War for the Observer: Management Battles With Legacy

When Jared Kushner bought The New York Observer in 2006 from its benefactor and owner, Arthur Carter, New York City’s salmon-colored staple had been losing about $2 million dollars a year. But the paper, which had always been financially troubled, had incalculable cachet. For the cultural and media elite it chronicled, it was a must-read, and a significant voice in local politics and real estate. Created in its storied form by Graydon Carter, who would go on to edit Vanity Fair, briefly edited by Susan Morrison, now of The New Yorker, and then guided by longtime editor Peter Kaplan, the paper’s relatively small circulation of 50,000 understated its influence.Kushner, a then-25-year-old real estate heir, paid nearly $10 million for this cachet. He saw the Observer not only as a way to improve his standing—as one of the paper’s former reporters has written, “owning the Observer opened doors real estate never could”—but also to prove himself. By running the Observer like a business—marketing the brand, building a Web presence, and providing more editorial resources—he would add profitability to the brand’s coolness and clout. In so doing, he would demonstrate his own value and maturity. This uncertain business proposition meant Kushner would have to turn the small-circulation periodical into an advertising miracle. To this end, in March 2009, Kushner hired Christopher Barnes, the co-founder and former publisher of AM New York, as president of the Observer. Since arriving, Barnes has been on an aggressive campaign to increase ad revenue and cut costs and to dominate the editorial culture of the paper. But according to Adweek’s extensive interviews with many of the Observer’s former business and editorial employees, Barnes’ campaign—and Kushner’s apparent faith in Barnes—is destroying much of what gives the paper value. Through a representative, both Kushner and Barnes declined to be interviewed for this article. The Observer now is a very different place than it was when Kushner bought it. The once tony publication, which reflected Kaplan’s strong editorial voice and nostalgia for the city’s journalistic traditions, is now driven by Barnes, a local retail ad-space salesman. “You’ve got a paper, or a brand, that is selling itself on being a premium brand, and they hired a guy whose entire background is in local, classified sales,” one source said in disbelief. “There could not, in my mind, be more of a disconnect.”Two weeks ago, former Gawker editor Elizabeth Spiers became the Observer’s fourth editor in half as many years. Her appointment signals Kushner’s still-strong desire to enhance the Observer’s voice and build its Web site, which is regarded as behind the times. (One of the paper’s former columnists recently explained that he left the Observer last year because he “didn’t want to get left behind” on the Web.) Spiers will report to Barnes—"She’s going to run screaming in a couple of months,” one former employee said. Meanwhile, Kushner, who is less and less of a presence in the Observer offices, seems to have higher ambition as a proprietor than mere prestige. In that, he's been closely counseled by—and become friends with—News Corp. mogul Rupert Murdoch, whose two young daughters were flower girls at Kushner's wedding to Donald Trump's daughter Ivanka. Advised by Murdoch to get himself a strong manager, Kushner found Barnes, who he sees, according to multiple sources, as his salvation, if not “as a god.”Within the paper itself, however, Barnes is, practically speaking, the anti-Christ. “I’ve never seen someone so universally reviled,” one source said. (Without being prompted, many sources identified only three people at the Observer who might not hate Barnes.) Asked why Barnes is so disliked, the source gave three reasons that were echoed by all those who spoke with Adweek: One, he views editorial content “as a support function” for advertising; two, he thinks “it shouldn’t take time or money to put [the paper] together”; and three, he believes “that every single person is replaceable.” “He’s a used car salesman,” one former employee said in an e-mail. As one source put it, “There’s a real feeling—and I think everyone could tell you this as well—that editorial is interchangeable.” Indeed, almost every member of the editorial staff who was there when Barnes arrived has either left or been let go. Barnes seems to take pleasure in his ability to fire people and pride in his ability to underpay them. “Christopher is so proud of the way he fired people when he came on board,” one former employee said, referring to his sacking of much of the Observer’s digital team. He would also mock employees who had been hired for painfully low salaries.What’s more, staffers don’t earn their low pay just for doing their own jobs. As one source said, “almost everyone at the Observer works on some other Kushner company . . . All the people are doing the Web site for Kushner companies, or people are working on HR for Kushner companies, or helping have a Kushner event. . . . Any new project can just be dolled to whoever: any new magazine, any new newspaper or vertical Web site—there was never anyone hired for it. It was just, ‘OK, well this person is going to also do that.'”Mostly, Barnes has concentrated on turning the once journalistically oriented Observer into a predominantly sales-focused organization. One of the first things Barnes did was set up whiteboards in the office, available for all to see, where he made a list of how much revenue each sales representative was bringing in per month—something former employees describe as both “humiliating” and “pathetic.” When the Observer moved to its new two-story offices in midtown Manhattan last summer, he insisted that a wall of each floor’s main hallway be laminated for the same purpose. The list for classified sales reps, on the downstairs wall, also includes the number of phone calls each has made—something Barnes is able to track through a device he had installed in their phones, according to a former employee. (Barnes has started a similar list for the editorial staff, tracking the amount of page views each writer’s stories have received.) A large part of the Observer’s revenues now come from its advertorial supplements, and Barnes continues to increase the number the company produces. Indeed, the company has largely transitioned from what the Observer was under Kaplan into a new company whose principal business is producing free-standing advertising supplements that, one source told Adweek, Barnes “refused” to clearly label as advertorial. In 2010, there were no less than 36 of them, ranging from real-estate focused supplements like Luxury Rentals or Neighborhood Spotlight, to travel and leisure supplements, education supplements, and, most notoriously, Observer Playground, a lifestyle magazine “for the New York mom.” (In 2010, two dentists brought and subsequently dropped a lawsuit against Playground editor Lyss Stern for failing to write a favorable piece about them, which they said she had agreed to do instead of paying her $45,000 dental bill.)Robyn Weiss, a salesperson who one source credited as “the reason the Observer continues to exist,” is responsible for many of these supplements. (Her official title, according to the Observer’s Web site, alternates between associate publisher, real estate director and entertainment director.) “Whatever she wants from Christopher, she gets,” a source said, “so she started creating more and more products.” In late 2010, Weiss brought in over $300,000 in advertising revenue in a single month. Barnes’ heavy attention to advertising and his disregard—or even contempt—for editorial content have, predictably, led to conflicts between Barnes and the Observer’s editors. Kaplan, who joined the paper in 1994 and was its longest-serving editor, left the month after Barnes arrived. His replacement, Interim Editor Tom McGeveran, announced his resignation five months later. It wasn’t long before the next editor, Kyle Pope, started demanding that he be allowed to report to Kushner instead of Barnes, a former employee said. By August 2010, Pope was reportedly telling his staff that he was at war with Barnes and calling the Observer a “shitshow.”By that point, the paper was a shitshow. Consider one incident that occurred the same month: One Monday morning, staff members showed up at the Observer offices to find a distraught sales representative packing her things. The sales rep had resigned the preceding Friday, giving two weeks notice. Yet according to the sales rep and sources familiar with the event, when she showed up that morning, Barnes, apparently upset about her resignation, started screaming at her, demanding that she leave. At one point, Barnes even got on his hands and knees, crawled under her desk, unplugged her computer, and walked away with the cord. The representative left that day without being given the opportunity to turn over her accounts, which had outstanding business deals. “It actually left the company reeling for a while,” one former employee said. “It really freaked a lot of folks out.”Four months later, Harleen Kahlon, the general manager of digital, was forced to leave under similar circumstances. Sources say that during a meeting with Barnes and Kushner, Kushner became disproportionately irate and hostile in the middle of a disagreement. She returned to the office the following week and told Barnes she planned to resign; a few days later, Barnes had her escorted out of the building. Throughout all of this, Kushner has “kept the wool over his eyes,” as one source put it. At this point, “I think it’s too difficult for Jared to even question whether Christopher is good,” the source speculated, “because then he would have to deal with the Observer.”“Both Jared and Christopher have a deep hatred for anybody who works at the Observer,” a former employee said. “The reason for that is, on Jared’s part, that he resents the Observer [staff] for not helping him make it a success . . . The Observer is something that he has been embroiled in a fight with, and how dare the Observer defy his attempts to make it successful. They’re like, ‘How the fuck are you people coming in here and not making this work?’ And they fail to see that the common thread is the two of them.”

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War for the Observer: Management Battles With Legacy

Dylan Byers

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Dylan Byers