Bad News

For a newspaper that hasn't made money in more than 20 years, the Boca Raton News sports some headquarters.

"The Palace," as employees sneeringly refer to it, is a square office building nestled in arboreal splendor at 5801 N. Congress Ave. in Boca Raton. Past the $10,000 fountain that looks like a huge boulder but doesn't work because it was never hooked up and beyond the thick glass doors etched with the paper's name is a lobby tiled in luxurious marble. Through the grand archway framed in rich, cherry woodwork is the community room. And what a room it is. Intended as a meeting space available to local organizations free of charge, it has 20-foot ceilings and glass walls that allow a climate-controlled view of the lush courtyard and garden nestled in the center of the building. The centerpiece of that garden is a young tree sprouting from a circular bed of smooth stones painted white and black and meticulously arranged in a Chinese yin-yang symbol.

A staircase with shiny brass railings leads to the offices of the News's advertising, business, and editorial departments. Floor-to-ceiling windows throughout the place showcase both the courtyard and greenery surrounding the building.

Most impressive is a second-floor suite where former publisher Michael Martin once worked in opulence: a cherry-and-glass liquor cabinet and bookshelf that sprawls across an entire wall, hardwood floors, and an executive bathroom with sink and shower. Imagine the place decorated with stylish furniture rumored to be worth between $7000 and $12,000 and you have a workspace worthy of a successful captain of industry.

But Martin wasn't successful, and both he and his furniture are gone. In fact the disparity between the paper and the place where it's produced makes a handy visual metaphor for his two years of ownership; all style, no competence.

Through the astonishing beneficence of a rich partner, Paul Neely, Martin took over the 45-year-old News in 1999 without risking his own money. For two years he lived an "Armani lifestyle," as one ex-News employee puts it, complete with an Infiniti SUV and a $475,000 home in Delray Beach a block from the ocean.

Then Neely grew weary of Martin's high living and tired of footing the bills. He wanted out, and Boca's hometown newspaper was in trouble.

These days the prognosis for the paper, even under new ownership, is not good. What was once a scrappy tabloid-size publication, considered to be among Florida's best small dailies, has become an anemic paper on the verge of irrelevance. It's the kind of place at which journalists work for a year or two right out of college, learn to write on deadline and figure out how city hall works, then move on or decide to leave journalism. And it's full of the mistakes that rookies make when they are stretched too thin or just aren't paying attention. A particularly embarrassing example: In a July 20 story about the paper's sale, staff writer Dale M. King got the name of his new boss's old company wrong. And nobody caught it.

The News is squeezed from the north by the Palm Beach Post and from the south by the Sun-Sentinel, both of which cover the News's home turf of Boca Raton and Delray Beach. There's little room to run and precious few resources with which to stand and fight. "I can't see how it can possibly survive," says Charles Layton, a former Philadelphia Inquirer editor who now writes books about the American newspaper industry. "That paper has been doomed for a long time."

The Boca Raton News was founded in December 1955 by a group of investors led by banker Tom Fleming. The editorial side consisted of husband-and-wife team Robert and Lora Britt.

In 1963 two executives from The Miami Herald purchased the paper and began building the staff. Their first hire was Sandy Wesley, a writer who spent decades at the News but was fired last March. The editorial staff totaled three for about a year, recalls Wesley. "The publisher covered sports and ran the press at times, the editor covered city meetings and police. I put out the women's section and wrote features."

Within a year the News added photo and sports editors and increased its publishing schedule to twice a week. By 1970 the paper was distributed every day except Monday. Around that time the News's owners sold the paper to Knight Newspapers, which at that time also owned The Miami Herald. (Knight merged with Ridder Publications Inc. in 1974.)

Wesley left the News in 1971 for a job writing features at the Palm Beach Post. She returned in 1981, when Knight Ridder began pumping capital into the paper. The media giant, then headquartered in Miami, beefed up the staff and switched from afternoon to morning delivery. Knight Ridder improved the situation, recalls former News reporter Mike Sallah, but was careful not to make the paper too good. "Knight Ridder did [the News] a terrible disservice," says Sallah, now a national-affairs writer for the Block News Alliance, a shared service of the Toledo Blade and the Pittsburgh Post-Gazette. "They built it into a really good daily, but they also stunted its growth. It was in a real position to grow in the '70s and '80s, but they didn't want it to get too big because they wanted the Herald to be big up there."

Nonetheless the News published stories that would have been inconceivable at most small dailies. Sallah says reporters occasionally worked on projects for three months or more -- a rarity today, even at the nation's largest newspapers. When crack cocaine appeared in Palm Beach County in the mid 1980s, News reporters went beyond quoting cops and reporting arrests. They hung out for hours at a time in front of a place on SW Ninth Avenue in Delray Beach known as "The Hole," a string of small cottages with iron bars on the windows that served as a drive-thru drug mart. On December 28, 1986, Sallah and fellow reporter Gina Smith filed a story that began on the front page with a photo of an apparent drug deal at The Hole and jumped inside to a two-page spread dominated by a map pinpointing every known crack house in Delray Beach, complete with the address, the owner's name, and a photo of each place.

"We did a lot of ambitious stuff like that," says Sallah, "major stuff, major take-out pieces. We won every award [in the small-newspaper] category in Florida, which just shows how well the paper did."

Sallah wrote a piece in April 1987 that he still recalls as one of the highlights of his career. It was the story of Bob Drummond, a rich Boca developer who in the early '60s had it all -- a fat inheritance, boats, racehorses, a huge estate, even a private helicopter. But in April 1962, two of Drummond's four children were poisoned by an 11-year-old neighbor boy who poured weed killer into a milk bottle and put the bottle in Drummond's refrigerator. Drummond's three-year-old son, Randy, and his nine-year-old daughter, Debbie, drank the milk and went into convulsions.

Drummond and his wife, Gloria, loaded the children into their car and drove them about ten miles north to Bethesda Memorial Hospital in Boynton Beach; no hospital existed in Boca at the time. The children survived the trip, but both soon died of arsenic poisoning.

Convinced their kids would have survived had a hospital been located nearby, the Drummonds began a five-year fundraising campaign to get one built. The Boca Raton Community Hospital opened in June 1967.

Sallah heard about the story and realized no one had ever followed up. With the 25th anniversary of the children's deaths approaching, he tracked down the police and doctors who worked the case; the Drummonds' other two children, Bob Jr. and Robin; and Gloria Drummond. He even located the poisoner, Raymer Cassady, who was then 36 years old, living in Deerfield Beach, and working as a garage-door salesman. (Cassady, who didn't comment for Sallah's story, was charged with "delinquency leading to a death" and court-ordered to attend a Boston school for disturbed children. He completed his sentence at age 16.)

Sallah found Bob Drummond living in his car only a few blocks from the six-bedroom Boca home he had once owned. Drummond never recovered from the death of his children and by 1987 spent his time hanging around in bars and crashing with friends.

"That story totally blew the lid off the town," recalls Sallah. "You are talking about a big tragedy with prominent people. I remember Mrs. Drummond having to go to the hospital after she read it, she was so freaked out."

Such stories enabled News alumni to get jobs at papers like The Miami Herald, the St. Petersburg Times, and the Detroit Free Press. Sallah left in 1989, just in time, he says, to miss the News's ruination. "That godforsaken project -- thank God I was gone."

By the late 1980s, Knight Ridder had its corporate finger in the wind, trying to determine what readers wanted from a newspaper. The company had been criticized by Wall Street for putting too much emphasis on quality journalism and not enough on the bottom line. Daily newspaper readership across the United States had been in steady decline since the mid-'60s, and editors were scrambling to find ways to make their product relevant. They started calling readers "customers" and talked about filling the paper with brief, bite-size, superlocal stories. Public-service journalism came into vogue and so, unfortunately, did focus groups.

Jim Batten, Knight Ridder's CEO at the time, embraced focus groups with the ardor of an alcoholic in AA. Suddenly Knight Ridder was less interested in the historic role of the press as the fourth estate and more interested in plumbing the reader's psyche. Long stories, government coverage, and international news were deemed irritating to readers, and the last thing execs wanted was to lose readers.

In 1989 the News became a lab rat for experiments Knight Ridder thought might lure readers back. KR brass called it the "25/43 Project," so-named for the age demographic they were desperately trying to impress.

Thirty focus groups later, the new News debuted October 11, 1990, looking like a dumbed-down version of USA Today. It was bright, colorful, and easily digested. It featured a strict policy of not continuing stories from the front page. Headlines were big. Editorials stated problems, just as they had before 25/43, but now they also proposed solutions. The business page came with a glossary of financial terms. National and international stories were keyed to maps that helped pinpoint the locations of such datelines as Indianapolis and Moscow. The sports section focused on recreational and participatory events. Weather was described on a full page printed in color -- common now but groundbreaking back then.

In hindsight the problem with letting readers dictate the newspaper's style and content seems obvious: News "consumers" don't always know what they want until they see it.

Most journalists hated 25/43. Linda Ellerbee, who was a syndicated columnist back then, wrote that the News was "... a newspaper for people who find USA Today too complex." The staid New York Times used the words didactic and garish to describe the News. Bill Kovach, curator of the Nieman Foundation for Journalism and former editor of The Atlanta Constitution, said the changes amounted to making the paper an entertainment rag. "The more entertainment, the more celebrity, the more light news, the more graphics, the more color and pizzazz that's stuffed into newspapers, the more irrelevant the newspaper becomes to the reader," Kovach was quoted in a Washington Post article as saying.

Readers were unmoved. A year after the makeover, paid circulation had jumped from 21,600 to about 25,000, but that increase was probably attributable to heavy advertising and promotion. Within a few years, all the gains disappeared.

After the hoopla faded, Knight Ridder quickly seemed to lose interest in the project. "A year later it became clear that they hadn't given sufficient thought to the long-term fiscal implications," says Randall Murray, the News's editorial-page editor for 11 years until he was fired in 2001.

Murray came to Boca Raton from The Morning Call in Allentown, Pennsylvania. He knew nothing about South Florida or 25/43 but was quickly swept up in the excitement after he arrived. "We worked 15- or 16-hour days, six days a week," he recalls. "It was hard as hell putting out the daily paper and planning for the next paper. It was essentially two jobs. We would work all day, then go to focus-group meetings at night. I came down with a whopping case of shingles a month after we got the new paper out."

The staff slowly dwindled and without sufficient manpower could not put out the same product. It was too labor intensive.

When Jim Batten died of a brain tumor in June 1995, Tony Ridder -- known more for business savvy than journalistic endeavors -- took over as Knight Ridder CEO. The News hadn't made money in years, says Murray, and Ridder wouldn't stand for that. "We knew it was just a matter of time before they dumped the News."

In December 1997 Knight Ridder sold the News and two other small dailies to Community Newspaper Holdings Inc. Details of the deal were never published, but a source who worked at the News in 1997 says CNHI paid between ten and eleven million dollars for the paper.

CNHI is what industry wags refer to as an "instant chain;" it didn't exist before 1997 but now owns more than 200 daily and weekly newspapers around the country. It grew by purchasing tiny publications, many with circulations of less than 10,000.

The company is the brainchild of Ralph Martin, who learned the newspaper business during 19 years with the Thomson Corporation, a news conglomerate. In 1996 Martin started shopping around for investors to create his own chain. He found Retirement Systems of Alabama, a pension fund worth more than $22 billion. With a $1.3 billion loan from RSA, Martin went on a shopping spree, purchasing "clusters" of papers in geographic proximity to share operating expenses and ad sales.

After buying the News, Ralph Martin installed his younger brother Michael as the general manager, despite the latter's lack of newspaper experience. The elder brother had his eye on a nearby Deerfield Beach-based chain of papers, but when the Sun-Sentinel snatched it up in 1997, he and his company lost interest in the News. CNHI had owned the News for only a year when it worked out a deal to sell the paper to Michael Martin for $6.5 million. The company kept the old News building in downtown Boca Raton, which it has been trying to sell ever since, and Michael Martin took everything else.

According to an ex-News employee who worked for the paper at the time and asked not to be named, Michael Martin had neither the money nor a likely investor. "He didn't have two pennies of his own money, as far as I know," says the employee. Luckily Ron Smith, then the News's editor in chief, had a connection: Chattanooga Times publisher Paul Neely. (Smith declined to comment for this story.) On April 22, 1999, Michael Martin, with Neely's backing, became the News's third owner in three years. And before he sold the paper to Neal Heller last July 20, he almost ran it into the ground.

On the day Michael Martin took over, Smith wrote a front-page story about the new boss that contained an interesting, if elliptical, paragraph: "The 42-year-old businessman said unique circumstances allow him to go against the national trend toward chain ownership of smaller daily newspapers." Unique indeed. In fact the circumstances were almost unheard of.

Martin had gotten into a few legal scrapes. In 1993 the federal government garnished his wages for defaulting on a student loan. Three years later, while living in Arizona, Martin, who is gay, was involved in a fight that ended with his boyfriend, Barry Brooks, in the hospital.

According to police reports, Martin had been staying at Brooks's Scottsdale home regularly for two months. On January 11, 1996, the pair had several drinks before starting a shouting match. Martin packed a small bag and left. But before Martin could drive away in his Honda Passport, Brooks demanded the return of a garage-door opener. Martin backed out of the driveway while his host was reaching into the car, dragging Brooks about 20 feet into the street. Brooks suffered a broken right patella, a broken left ankle, and severe scrapes on his legs.

Brooks sued Martin in civil court. In 1997 a jury awarded Brooks $9000 but found the relative degree of fault split evenly between the two.

About that time Martin moved to Florida, where he worked as vice president of sales and marketing for Whitman Education in Miami before brother Ralph made him general manager of the News.

Neely chooses his words carefully when talking about the News. "I'm not going to talk numbers," he says when asked to confirm the reported sales price of $6.5 million. In a roundabout way, he concedes that he was the sole financial backer. "I brought something to the partnership, and they brought sweat equity."

Two other sources -- Chris Mathieson, who was Martin's live-in boyfriend until the two split this summer, and an ex-News employee who worked in the business department and asked not to be named -- fill in the details. Martin had 57 percent of the company, and Neely held 30 percent. Martin gave the remaining 13 percent to Clifford Jones, chairman of the Boca Pops Orchestra and a close friend. (Jones did not return phone calls for this story.)

Neely financed the deal by using personal stock as collateral for a loan, says Mathieson. Better still for Martin, Neely lived outside Florida and rarely visited. "How does someone invest millions and have no oversight?" asks the former business-department employee. "What is going on?"

Together Jones, Martin, Neely, and Ron Smith composed BRN Media Group, which owned the News and two smaller publications, Education Times and B Magazine.

Times were good in the stock market back then, and as Neely's portfolio increased in value, he took additional loans to finance the paper's operation, say Mathieson and two sources who asked not to be named. Neely's total investment peaked at $11 million before he pulled the plug, according to the three.

When BRN bought the News, Martin threw a catered, red-carpet bash complete with a band, valet parking, and gift bottles of wine labeled "BRN Media." All the beautiful people of Boca were invited, says the ex-employee. But the staff was snubbed, then and later. "Come Christmas we didn't get a lousy, stinking Christmas card from him or a thank you. We got nothing."

CNHI owned the paper's offices, at the time still located in the old News building, and Martin wanted to move. So the new publisher dispatched his general manager, Scott Edgerton, to look for a new space. When Edgerton showed Martin the Congress Avenue location, the owner fell in love. He moved the paper in November 1999. "There is no question the offices were considerably nicer than the Boca Raton News's original office downtown," Edgerton says, noting the paper got a deal on the space because it took over a prior tenant's lease. On the open market, the posh, 43,000-square-foot building would have commanded a lease price "in the mid-$20 range" per square foot, he says. "What we paid is confidential, but it is less than $10 a square foot."

Still when you own a press, as the News does, moving isn't cheap. The concrete floor in the new press room had to be fortified so the massive machinery wouldn't vibrate the whole building. The ex- business-department employee says disassembling, moving, and reassembling the press cost about $1 million.

Executives were paid juicy salaries, according to another News source, who worked in management -- including $168,000 to Martin and $150,000 each to Clifford Jones and a third Martin brother, Paul, who, though employed by the News, lived in Kentucky. (Ralph Martin, who left CNHI in July 2000 but later came to work for Michael as a consultant, was recently named the News's chief operating officer by current owner Neal Heller.)

Michael Martin apparently relished the social status his title brought considerably more than he enjoyed the work. He served on the boards of more than a dozen community organizations, including the Boca Pops Orchestra, Florida Atlantic University, the Greater Boca Raton Chamber of Commerce, and the Palm Beach International Film Festival.

Meanwhile the News was dying. Ron Smith, by all accounts a competent manager, left to become a night editor at the Palm Beach Post. And Neely apparently grew tired of Martin's flamboyant lifestyle. "It's fair to say I had trouble with Michael Martin," says Neely. "There were differences that made me want to leave the partnership."

In March, Martin fired 20 employees. Twice in the following four months, the News couldn't meet payroll. Jeff Perlman, vice president of product development, says contractors weren't getting paid and were therefore reluctant to do business with the paper. When a newsprint supplier cut the News off, the end seemed nigh. "Around here we compared Michael's leadership to being in a car with a drunk driver," Perlman says. "We just prayed he wouldn't take us over the cliff with him."

Circulation withered, he adds, while Martin mismanaged printing jobs for other publications that had brought in vital revenue. Perlman still can't believe how employees remained loyal to the paper and went to extraordinary lengths to keep it alive. "We scrounged for paper left over from the Knight Ridder days," Perlman says. "It was so brittle it would break on the press. But we never missed a day of publishing because of [Martin]. There were days when I would walk into a manager's meeting and I was sure this would be the day we were done. We came as close to closing as physically possible without actually doing it."

None of the problems seemed to alter Martin's lifestyle appreciably, according to his ex-boyfriend. Mathieson contends Martin went through money like a trust fund baby even as the News was foundering. "He went to 52 or 57 charity events in a single season, and he would buy a table at each. That is like $2500 a piece." He traveled extensively, says Mathieson, was a member of the tony Boca Raton Resort & Club, and spent thousands renovating his own home using a corporate charge account. "He started getting financially really tight, so he started putting everything on the corporate Home Depot card," Mathieson says.

By early 2001 the News was on life support, and Neely was fed up. His only hope was finding a buyer. "Imagine it," says Mathieson. "At 42 [years old, Martin] was given $6.5 million and a paper. He didn't put in a dime. All he did was walk into the office. How moronic can you be? To be given this gift from God and to totally screw it up is unbelievable."

Martin is a hard man to find these days; getting him on the record for this story required a dozen phone calls and two trips to his Delray Beach home. But when he did respond, over the phone and via e-mail, he was calm and congenial. His demeanor is that of a nice, albeit beaten, man -- not surprising given the recent turn of events.

The News almost died because he didn't cut costs immediately after taking over, Martin admits; it was bloated with staff after its Knight Ridder days, he says, and that changed little under CNHI. "The paper had been operating at a loss for two decades. I was not successful in reversing that in the first year and a half of my ownership," he says.

Like Neely, Martin won't talk numbers. He does say the paper was saddled with debt when he took over and, despite Neely's largesse, never had enough operating capital. His salaries were in line with other papers, he says, and his personal expenses were not outrageous, as Mathieson claims. "Unfortunately you've spoken to an ex-friend that has a personal grudge against me, totally unrelated to BRN. After I severed our personal friendship, Christopher Mathieson swore to develop stories to hurt me if I didn't write him a very large check, which of course I refused to do."

Yes, he used the corporate Home Depot card for personal expenses. But Martin says the charges were compensation for a two-thirds salary cut he took beginning in February 2000. "All [charges] were approved by management and completely documented," he says. And yes, he attended numerous social functions but not as many as Mathieson claims. That's part of the job for a community newspaper publisher. As for the $50,000 Boca Resort membership, Martin claims to have paid for that from his own pocket.

In the end Martin concedes failure as a publisher but writes off much of what's been said about him as sour grapes. "I'm sorry you've been given such bad information, but considering the source of most of it, I'm not surprised," he says.

Neal Heller and business partner Arthur Keiser spent five weeks hanging around the News before deciding to buy it this past July 20. It took that long to sort things out. "After a tremendous amount of due diligence, we identified the problems," says Heller, the 41-year-old publisher. "In large part they are attributable to the previous management." (Keiser, president of Fort Lauderdale-based Keiser College, is the minority shareholder.)

Heller is circumspect in his comments about BRN Media, but he clearly knows the score. If anyone can pull the paper out of its nosedive, he can.

One of Heller's first acts as the new boss was to squeeze all employees into about half the office space. Serendipitously the Congress Avenue office building was sold to a new owner about the same time Heller bought the News, and the landlord wanted to occupy half of the newspaper's space. This means the News pays less rent.

Instead of Martin's luxe suite, Heller works in a 10-by-12-foot space right off the newsroom with a view of the parking lot. "I like it," he says. "I want to be in the middle of things."

Like Martin, Heller has no background in newspapers. Unlike Martin, he has experience running a business.

A native of Queens, Heller graduated from the University of Miami in 1982 with a degree in broadcast journalism, then from Nova Southeastern University in 1985 with a law diploma. He worked briefly as a lawyer but didn't like it. At age 26 he purchased the Florida Institute of Massage Therapy and, with his then-wife, Elizabeth, built the single campus into a chain of nine accredited schools -- four in Florida and five in other eastern states. According to his March 2001 divorce filing, Heller's net worth is $3.59 million.

The Hellers sold the schools in 1999, though he stayed on as a consultant. He left last April, he says, after realizing the new owners didn't have aggressive plans to expand nationwide: "I was happy to leave. It was time for a new challenge. I had no idea it would be owning a newspaper."

Although Heller also wouldn't talk numbers, Mathieson says Martin filled him in before the sale was complete: a price tag of $2 million, $600,000 of which went to pay off Neely -- not an impressive return on an $11 million investment.

Like every owner before him, Heller has big plans: beefing up coverage of real estate, personal finance, business, and technology; adding a travel column; and expanding the sports section. Of course he uses the word local liberally when describing the paper's focus. Everyone who has owned the News since Knight Ridder has vehemently believed that local news will be the paper's salvation.

Maybe, maybe not. But even if Heller's vision proves viable, it may have come too late. "I just don't know if they can come back," says Randall Murray, the fired editorial-page editor. "It's lost so much credibility, it's gotten so small that there's no reason to take it anymore."

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Bob Whitby