope. But to sit here and say we have a permanent solution, I can't do that. I don't have one."

Staffers vented their frustrations in droves. "Yes, we understand you're trying to save the company," one of them told Schmidt and his fellow executives. "But little things such as the cars, or being willing to take pay cuts or something instead of giving generalities and then, 'Oh, we may need to do this and that.' I think people here deserve a lot more than I think you guys are willing to give."

Schmidt contends that there is no morale problem at WTTW and that accusations that company executives have overspent are being hurled by a handful of people who have an ax to grind. "I would challenge you to take an objective look at every non-profit in Chicago and indeed throughout the country," Schmidt said. "People are in a cost-cutting mode, and it is painful. It's a tough world, but I reject the notion that we are in a destructive morale posture."

So far, WTTW's Board of Trustees seems unfazed by the criticism. During a board meeting the last week of June, Schmidt got the Trustees' backing for another year.

In an interview, Board Chairman Sandra Guthman, a former IBM executive who now runs the Polk Brothers Foundation, echoes management's contention that many of the problems the station faces are out of management's hands. "I think we're moving forward," says Guthman. "Have we done everything perfectly? No. But nobody does."

Indeed, most PBS stations are suffering from the economic downturn that has eaten into corporate underwriting. WGBH in Boston, which is on the verge of launching a capital campaign to help underwrite some of its own initiatives, had to lay off 20 people, or some 7 percent of its staff, in the past year.

WTTW's problems have been amplified by the costs of launching Network Chicago, which was supposed to be a partial remedy for some of these economic headaches. But Schmidt and Marcusson say the station's financial setbacks have nothing to do with its Network Chicago experiment.

"There is no connection to the financial pressures we are feeling and the fact we raised money for this initiative," Schmidt says. "Network Chicago was launched with a pool of risk capital. We were coming off a period of declining revenue. We had to decide, were we going to cut back from where we were in 1998, or were we going to try and sell the big idea?

"At the time we were debating it, we asked, 'How do we create community awareness?' We thought [we] shoot for the moon [and] if we get across the ocean, that would have been okay. We would have never raised nearly $50 million without it."

Schmidt also argues that it is unfair to classify Network Chicago as dead. "It's superficial to look at Network Chicago as a newspaper, a television station and a radio station," he says. "What it is is a way of managing ourselves and organizing ourselves. It is absolutely mandatory to continue to think in terms of content and not just in television and radio."

Dan Schmidt was the least likely choice to lead WTTW when the time came in 1998 to find a replacement for the legendary Bill McCarter, who had led the station for 28 years and had made it PBS' shining example of how to fulfill public broadcasting's mission of serving the local community.

Under the stewardship of McCarter, who was both praised and vilified for his views of public television, WTTW had built a nightly audience that was the envy of the PBS system. While other public broadcasting stations, like WGBH and WETA in Washington, D.C., concentrated on producing national shows, such as "Arthur," "Washington Week in Review" and "Frontline," McCarter's philosophy was to serve the hometown folks first.

He also took chances. His risky decision to be one of the first to put "Monty Python's Flying Circus" on the air was a home run. He allowed the successful "Wild Chicago" and the original "Soundstage" to develop and flourish, giving the station a reputation for eclectic programming that would be held up as a model for years.

More importantly, he developed and produced the station's enduring public affairs jewel, "Chicago Tonight," and brought in its host, John Callaway, who became not only the voice of the station's top program, but also, many contend, the station's conscience. (Callaway declined comment for this article).

It all served the mission well at the time, when competition from cable TV and other media was still years away. But it also wasn't easy.

A key to McCarter's longevity at the station's helm was his uncanny ability to "play the board one member at a time," as one ally puts it. For years, WTTW's Board of Trustees was criticized for being too much of a bastion of Chicago's North Shore elite, whose personal programming choices lent credence to the stereotype that WTTW stood for "Winnetka Talks To Wilmette."

WTTW's connection to the upper crust in Chicago goes back to its beginnings in 1953, when Edward L. Ryerson, then chairman of the board of Inland Steel, piloted the first fund-raising effort to establish the new station.

To keep board members from pushing their personal agendas, McCarter would indulge various board chairmen's interests to a point, while keeping their hands off the station's most important projects.

And not all of the board's ideas were bad. For instance, viewers today can see the influence of former board chief Irving Harris, who had pressed for more arts coverage. Henry Meers, who followed Harris, saw "The McLaughlin Group" while on a trip to Washington, D.C., and soon it was on Channel 11. And Frontenac founder and immediate past Board Chairman Martin Koldyke brought in the "Golden Apple" awards.

Along with his successes, McCarter made some notable missteps. The station's decision to build a $4 million, 10,000-square-foot stage in 1997 was based partly on his belief that Chicago would be a hotbed of television production. With talk show hosts like Jerry Springer and Jenny Jones using Chicago as their headquarters, McCarter thought WTTW could tap into that money as well. It did reap two: "The Bertice Berry Show" and a talk show starring former "Partridge Family" actor-turned-radio host Danny Bonaduce. But neither lasted very long due to low ratings.

Other shows were put off by the studio's distance from downtown, which became problematic for attracting guests and audiences alike. At the same time, commercial production at the studio, which included Chevrolet ads featuring Michael Jordan, had started to slip as companies pursued cheaper places to shoot in Canada. Once a $2 million to $3 million annual revenue generator for WTTW, the studio now sits mainly idle, bringing in roughly $400,000 to $500,000 a year.

But McCarter's determination to push the envelope in finding new revenue was infamous, giving the station a maverick tag during much of the 1970s and '80s. He was, perhaps, the loudest challenger of Congress' unwillingness to bend when it came to allowing commercial advertising on public television. That made him one of the more polarizing figures in the business.

Today, McCarter is more convinced than ever that the financial perils at Channel 11 and another PBS stations, while exacerbated by the struggling economy, are rooted in the limited potential for outside revenue sources, namely advertising.

"What has been missing from the beginning, which is taking its toll now, is the absence of an admission gate," says McCarter. "There isn't a theater that doesn't have an admission gate. You couldn't run a good college without tuition. That flaw in the funding has been revealed in this economic climate."

It was McCarter who brought in the man who would eventually succeed him. In 1991, he tapped Schmidt, who had spent his career in public radio, to overhaul WFMT, which at the time was facing a staff revolt over such changes as a new openness to using "canned" commercials instead of having announcers read the ad copy, as they always had. The change was intended to attract advertisers who wanted more than just a live voice-over doing their ads. McCarter, a manager steeped in television, was looking for someone who knew radio to calm the waters.

He turned to Schmidt, who'd had some success running northern Minnesota's public radio stations. Soon after arriving, Schmidt was credited with quelling the most pressing problems at WFMT.

But board members and insiders at WTTW say McCarter never thought of Schmidt as his successor. "He was brought in specifically for WFMT and that's it," said one executive with close ties to McCarter. "No one thought he would be considered for the top job."

So it surprised just about everyone when Schmidt threw his hat in the ring for McCarter's post after the aging leader announced he was stepping down. Schmidt's two rivals for the job were executives from commercial TV.

"Dan started the process as a real dark horse," says Koldyke, who was board chairman at the time. "He was a young man with vision. Through the [interview] process, he continued to shine."

Insiders contend that Schmidt won the job partly because he backed Koldyke's vision of dramatically retooling the station at a time when the stock market was booming, the Internet was the future, and a federally mandated switch to high-definition, digital transmission was on the horizon.

Little did anyone at the station know that with Schmidt's ascendancy, the seeds of Network Chicago were being sown. Schmidt and the board worked together on a plan to overhaul the operation. Almost immediately, they agreed to raise $55 million to fund the new equipment, new programming and other improvements. It would be the organization's first capital campaign, and it was officially launched in 2000.

To help raise the money, WTTW turned to the Lyric Opera of Chicago, one of the most successful institutions in the city at tapping funding. Lyric development executive Farrell Frentress was hired by WTTW at $223,556 a year, plus a car, to lead the big development campaign.

It was Frentress' perk--a new concept at WTTW--that caused the station to award corporate cars to Schmidt and Marcusson and to production chief King when he was hired in 2002.

Currently, top executives including Schmidt, who makes $288,000, Marcusson, who takes home $181,500; King, who makes $200,000, and Frentress, who now makes $238,600, have had their salaries frozen.

With the launch of the capital campaign, Schmidt tapped the first of several high-priced consultants. He paired up with Northwestern University's Media Management Center in 1999, at a cost of nearly $140,000, to help find WTTW's place in what then looked like a new media frontier. Among other things, NU surveyed viewers on what they wanted from their public television station.

WTTW was worried about its place in television's future, says John Lavine, who heads the NU Media Management Center. "Disney and others had become the 'Sesame Street' of cable TV," he says. "This was not something [public television] was going to turn around or make go away."

Lavine says WTTW wanted to exploit whatever opportunities there were. "The question was, what can be uniquely ours while serving Chicago and serving our market for a very long time," he explains.

Based on the research, Lavine says, it was clear that Channel 11 owned morning broadcasting for children, but the rest of its audience was diverse, with different tastes and expectations.

For example, he says, research showed that the audience was made up of so-called doers--people who were active and wanted information on places to go and see. They were busy and wanted information at their fingertips whether they were in their car, at home, or even by phone.

At this point, the beginnings of the complicated Network Chicago infrastructure were first outlined. According to Lavine, the goal was to develop multiple "platforms" so that viewers and listeners could get the information they wanted in a number of ways.

Among the more interesting, and potentially dangerous, suggestions was that consumers might like something in print. "A lot of people essentially said, 'I'd like an adult version of the Reader. I'd like a version of the Reader that fits my needs,' " Lavine says. "We were most thoughtful about that one. Was it really true? We checked it out very hard. If you were very careful how you did it, it was indeed an opportunity."

So NU suggested a network of outlets that included Channel 11 and WFMT, its two well-established brands. Added to that would be a print product, later launched as CityTalk, an online component (that Andersen later advised them, wrongly, would bring in roughly $1.5 million in ad revenue), and a component of events that would all be tied together with programming that flowed through each one of the "platforms."

But WTTW fumbled the execution and in doing so, added a tremendous amount of cost in a very short time. The multi-platform strategy that the Media Management Center suggested, and what people eventually saw, read and heard, were vastly different.

"How you execute this is very crucial," Lavine says he told WTTW at the time. "This was not a TV-centric approach. If all you do is develop shows, consumers were saying that's not what they wanted. If it all boiled down to TV, it was going to be a problem. And I think that was the problem."

From the beginning there was internal resistance to the plan, a feeling that Schmidt was pushing through his agenda without thinking through how a place with limited resources, and used to working in a hand-to-mouth environment, would be able to pull this off.

Several staffers didn't get the concept, or how it was supposed to be implemented. In the original Network Chicago plan, Schmidt wanted an hour-long "Chicago Tonight" broadcast that included segments on the arts, health, business and technology. He also wanted a newscast added to the mix, which would have required an enormous increase in resources. His production staff at the time said the station wasn't equipped to handle it, complaining that Schmidt didn't understand what it would take to develop more local programming.

The decision was made to continue the half-hour "Chicago Tonight" format and then add an extra half-hour show based on special-interest areas identified by the station's research with Northwestern.

"We tested [an hourlong] program once, and the word was that it was very stressful on the staff," Schmidt recalls. "What we would rather do, the staff said, was try another half-hour to pair with it. What it did was create the need for another production unit for another half-hour."

But Schmidt says he believed the real reason for the staff resistance was that "Chicago Tonight" was at the time "our true sacred cow. It was really the epicenter, the core womb . . . This was and still is populated by journalists, media professionals who really believe passionately in the status quo. They didn't want to mess with it."

Schmidt now says that, in hindsight, he wouldn't have launched the technology and health show, called "Chicago Tomorrow," or the "Cheap Show," a local "Politically Incorrect" wanna-be.

Beside those two shows, the original Network Chicago lineup included "Chicago Stories," "Artbeat Chicago," and the long-running "Week in Review" hosted by Joel Weisman. All three remain as part of the expanded "Chicago Tonight."

In the meantime, "Chicago Tonight" was being overhauled. With Callaway retiring, new host Phil Ponce would have to introduce the half-hour specials that would follow. As part of the overhaul, Schmidt wanted a new set for "Chicago Tonight," adding more cost.

So $200,000 was paid out to construct a computer-generated set, from which Ponce would read the day's headlines before sitting down with his guests to discuss the topic of the evening. That set would later be scrapped for another $200,000 set that houses the newest version of "Chicago Tonight."

Amid the chaos of trying to develop a new concept and implement it in a matter of months, Schmidt turned to another consultant. Concerned that the organization wasn't embracing change, he hired Human Synergistics to evaluate the station's culture and assess how it could do things better.

"Creative people thought management's job was to keep the furniture vacuumed and the lights on and leave them alone so they could create and do whatever they do within their editorial bubble," Schmidt says. "I recognized that that approach was not going to lead us into the future."

The Human Synergistics assessment revealed a culture that was "risk averse" and very "passive aggressive," Schmidt says. "It was a picture of an organization that was not ready to do what you wanted to do. A lot of people here were very concerned that their world would be rocked."

But staffers say the resistance to Network Chicago centered on not having the resources to do what Schmidt wanted implemented.

The exhaustive study took a toll on the staff, which in the middle of trying to develop the new shows was constantly being pulled into meetings with the consultant. The study also added to the strain between management and staff, who considered Schmidt and other top executives aloof and distant. Schmidt was viewed as an executive who didn't walk around much to chat up the staff.

But what most surprised many at the station was top management's indifference toward company spending.

Most everyone was stunned when A.T. Kearney agreed to give "CEO Exchange" $10 million. The show, as developed by Channel 11, featured CNN senior analyst Jeff Greenfield as moderator. Each episode had at least two CEOs, who were interviewed by Greenfield, usually in front of an audience.

Despite soft questions, the star-power of the show was remarkable. Executives from Microsoft Chairman Bill Gates to former General Electric CEO Jack Welch appeared on the program, and the show was generally viewed as a success.

But public television outlets rarely see that kind of money come in for one program. And in most cases, it should have been enough to help fund other programming ventures at the station.

But the taping of "CEO Exchange" turned into a spending spree. The shoots took place in several locations outside Chicago, including London and Lausanne, Switzerland. Production crews were often sent to locations a weekend before they needed to be there, adding to the costs.

At the same time, WTTW continued spending aggressively to market Network Chicago. In 1999 it hired Beyond DDB, a subsidiary of the advertising agency DDB Chicago, to help develop a marketing plan. Beyond DDB shot ads and promotional pieces that used a blue chair as Network Chicago's main icon. It was another big expenditure that many contend didn't have much of a return.

In 2000, DDB was the station's biggest contractor at $456,000. Another $369,000 was spent on commercial time to promote Network Chicago, money that staffers say should have been spent more wisely on staffing or other programming initiatives.

Critics contend that Network Chicago had become a nebulous tag that began to dangerously overshadow WTTW's signature brand, which had been building up equity with viewers for more than four decades.

Besides, there was little to show that the integration between "platforms" was working, or even bringing in potential revenue. Under the plan, if Channel 11 were to broadcast a concert, for example, WFMT might promote it and broadcast it; the Web site might webcast it and offer more information about the concert and the composers; and the "events" component might do something special for viewers and listeners in conjunction with the concert. Little, if any, of that happened.

It hadn't take long for holes to start appearing in both the programming and business sides of Network Chicago. In less than a year, Channel 11 canceled two of the three new programs it launched under the label. And the station's business plan--to spend capital money to get the shows up and running and generate buzz before letting them stand on their own--appeared to be flawed. Network Chicago sales teams, like those at other media companies, were having problems persuading media buyers to purchase underwriting and advertising across multiple platforms--a key to the vaunted revenues Network Chicago was to produce.

It took only eight months for CityTalk, the new newspaper, to get an overhaul. From the beginning, the publication had veered from its mission to tie into the rest of the Network Chicago edifice, even after being warned by consultants that it was imperative to do so. It had hired an editor whose previous stint was running the bucolic Daily News in West Bend, Wis. And with one of the most generous freelancing budgets around, the publication, which initially paid $1 a word to freelance writers, soon began to buckle under the weight of its expenses. By July 2001, CityTalk's staff was cut, a new editor was named, and the weekly went bi-weekly to help trim costs.

Several longtime staffers and more than one board member privately say the decision to go into publishing was ill advised. That CityTalk tried to compete editorially with established players like the Reader and NewCity might have hastened its demise. "They were doing things we knew nothing about," says one board member about the launch of the newspaper.

As revenue began to fall in 2001, it became clear that major cutbacks would have to be made. And Channel 11's more popular shows were no longer sacred.

Desperate for some positive news, Schmidt turned to commercial TV expertise. Bob Sirott had been at WTTW taping a series of specials when he and Schmidt began having conversations about the station's lineup.

At the time, Schmidt was looking for a top TV executive to help turn things around. Sirott suggested Randy King, director of production, engineering and operations at WFLD-Ch. 32, who had worked with Sirott when he hosted "Fox Thing in the Morning." King also had nine years of experience at Fox Network's programming arm in Los Angeles. He was hired at Channel 11 last year.

By the time King came in, Network Chicago was already a shell of itself. The Callaway-hosted "Chicago Stories," the only clear programming success of the original Network Chicago lineup, was cut to roughly six times a year. In King's eyes, with losses beginning to pile up, only "Chicago Tonight" was inviolate. A new mandate went out that nothing in the building would be done on the company's dime unless it had underwriting support.

"We don't have cash, so if you come looking for it, we're not going to hand you a check for $500,000 for [a] one-off documentary," King says. "But we can open our studio up to 'Soundstage' and partner with HD Ready to cover the out-of-pocket expenses."

But the move risks being shortsighted, television observers say. One of Channel 11's hallmarks over the years was its ability to develop quality programming, even when the money wasn't there. For years, the costs of "Chicago Tonight" outweighed the show's corporate underwriting. Under King, it is doubtful something like "Chicago Tonight" would ever see the light of day.

Furthermore, critics say, King's policy means programming at the station will be guided simply by cash and that corporate underwriters will therefore dictate what gets aired and what doesn't.

Meanwhile, there are few production companies willing to take on all of a show's financial risk until an underwriter is found.

One of the new shows, "Check Please," which features restaurateur Amanda Puck as host of a roundtable of regular Joes reviewing Chicago restaurants every week, was implemented following the demise of the "Cheap Show." "Check Please" was quickly building an audience. But the program ran into a problem with King last season because it didn't have an underwriter. It was saved at the last minute when board member James R. Donnelley, a fan of the show, maneuvered to get some Donnelley Foundation money behind it.

King defends his new approach, saying that WTTW has no other choice. He says it will bring in outside ideas to a place that was considered close-minded to them for years. "Given our financial situation, what we can offer are local producers, facilities, distribution and people," said King. "But if we were to go out and fund something ourselves and speculate with our own cash . . . it wouldn't be prudent."

He says the new "Soundstage," which debuted this month, is getting off the ground because of the willingness of the producer, HD Ready Production, to front the out-of-pocket expenses. That enabled WTTW to finally sell a $1 million underwriting sponsorship to Allstate Insurance Co. After HD Ready's expenses are paid off, the production company and WTTW will share in any profits made from the sale of CDs and DVDs, a revenue stream King hopes will provide much-needed money.

But so far, there is no underwriter for another project, a half-hour comedy/reality series titled "Comedy Tonight" from Tim Kazurinsky and producer Thea Flaum.

King's other big change was more controversial and met with resistance both inside and out. In overhauling "Chicago Tonight" in the face of soft ratings, he recommended that his friend Sirott be hired full-time as the show's new host. Ponce would continue to do the traditional roundtable portion of the program, though in a somewhat reduced role. The move instantly rankled staffers who felt that King was paying back Sirott for getting him in the door.

King maintains it's not true. "[Sirott] is hard-core Chicago, born and bred. In spending a lot of time with him, it was clear this guy loved Chicago and knew everything about it."

The addition of Sirott drew scrutiny outside as well. Newspaper critics questioned whether Sirott's free-wheeling style and bent toward pop culture would "dumb-down" the show, which has been known to cover everything from world economics to global terrorism.

Sirott says he has heard about some of the internal grumbling, though no one has said anything to him. "I don't hear that stuff because it's behind my back," he says, describing the new "Chicago Tonight" as more of a news magazine than anything else. "I don't doubt there are people who want the old show back.

"I feel sorry for the people who are bitter," he adds. "I'm the biggest snob there is. We don't do anything that smacks of tabloid [journalism]. It's pretty solid whether it's politics or anything else. I don't get any resistance. As far as editorial control and content, they let me carry a pretty big stick."

So far, the change appears to be moving ratings in the right direction. After months of decline, the new expanded hour was up one-half rating point to 1.8 in May, according to Nielsen Media Research. Its share of the audience went from a 2 to a 3.

Even with his vigorous defense and contention that Network Chicago remains alive, it is clear that Schmidt has a lot riding on the success of Sirott and the new hourlong "Chicago Tonight."

He says he continues to have the full backing of the board. Yet the pressure to show success at the station is clearly evident. Even though it will be months before Channel 11 gets a complete picture of whether the new "Chicago Tonight" is a success, the station has been out trumpeting the show's ratings progress as if a new page has been written in local TV history.

Given what little else is going right at the station, no one should be surprised.

Caption: PHOTO (color): CEO Dan Schmidt's vision for WTTW had only two problems: the staff didn't understand it, and advertisers didn't buy it.
PHOTO (color): A security officer mans the desk in the new $2.1 million lobby of WTTW's offices on the Northwest Side. Critics cite the opulent lobby as an example of wasteful spending.
PHOTO (color): Reese Marcusson, WTTW's chief financial officer.
PHOTO (color): Randy King, WTTW's executive vice president for television.
PHOTO (color): "Chicago Tonight" host Bob Sirott checks his watch as Phil Ponce moderates a discussion in the background: "We don't do anything that smacks of tabloid [journalism]," says Sirott. "It's pretty solid whether it's politics or anything else." Tribune photos by Chris Walker.
GRAPHIC (color): On the cover: Illustration by Christoph Niemann.

Copyright 2003, Chicago Tribune
Record Number: CTR0307270485