Screwed by the Tribune

The big difference between newspaper distributors James Engle and David Guzik is one of scale. Last March, Engle borrowed $800,000 to purchase the West Du Page News Agency. In July, Guzik paid $70,000 for the Manor News Agency on the northwest side of Chicago.

Otherwise, their stories are much the same. Both men say the Chicago Tribune strung them along until they suddenly found themselves on the edge of bankruptcy.

Last October, the Tribune announced it was changing its home delivery system. No longer would independent distributors buy the Tribune wholesale (paying 12.2 cents for a paper that then retailed for a quarter) and sell it for whatever the market would bear (usually about 35 cents for home delivery). Instead of 89 different rates (the Tribune had added them up), there’d soon be one: starting in April of 1988, the Tribune would call the shots. It would buy the distributors’ subscription lists for “a fair market value” and from then on pay “agents” a flat fee to deliver the paper.

It sure sounded like progress. And sensitively achieved, at that. The Tribune noted that the ten-year renewable contracts signed by most distributors permitted such a change with as little as 30 days’ warning. But “to allow for an orderly transition of business,” five months’ notice was being given.

“There will be,” pledged the Tribune, “no interruption of service to readers.” Hah hah! Our morning Tribune disappeared April 11, the day the changeover took effect, and we haven’t seen it since. But we digress.

Engle, in the suburbs, and Guzik, in the city, were the last people to buy distributorships before the Tribune showed its hand. Now they feel like suckers.

Hardly a typical distributor, Engle is a former Sun-Times circulation chief. He said in court that Howard Hay, the Tribune’s vice president for circulation, personally urged him to get into the distribution business. Yet when Engle closed the deal 13 months ago, Hay already knew the Tribune was making plans to stick it to its distributors.

Why didn’t you warn him? Hay was asked in court. “I was not at liberty to say anything,” Hay responded.

Last October 27, Hay mailed all the distributors a form letter with the bad news. One at a time, they were summoned to the Tower and given terms: take what we offer for your subscription list and come on board as agents. Or, you can let an arbitrator fix the price. But if that’s the way you go, someone else will deliver the Tribune. They offered Engle $350,000 for his list, less than half what he’d paid for his business, even though selling Tribunes gave him three-quarters of his income.

Hay and Engle, being pals, later met at a restaurant to talk it over. Hay said he could see the Tribune raising its offer to $ 410,000. “He asked me what I was going to do,” Engle later testified, “and I said ‘I’ll probably be financially ruined,’ and I laughed. And he said ‘Jim, I wish you wouldn’t laugh about that.’ I said ‘What do you want me to do, Howard, cry?'”

Legally, if not morally, the Tribune could be within its rights. Of the 79 distributors who collectively pursued a temporary injunction blocking the changeover, only Engle achieved any satisfaction. U.S. District Judge James Holderman said he’s the one distributor at all likely to prove eventually that the Tribune acted in bad faith. So he ordered the Tribune to leave Engle’s operation alone until arbitration runs its course.

David Guzik was not so lucky. Guzik, who is 32, has been delivering papers for 18 years. Last summer, he bought the Manor News Agency, which delivers about 500 Tribunes and 200 Sun-Timeses in an area bounded by California and Sawyer, Addison and Lawrence. He paid about $100 a “tag,” a tag being a subscriber.

Guzik got up at 3:30 to see to it that those 700 papers wound up on the right front porches by daybreak. He cleared about $500 a week–not a bad living. And like a lot of distributors, he hoped that eventually he’d turn the operation over to his kids.

But no longer. As of April 11 he’s got only the 200 Sun-Timeses to deliver, and the $500 income is down to zero. “I had to fire one kid,” he told us the other day at breakfast (all he had was coffee), “and lay off the office helper who did the billing. It’s me and three kids now. They deliver on bikes and I deliver in the truck.”

Guzik couldn’t have become a Tribune distributor without the paper’s assent. Before he bought Manor last summer, he says, the Tribune had vetoed two other prospective buyers. And when the deal was done, a letter arrived from Daniel Gallivan, the Tribune’s home delivery manager. “Dear David: Congratulations!” it began; and Gallivan went on to declare: “My sincere best wishes to you in this new and challenging endeavor.”

Three months later, he got the letter from Howard Hay. Guzik says circulation manager Tom Buttel offered him $23,000 for his list. Your tags just aren’t worth all that much to us, Guzik says Buttel told him. The demographics are bad. You work a blue-collar area; these aren’t premium readers.

Guzik wondered what demographics had to do with it–a bus driver’s subscription was worth as much to him as a surgeon’s. “I told him the Trib let me buy [Manor] for $100 a tag. I should at least get that amount.”

How did Buttel respond? we asked.

“Nothing. Blank stare.”

Becoming an agent, getting a flat 12 cents or so a paper, would cut his income in half, Guzik reckoned. So he said no to Buttel. He awaits arbitration. He told us he dutifully turned over his list of subscribers anyway, as he was bound by contract to do, so that the “agents” the Tribune supposedly had been hiring and training the past five months could start delivering the paper in his area on April 11.

“I must have had 80 calls the first day, looking for the Tribune,” he told us.

Guzik still owes the former owner of Manor News more than $50,000. He doesn’t know how he can pay him back. He dwells on what he stands to lose: “My good name–it won’t be worth anything–and my livelihood. I’ll have to go bankrupt.”

He said, “They sold me a contract for ten years. I feel I should get ten years of work out of somebody. I’m willing to put up the ten years. They should be willing to put up the business.”

We called Daniel Gallivan. We asked him how he could have watched Guzik sink everything he had into a distributorship knowing what the Tribune was about to do to it.

“Well,” said Gallivan, who sounded distressed, “that knowledge wasn’t known by me at time.” He said we should talk to Howard Hay, who didn’t want to talk to us. Neither did Tom Buttel.

Apparently, nobody actively deceived Guzik. It was a closely held secret, and Gallivan really didn’t know. Thus he served a function. We wonder if he now serves another: bearing the burden of corporate embarrassment senior executives too busy to tote that inconvenient load.

Our President Speakes

“Here’s something I think you ought to see,” said the president’s wife. She handed him page one of the morning paper. A headline screamed: “Speakes: ‘I Faked President’s Quotes.'”

The president read every word.

“Well, that explains a lot of things,” he said softly.

“It’s just like you always told me,” said the first lady.

“Yes, I always had a feeling I hadn’t said half the stuff everyone said I did,” said the president. “But there was just no way I could prove it.”

“Well, the truth is out now,” said his wife.

The president found he could no longer concentrate on “Funky Winkerbean.” He was so curious about that headline, he asked his wife what the article said.

“Apparently it only happened twice,” she told him. “Once when that Korean jetliner went down–”

“Boy, that was a terrible thing,” said the president, whose emotions were never far from the surface.

“And once when you met Gorbachev.”

“Boy, he’s an interesting fellow,” said the president with equal fervor.

“And that seems to have been it,” said the first lady.

“I don’t think he’s owning up,” the president mused. “What about that Biffburg business? Did you ever hear me say, let’s go see where some storm troopers are buried? Wasn’t I plugging all along to honor the Grimm brothers?”

“That’s how I remember it,” said his wife.

“Dollars to doughnuts Larry put some words in my mouth,” said the president. “Doggone him.”

At long last, he’d laid that matter to rest!

“And that isn’t the only thing I’ve caught the dickens for,” said the president emphatically.

His wife didn’t think so either.

“There was your vow to balance the budget,” said the first lady. “And the time you introduced Samuel Doe as ‘Chairman Moe.’ And something you said about recalling nuclear missiles. And greeting the secretary of housing as ‘Mr. Mayor.’ And how about forgetting the name of your own dog and calling it Lassie! And of course the state dinner in Brazil when you made a toast to the people of Bolivia. And the Saturday you were joking around on the radio and announced we’d begin bombing the Soviet Union in five minutes.”

“I think I may remember the last one,” said the president, pondering forcefully. “But those others–nosirree.

“Larry Speakes must have made them up,” said the first lady.

“Boy,” said the president, “I’d better take that young man to the woodshed.”

“Marlin Fitzwater called before you got up,” his wife said. “He’s working on a statement.”

“I hope it’s a stern one,” said the president. “This is the kind of behavior I really ought to be taking seriously.”

Art accompanying story in printed newspaper (not available in this archive): photo/Paul L. Merideth.