May 9, 2009

Cover Story

Mark Willes

For decades, Salt Lake City has been referred to as “The Crossroads of the We...Read More

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Mark Willes

Leading From the Crossroads

By Tom Haraldsen

May 9, 2009

For decades, Salt Lake City has been referred to as “The Crossroads of the West.” Now, the city’s largest corporate tenant has reached a crossroads of its own, and has changed its management style to deal with the nation’s deepest recession since the 1930s. Chief among those changes is new leadership. Mark H. Willes became president and chief executive officer of Deseret Management Corporation on March 2 this year. The appointment of the 67-year-old Salt Lake City native was the start of a sweeping change in the operating model of the for-profit arm of The Church of Jesus Christ of Latter-day Saints. For the first time in the corporation’s 43-year history, it will now serve as an operating company, rather than a holding company, for seven of the LDS Church’s businesses, including three media-based companies—Bonneville International Corporation, Deseret News Publishing and Deseret Book. That’s where both Willes’ corporate experience and his history could make for some interesting changes at DMC. He has been credited for increasing profits for companies he’s led, criticized for some cost-cutting measures he’s taken and questioned about his reluctance to fully embrace social media. How those blend together in the DMC caldron of companies is yet to be determined. Answering the Call Willes was enjoying semi-retirement when, in mid-January, he received a phone call from the LDS Church’s Executive Committee. Made up of the church’s First Presidency, three members of its Quorum of the Twelve and its Presiding Bishopric, the executive committee asked him to take the reigns of DMC from retiring CEO Rodney H. Brady, who had run the corporation since 1996. “They were so kind and gracious,” he says, in remembering the day his phone rang. “They said, ‘Well, we’re wondering if you’d consider…’” Willes says he’d made the decision long ago to “do whatever was asked of me” by his church leaders. They asked him to become chairman of the board of all seven companies, with each company’s CEO reporting directly to him. Six weeks after he took the job, each of the company’s existing boards were dissolved and new, smaller boards of directors were created. Willes formed four task forces to study and “to focus on different aspects of our company, such as IT, human resources and finance,” he says. “What we are trying to do is to get perhaps greater clarity around why we do what we do, should we do certain things and should we not do other certain things. You need to have that if you’re going to make the right strategic decisions about the directions you want these companies to go.” Willes says he is just beginning to see if the possibility of consolidation at DMC will become a reality. “Does it make sense? It not only needs to save money, but it also needs to be more effective,” explains Willes. “Are there things we’re doing in multiple places that can be done in one place? [Consolidation is] clearly very much on the table. How much of it we’ll actually do depends on the results of the task forces.” As of late April, only one significant change had been announced. Willes hired Claire Averett as vice president of corporate human resources, responsible for HR strategies at DMC and its seven entities. It could be the first step toward consolidation within the companies—a possibility Willes is prepared for. “The challenge you have in any business environment is that sometimes you have to make very hard decisions,” he says. “That, in the initial instance at least, can be very hard on people. And I’ve tried hard so that it never became easy for me.” In Willes’ previous leadership positions, as CEO of Times Mirror, publisher of the Los Angeles Times and vice chairman of General Mills, Willes says that when he had to lay off employees, “I wanted to see the list of every person by name. Even though I didn’t know most of them, I wanted to make sure that I realized…that that was somebody’s husband or father or son or daughter.” DMC’s financial footprint in Utah’s community is huge. The LDS Church does not release nor confirm financial reports, but in 2007 Forbes magazine estimated the corporation’s revenue to be about $1.2 billion. It employs an estimated 4,000 people among its seven divisions. “We are fortunate in Utah to have many generous, successful and committed corporate citizens,” says Lane Beattie, president and CEO of the Salt Lake Chamber. “Deseret Management Corporation, and the premier companies it represents, is among many Utah originals that strengthen our economy, fortify our community and ensure Utah’s enduring success. They serve business and the community...a mix that most cities can only yearn for.” Yet, Willes says, even the LDS Church hasn’t been spared from the effects of the nation’s recession. “We have a pretty interesting collection of companies,” he says. “We have two real-estate related companies, three mass media/communication companies, a property management company and an insurance company. The insurance industry is under tremendous pressure. We’ve got two media companies that are heavily dependent on advertising. Those industries are hurting. And we’re in the real estate business. But you know, depending on how companies respond to that pressure determines how they come out on the other side.” A Storied Past Willes’ history of cost-cutting through downsizing, and driving up corporate profits, is still legendary to the companies he led before coming to the DMC. In 1995, Willes left his position at General Mills in Minneapolis to become CEO of Times Mirror. The company owned the Los Angeles Times, New York City’s Newsday and the Hartford Courant, among other papers. He later became chairman of Times Mirror and named himself publisher of the Times in 1997, a position he held for two years before Kathryn Downing took over as publisher. He helped increase circulation for the Times, which increased by 200,000, reaching a high of 1.2 million. Stock prices went from $18 a share when he became CEO to more than $70 a share four years later. For shareholders, that was the upside. He also focused on trying to adapt the paper to the reader’s needs. “When I went to Los Angeles, I said that ‘I think we need to know more about what our readers want,’” he recalls. “At the end of the day, if we don’t give them what they’re interested in, they’re not going to take us. It seemed like a straight forward idea to me, but it was not a straight forward idea to some of the journalists.” Some writers accused him of trying to breach the wall between editorial and advertising in his profit-driving efforts. “There were people who thought that the wall had been breached,” he recalls. “I think it’s critical that the editorial side be independent of the business side—independent in terms of having the ability to write what they need to write about in any given story.” But he says that doesn’t mean editorial and sales can’t work together. Deseret News publisher Jim Wall agrees. “We’ve collaborated a lot with our advertising department,” he says. “We’ve found ways to keep the barrier where it should be, and there needs to be a barrier. I haven’t found a conflict at our paper. You just remember to write to your readers.” Willes also worked on increasing profits by streamlining operations at the Times, cutting 2,000 jobs. He eventually closed Newsday, the Baltimore Evening Sun and some smaller publications. His efforts to make the Times profitable put him in the center of a situation that he might be remembered for the most, and he says a bit unfairly. It was a decision that Downing made in 1999 with owners of the newly-built Staples Center arena in downtown Los Angeles. The Times produced a 14-page special section on the center, and it was later revealed that the paper shared advertising revenues (totaling $600,000) with the developers in exchange for signage in the arena and other perks. Staff writers were furious, citing a violation of their professional ethics and objectivity and signing a petition protesting the “behind-closed-doors” deal. The situation eventually elicited a front-page apology from Downing. Willes said he became a victim of collateral damage caused by that deal. “It would be nice just once to read an accurate account of what happened,” he says. “I was not the publisher of the paper. I had nothing to do with that deal. It was all done by people other than me, and yet I was the one who was blamed for it. I found out about it, like everyone else, after the fact.” About five months after the incident, owners of the Times Mirror sold out to the Tribune Co. in a $6.1 billion deal, and Willes returned to Utah. Shares of Times Mirror were trading at $95 each at the time of the sale. Another Debate That wasn’t the only question that lingered about his management style at the Times. Willes went on record as a skeptic of print journalism’s increasing turn toward the Internet. His feeling nine years ago, as it is now, is that there remains no operating model on how to profit from putting publications on the Internet. “The debate about social media is whether you can have a model where you can charge for content,” he says. “Everybody was saying, ‘Let’s give the content away for free, and we’ll make it up on the outside.’ It was always clear to me that while you could sell advertising [online], it was going to be a fraction of what newspapers, magazines and others get in their printed product. If that’s all you did, it was basically a recipe for the destruction of the newspaper industry.” Two of DMC’s companies, Bonneville International and the Deseret News, are heavily vested in using social media. But leaders for both companies don’t feel Willes’ views of the Internet conflict with what they are currently doing. “One of the main topics of our first five-hour meeting with Mark was the Internet, how we use it and can,” says Bruce Reese, president and CEO of Bonneville International, which owns radio stations in eight markets as well as KSL-TV in Salt Lake City. “We’re doing well with it, but we want to do better, and one of the big questions is what can we do to monetize it. That’s Mark’s goal as well.” “Our conversations about the Internet are ongoing,” says Wall. “Mark is a big advocate of what newspapers can do, and not just regarding circulation. It’s about what we can do for the community, providing information, and we’ve had great conversations about the changes we are making.” Wall says he wants to make print journalism increasingly more important, as does Willes, and calls “online great for search, but print great for discovery.” “Nobody will pay to get the same information on a newspaper Website that they can get for free on 50 other sites,” Willes says. “It’s absolutely clear that the Internet is diverting a huge amount of advertising dollars and readers away from newspapers. So if you’re a media company, a content company, which newspapers are, then you’d better figure out a way to monetize that or you’re going to go under. It’s about figuring out a way to do that that works.” As for those experiences in Los Angeles, he says time gives perspective. “Thankfully, history, I think, will treat my time at Times Mirror quite well.” Moving Onward Willes’ appointment was announced through an interoffice memo to the seven DMC divisions in January. The LDS Church issued a statement from President Thomas S. Monson saying that, “Mark brings a rich background of corporate world experience and is well respected in the international business community. We look forward to working with him.” A spokesman for the church would not elaborate on how Willes was chosen for the position, if others were also considered or how he was vetted. Sheri Dew, president and CEO of Deseret Book, calls his appointment an inspired one. “He understands media, retail and finance. He’s hands-on and has the practical experience of working with boards and business,” she says. “It makes perfect sense to me that we’re reorganizing media companies—all of us are content providers, and it makes sense to work together to leverage our strengths.” Reese says his experience thus far with Willes has been positive. “He’s bright, he listens, has a sense of humor and is receptive to a lot of ideas. I will miss Rod Brady, but Mark has a different assignment, and he’s hit the ground running.” Wall says he welcomes change, admitting that whenever an organization moves from holding to operating, “there are dozens of questions, and the answers are always in the future. We’re excited, and Mark’s been very proactive so far.” After retiring from Times Mirror in 2000, Willes returned to his home state after being away for 40 years, to give something back. “So, I got involved in some small start-up companies to be useful in some way and make some investments in those, and I have become chairman of several of them,” he says. Among those are Imagine Learning of Provo, developer of ESL software for students; AxisPointe of Lehi, a technology-based post-construction customer service and facility asset management company; and i3 Technologies, which is creating the ability to produce voice prints that could revolutionize the audio segment of the film industry. He also serves as presiding director of Black & Decker. As for his retirement plans and spending more time at his second home in St. George—those are on hold. “I don’t think the changes I’d like to make will all occur in the short term,” he says. “If we are able to do some of the things I’d like to do, it may take a good while. The world is changing, and what was perfectly appropriate for yesterday and the day before is not appropriate today, or might need to be modified. Thankfully, we have an owner who, if they believe you are doing basically the right things, will be patient.”
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