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Randy Michaels may have left Tribune Tower, but something still stinks in there

Buried in the more sensational news that Randy Michaels resigned as Tribune CEO yesterday is the fact that a Delaware Judge is letting a group of creditors move forward with a lawsuit against chairman Sam Zell. This group of unsecured creditors contends that Zell’s Tribune buyout was a “fraudulent transfer” that primarily lined the pockets of Zell, the shareholders and banks that arranged the deal. I’ll also argue that Tribune executives made out pretty damn well, raking in $57 million in bonuses since the company filed for bankruptcy in 2008, while also giving the boot to 4200 employees.

Another thing sticking in my craw is how a lot of commentators are saying that Michaels’ departure is happening despite the fact that Tribune’s board appeared to be happy with his performance. The subtext in many of these commentaries, such as this one by Chicago Tribune business columnist Phil Rosenthal, is that the bad publicity overwhelmed the good he was doing, and that without that publicity Michaels’ would still be sitting pretty behind the CEO’s desk.

However, I say that Michaels’ rotten behavior itself–not the bad publicity–overwhelmed whatever good he might have been doing (and I truly question that he could have successfully steered Tribune to anything except shed employees and cut costs). To blame the publicity for Michaels’ downfall is to completely ignore the effect his behavior and the behavior of his cronies had on the morale of employees working at the company.

If you go back and re-read David Carr’s article which brought wider attention to the executive suite’s Animal House atmosphere you’ll hear quotes from employees who are toiling in a hostile work environment, especially women, who were subjected to their bosses loudly assessing their sexual desirability and other harassing remarks. Most of these employees were afraid to be named in the article for fear of losing their jobs.

How do you run a successful media company when a significant percentage of employees are being sexually harassed or otherwise made to feel uncomfortable or have to work in an atmosphere of hostility? I’ll argue that you can’t. You can fire 4200 employees and therefore immediately cut costs. But once that fiscal year is over, there aren’t a lot of tricks left in the bag.

Maybe all Tribune’s board wanted from Micheals was his signature ruthlessness to quickly shed costs and employees without remorse. They still probably got more than they bargained for, but now he’s gone. The question that remains is whether this board or the next one will have the intelligence to bring on board a CEO who can turn the company around through good business practices, which includes creating a supportive and inspiring working atmosphere for its employees.

I’m not confident that will happen.

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