The news comes soon after chief innovation officer Lee Abrams stepped down from his position amid uproar over a staff memo that contained, within a video on The Onion, supposedly racy content.

The departure marks a particularly turbulent two weeks in the span of time since real estate mogul Sam Zell purchased the company for $8.2 billion. On Oct. 5 the Times ran a ran a column by David Carr that depicted with vivid detail the frat house atmosphere at the Tribune. One salacious tidbit found Michaels offering a waitress at a hotel bar $100 to show himself and two young staffers her breasts — "watch this," he said. The article alleged that the company, once known for its restraint, was now defined by smoke-filled poker nights and "pervasive sex talk."

Michaels had spent time as a shock jock and executive at a series of radio conglomerates before Zell named him CEO upon acquiring Tribune in 2007. It can be said that since then, the economic woes have been on par with those poisoning the workplace environment. When the company declared bankruptcy in 2008, it listed $7.6 billion in assets and $13 billion in debt — the largest bankruptcy of an American media company in history. Since Zell seized the reins, over 4,000 employees have been laid off.

There has not yet been a statement from a Tribune spokesperson on the resignation. 

nfreeman [at] observer.com | @nfreeman1234

There has not only been cost-cutting and declining quality at the company's newspapers (at The Chicago Tribune and The Los Angeles Times' circulation is down in 9.8 and 14.7 percent respectively in the first half of 2010), there has also been a culture of bar-room unprofessionalism institued across the company by former executives from the radio business installed by Mr. Zell. Randy Michaels, a former shock jock who Mr. Zell named CEO, amended the company's employee handbook, as far as we can tell, to loosen the definition of harassment in the company's offices.

Here are some anecdotes from Mr. Carr's 4,000-word piece.

Meet Mr. Michaels:

After Mr. Michaels arrived, according to two people at the bar that night, he sat down and said, "watch this," and offered the waitress $100 to show him her breasts. The group sat dumbfounded.

Poker party in the Tribune "shrine":

In June 2009, a party for management was held in the former office of Col. Robert R. McCormick, the newspaper baron and grandson of the founder, on the 24th floor of the Tribune Tower. Smoke detectors were covered up and poker tables were brought in.

Sex talk in the workplace:

A woman who used to work at the Tribune Company in a senior position, but did not want to be identified because she now worked at another media company in Chicago, said that Mr. Michaels and Marc Chase, who was brought in to run Tribune Interactive, had a loud conversation on an open balcony above a work area about the sexual suitability of various employees.

“The conversation just wafted down on all of the people who were sitting there.” She also said that she was present at a meeting where a female executive jovially offered to bring in her assistant to perform a sexual act on someone in a meeting who seemed to be in a bad mood.

Executives who have no idea about the newspaper business:

Mr. Abrams, who describes himself as an “economic dunce,” was made Tribune’s chief innovation officer in March 2008. In his new role, he peppered the staff with stream-of-consciousness memos, some of which went on for 5,000 typo-ridden, idiosyncratic words that left some amused and many bewildered.

“Rock n Roll musically is behind us. NEWS & INFORMATION IS THE NEW ROCK N ROLL,” he wrote in one memo, sent in 2008. He expressed surprise that The Los Angeles Times reporters covering the war in Iraq were actually there.

To get ahead of The Times article, late last night Mr. Michaels sent out an email to the company's staff saying that Mr. Carr's story was predicated on two-year-old rumors spread by an "ex-Chicago Tribune employee who is now a contributing writer to the New York Times." Mr. Michaels also accused Mr. Carr of trying to influence decisions about Tribune Company's managment that are emerging at the end of its Chapter 11 bankruptcy filing.

"Mr. Carr has made clear that he is digging up these old allegations because he believes that decisions about the company’s management are about to be made, and he wants to influence those decisions," Mr. Michaels wrote. He also defended the company's "fun, non-linear creative environment."

"Ignore the noise," he added. "Treat each other with respect. Have fun, and let’s go create the future."

At Flagging Tribune, Tales of a Bankrupt Culture [NYT]

“My dad always said 'I'll believe when I hear it from the horses mouth,'” was the message his subscribers received. “twitter is the horses mouth. no more 'well the news said ...'”

By Friday, April 17, Mr. Kutcher became the first “Twitterer” to attract a million readers. He beat CNN.com's continuous headline feed, also syndicated to Twitter, by a half an hour.

Mr. Kutcher did not dismiss the Hollywood press corps in fewer than 140 characters. They've done it themselves, and the words keep pouring out about it.

Once upon a time, Variety owned the town of Hollywood. It was the hometown paper. Something only became news after it was reported in Variety. And if that ray of sunlight ever hit and you finally found yourself reading your own name in Variety, then maybe one day you’d be a “topper” somewhere.

And then—as the now-familiar story of journalism goes these days—the Internet happened, and so did the imploding economy. And so a vacuum of power, that motor of everything in Hollywood, opened up in the Hollywood press corps.

“Along come the blogs, and now they share that agenda with us,” said Neil Stiles, the publisher of the Variety Group. “There’s no question about that.”

“The agenda of the day,” he added, thinking aloud, “where we once had that on our own, we now share that.”

Of course, they're not all sharing nicely.

Or, put another way, Variety ceded its grip on the town entirely, and now the Hollywood press corps is in a state of revolution. There is no power structure. It’s all turned inside out and upside down. Everyone claims victory, but no one seems to have it, nobody is powerful enough to measure it. And, above all, it’s one nasty, mean, shrill place.

“For people working in the industry Variety and The Hollywood Reporter gave information,” said Sue Mengers, the original super-agent, reached at home. “You could see what movies are casting. What movies are shooting. Newspapers could never publish that information.”

Has she noticed anything different lately about Variety?

“Well, yes. It’s thinner—there’s less content,” she said.

Variety's Spicy Life

“In the universe there are 1,000 news sources,” said the veteran ICM power agent Ron Bernstein. “I’m just stating the obvious. Now there are a million alternate sources for news.”

And the business model for Hollywood news, everywhere, fell to pieces. Between Variety and The Hollywood Reporter—once a worthy competitior to Variety that has been ushered to the sidelines—the business has been tanking, but also, everywhere.

Between 2007 and 2008, IMS, a third-party tracking service, said that ads and barter ads in Variety, The Hollywood Reporter and The Daily Gotham went down 26 percent; according to an internal hand count by Brian Gott, the publisher of Daily Variety, they are down 31 percent in the first quarter for the three publications.

For years, Variety made money hand over fist. It was a machine. Recently, former editor Peter Bart said that “niche journalism is the most profitable sector if it works.”

If it works. And somehow it stopped working for Variety. Reed Business Information, its parent company, recently cut 7 percent of its staff, including 8 percent of the Variety Group.

Mr. Bart, the longtime editor, got kicked upstairs in favor of longtime No. 2 Tim Gray.  Mr. Stiles, its publisher, outlined a few core reasons the business started tanking. The writers’ strike started it; the credit crunch followed; and then the Academy Awards season, said Mr. Stiles, was considerably smaller—fewer movies and fewer ads, particularly after Christmas, when big studios gave up on any chance of putting up a campaign against Slumdog Millionaire.

“From early on it looked like Slumdog Millionaire was going to clean up,” Mr. Stiles said. “So companies backed off a bit and said, ‘Look, we don’t have a prayer of winning so we might as well back off on the ad units because there’s no point in trying to influence people.’”

And there went the all-important “For Your Consideration” ads that buoyed the trade, targeted at Academy voters.

In many ways, the Slumdog phenomenon shows how the problem with the Hollywood press corps is only an extension of the churning of the larger Hollywood power structure. After all, who made Slumdog a winner? Not the studios themselves. There was already a wolf at the door.

Sure, Variety.com was a huge traffic generator—but there was a problem, the same one that is dawning on all major newspapers around the country. Bundles of readers and page views doesn’t translate into cash.

“Everybody has figured out how to build the traffic,” said Mr. Stiles. “What they didn’t work out is that when you get to the Promised Land, is it worth being there? The fact of the matter is, the business model is never going to be attractive.”

And it wasn’t: as a business, the magazine has taken a hit, and as everyone has learned—The New York Times included—digital advertising money is pennies to the (diminishing) print ad dollar.

Mr. Stiles said there needs to be a new focus—online will charge for some content, but not all. News should be free, but the archives and some specialized content will be entirely behind a paywall, which he believes will bring in money.

But, we asked him, if Variety isn’t on top now, what will it take to get back?

“It wasn’t, then it was, and now it isn’t again, and it will be,” said Mr. Stiles, the Variety publisher. “We just have to own that space again.”

“It might be Variety, it might be—I don’t know,” he continued. “I’m aiming to make sure it is Variety, but I wouldn’t be so arrogant as to assume we will be.”

Across town, the L.A. Times has never been able to fulfill its potential as a must-read in Hollywood. For years, the paper has been grappling with its identity. Dean Baquet, the former editor of the paper, liked to troll the hallways and say that the Times was going to own Hollywood!

But that never happened. The L.A. Times became hamstrung by too many internal conflicts (competing desks going after the same story, staffers upset that the Web site gives into celebrity link-baiting temptations) and, of course, a staff that is less than half the size of what it was eight years ago.

And they suffer from a similar problem to Variety. Bloggers like Nikki Finke have been nimble and fast, and while an L.A. Times reporter is on the phone waiting for confirmation, Nikki puts it up regardless if it’s right or wrong.

So perhaps in an attempt to combat Nikki Finke, the L.A. Times has restarted Company Town, which will be written by Joe Flint, a former Wall Street Journal reporter.

“We’ll be able to do things like a rumor of the day,” said one staffer. “Newspapers need to figure how to do this, to report on the things that we know—we know— are true, but that no one is confirming. And that’s where Nikki kills everyone. She goes out there and says it, and sometimes it’s true, and sometimes it isn’t, and no one holds her for account for what’s not true. And everyone credits her when she’s right. Hopefully, [Mr. Flint] will be able to figure it out.”

The Replacement Killers

“The trades have become increasingly irrelevant,” said Sharon Waxman, the former New York Times reporter who has started a blog of her own, The Wrap. “I used to get the trades. I used to get Variety every day and it’s been a long time since I got Variety every day.”

“When I started the Web site, I think people were—not surprised— but I think people realized ‘Oh my God, here’s the truth! This is not the pabulum that I’m getting every day,’” said Nikki Finke, the writer behind the daily blog Deadline Hollywood.

“The L.A. Times has a very strange relationship in Hollywood,” Ms. Finke said. “Sometimes it’s in bed with them, sometimes it’s not. It’s changed owners, changed editors, changed focus and—along with The New York Times—the L.A. Times has desperately needed advertising by the studio and networks and they have become more groveling. You just don’t see those negative stories that you used to.”

Whether it’s true or not—she would argue that everything that she says is true—it’s what gave her an opening and a following.

The Web site launched in March 2006, and by time the writers’ strike hit in the fall 2007, it was a bona fide hit and a must-read among everyone in Hollywood (and earned Ms. Finke our Media Mensch of the Year award).

“Nikki is the one to beat right now,” says the now-retired longtime Hollywood reporter Anita Busch.

Ms. Finke reported on her blog that Variety wanted to buy her (Mr. Stiles, the Variety Group publisher, said there was an early conversation, but it didn’t get much farther than that). Business Insider reported that Arianna Huffington was interested in buying Deadline Hollywood as well.

“We are not in any conversations to buy Nikki Finke,” Ms. Huffington said when we asked her about it. But had she ever entertained the idea? “We’re not in any conversations now. That’s all I can say.”

It might have been a good move.

“What is clear—what is absolutely clear—is that people in Hollywood have been hungry for an alternative,” said Ms. Waxman.

Ms. Waxman has a full-time team of six people, and a series of other contractors, many of whom are on one-month contracts, and her largest single investor is the venture capital firm Maveron, which was co-founded by current Starbucks chairman Howard Schultz and Dan Levitan, a former managing director at Schroders who helped with the Starbucks IPO.

In her office, in her West Coast home, she’s got a list of words up that can’t be used by contributors at The Wrap.

“We are not the trades,” she said. “We’re just not. Inevitably, people have come to us who are from the trades. So if I have to beat it out, I will do that! I do have a sign up that says I don’t want to see any of that industry jargon that is incomprehensible to the average reader. ‘A starrer! A helmer! A lensman!’ None of that stuff goes in The Wrap.”

She said she wants to watch her spending because when there’s a shake-out, which she said will inevitably happen with the trades and the broadsheet papers, she wants to be there. "They've come to The Wrap in great numbers because they want to read a site that doesn’t have an agenda and doesn’t have a nasty tone to it that is interested and knowledgeable about their lives and their business and their world and wants to report on it in a way that is lively and has a pulse, but isn’t mean-spirited.”

It sounded like a not-so-subtle jab at Ms. Finke, and before we knew it, we were in the middle of yet another fight.

“People around Hollywood are terrified of her,” said Ms. Waxman. “I’m surprised how terrified people of her. A journalist only has so much power as you give them.”

“I can’t believe that she’s saying that with a straight face,” Ms. Finke said. “Her site is getting no traffic and is inaccurate and boring. And no one in Hollywood is talking about it. She must be desperate.”

Several posts on The Wrap—down to analyzing how much Deadline Holllywood could sell for and another where a contributor calls Ms. Finke “emblematic of a true danger that now exists in journalism: the unchecked reporter”—have come after her.

Ms. Finke, characteristically, returned the fire.

“When I started my Web site, Sharon would say to me, ‘I hate your Web site,’” said Ms. Finke. “She said, ‘You take all your time and everyone is talking about you and I hate it.’ And I said ‘Sharon, if you’re my friend, aren’t you pleased? If you had something going for you, I would be pleased for you.’ Then she said ‘No, I hate it, I hate it.’ Then she lied to me about what she was doing! She said she was going to start a blog about politics. Totally lied to me!  I had to hear from everyone else that she was going around to people and saying she was going to compete with me. What friend does that to another friend!”

Ms. Waxman called that account “inaccurate,” and added: "Nikki has her own view of reality which does not always accord to reality as others see it. The way she twists things and the way she always manages to bend the facts—and I put facts in quotes—is in a way that suits her.”

‘A Small Town, Filled With Sociopaths’

We asked Mr. Bart if he ever saw Hollywood like this before.

“Absolutely not,” he said. “During my first stint [at The New York Times], it was downright clubby. To the real old-timers, this harkens back to the days when there were giant feuds between Luella Parsons and Hedda Hopper. They would go at each other in screaming fits of rage. It’s a reminder of that era.”

Throw a line out and you’ll find dozens of feuds tumbling in.

In fact, we did just that, with Anita Busch, who didn’t take long to start a feud from beyond the journalistic grave.

“I do think it’s kind of surprising that Sharon Waxman even has a blog,” Ms. Busch told us. “I think she’s even one of the worst journalists I’ve ever encountered. I’ve never seen anybody that ignores the basics of Journalism 101 as she does. I find it surprising that she’s got this blog.”

“I try not to click through on Sharon’s Web site because I don’t want someone who doesn’t care about journalism to succeed,” she added, for good measure.

(Ms. Waxman replied: “I feel sorry for Anita Busch for saying such a thing like that. I think that’s a pretty sad statement. I think it says more about her than me.”)

Patrick Goldstein of the L.A. Times and Brian Lowry of Variety threw jabs at each other as well. Mr. Goldstein frowned upon the way Variety did business—serving as a mouthpiece for a studio, essentially.

Mr. Lowry, in a blog post singling out Mr. Goldstein, calls him lazy, petulant and a weak reporter. “Now you have this blog, ‘The Big Picture,’ so I’m thrilled to see a newspaper that has laid off more than half its staff since I left in 2003 has finally dictated that you squeeze out more than 800 words a week,” wrote Mr. Lowry.

It goes on. Variety did a piece on bloggers—Ms. Finke was mentioned in a not so flattering light. Then she slammed back hard as well.

“I was told that Peter Bart and Mike Fleming of Variety were going around town telling Hollywood to stop giving scoops to Nikki! Ha-ha!” she said. “Hollywood was laughing at that, saying, ‘You’ve got to be kidding! What, do you think we spoon-feed her? She finds stuff out on her own!’What they didn’t understand, there’s something called reporting.”

We told Mr. Bart this.

“I think that’s childish,” he said. “Once again, the idea that’s a little presumptuous is that I would advise people how to handle Nikki Finke. I’ve got more interesting things to do.”

“The important people don’t talk about the media noise,” said Mr. Bart, almost aspirationally.

And maybe that is the problem.

“We’re seeing that the entertainment vertical has become a one-stop shop where you can get the latest news in and from the Hollywood community,” said Arianna Huffington, the creator of The Huffington Post. “We’ve had members of the community like directors, producers want to go directly to the user with blogging.”

That is: Why drop your message with a trade, a newspaper—even a blogger—when you can reach a million readers without any of them?

Ms. Huffington pointed to the self-defense she published on her Web site by Ron Howard responding to the Catholic League that his upcoming movie, Angels & Demons, is anti-Vatican. Scarlett Johansson wrote about why it’s “reckless and dangerous” for celebrity rags to obsess over the weight habits of movie stars. Alec Baldwin recently lectured his Huffington Post audience about the need for newspapers: “Journalism is what is required now. And, yes, some commentary. But more journalism than commentary. That's what a newspaper does.”

Even proximity to a tweety star gives you a voice, as when Demi Moore, called "wifey" in a tweet by husband Ashton Kutcher, barked at him not to suggest an unhealthy dietary cleansing routine to his many fans.

When celebrities doing journalism lecture journalists about doing newspapers, for Web sites that compete with newspapers and magazines to cover the industry the celebrity works … Wait, what?

“For one thing, you have bloggers who need traffic and are desperate for attention,” said Mr. Bart. “The overriding truth of the blogging community is they’re trying to figure out how to monetize their endeavors. So you have to call attention to yourself. On that side, you have a clear motive.”

Put more bluntly, Ms. Busch said, “Hollywood is a small town filled with sociopaths. And when you’re assigned to cover that? You really have to be on your feet.”

As long as you don't get your legs broken, that strategy will work just fine.

On Sunday night, Mr. Kutcher was giving another “status update” to his million-strong audience. Celebrity news, straight from the horse's mouth!

“Off to a suprise b day party for … ,” he wrote; then, “Uh maybe not.”

CORRECTION: An earlier version of this article characterized Howard Schultz as an invididual investor in The Wrap, instead of co-founder of the venture capital firm that made the investment.