Rauner’s GTCR hired habitual sexual harasser to head media venture

By DOUG IBENDAHL • February 12, 2014


Illinois media outlets are having a field day with the sexual harassment and other allegations being leveled against Dan Rutherford. It’s hard to find serious analysis, but it’s easy to rehash the innuendo, and the salaciousness no doubt sells newspapers.


The Chicago Tribune is a leading titillator when it comes to Rutherford. But thus far the pro-Rauner Tribune has ignored another sexual harassment story which not only links their buddy Bruce – but also their own newspaper.


In June of 2011, Bruce Rauner’s former private equity firm GTCR partnered with media veteran Randy Michaels to form Merlin Media, LLC. “It’s a pretty standard GTCR deal,” said Philip Canfield, Principal at GTCR. “We’re backing a CEO [Randy Michaels] and doing a corporate carve-out and a bunch of transformation of those underlying assets.”


According to an SEC filing dated September 1, 2011, Michaels, whose real name is Benjamin L. Homel, owned only 1% of Merlin Media. GTCR was the main owner with an approximately 74% interest. Emmis Communications owned the rest.


“We [at GTCR] are extremely excited about the opportunity to partner with Emmis and Randy,” said Canfield back in June of 2011. “Emmis’s CEO, Jeff Smulyan, and Randy Michaels are both proven veterans of the media industry and we look forward to working with them to provide valuable media content to Merlin Media’s future consumers.”


Private Equity International, a magazine dedicated to the private equity industry, describes GTCR’s “intense, relentless” CEO recruitment efforts:


GTCR is known today for having one of the most intense, relentless and successful focuses on CEO recruitment in the private equity industry, and its modus operandi is always the same: seek out an ideal CEO for a given platform, doggedly pursue him or her until the offer is accepted, then help the CEO build a company. In many cases, the CEO is hired before a single acquisition is identified.


There is no evidence that Rauner, then GTCR’s Chairman, had direct involvement in GTCR’s hiring of Michaels as CEO of Merlin Media. However, there is also no evidence that Rauner objected to the hiring of a well-known habitual sexual harasser to oversee GTCR’s hundred million dollar investment.


Rauner was not only a Principal of GTCR at the time of Michaels’ hiring – he was also the firm’s Chairman. And keep in mind, GTCR may be large in terms of assets under its control, but it is relatively small in terms of employees. GTCR currently has only around 80 employees, and only a fraction of those are Principals of the firm.


Rauner and GTCR’s other Principals put Michaels in charge of their new venture despite the large amount of public information readily available about Michaels’ past disturbing – and sometimes unlawful – conduct.


What was trash to other entities – GTCR considered treasure.


In 2010, New York Times columnist David Carr reported on the Tribune’s frat boy, sexually-charged culture created by CEO Michaels:


One former Tribune Co. corporate employee said she had an interaction with Michaels that played a significant role in her decision to leave the company. It occurred shortly after Michaels arrived at Tribune, she said, when she was called to his office to review some documents with him. Michaels, she said, asked her to come around to his side of the desk, even though there was no chair. As she stood next to him, he asked her to lean down and move closer so that eventually she was crouching at his side, which made her feel uncomfortable.


“Then he looked at me and said, ‘Did anyone tell you that you’d look really good on your knees?'” she recalled.



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 . . . “Here was this guy, who was responsible for all these people, getting drunk in front of senior people and saying this to a waitress who many of us knew,” said one of the Tribune executives present, who declined to be identified because he had left the company and did not want to be quoted criticizing a former employer. “I have never seen anything like it.”



Based on interviews with more than 20 employees and former employees of the Tribune, Mr. Michaels’ and his executives’ use of sexual innuendo, poisonous workplace banter and profane invective shocked and offended people throughout the company. Tribune Tower, the architectural symbol of the staid company, came to resemble a frat house, complete with poker parties, juke boxes and pervasive sex talk.


Michael resigned from the Tribune in late October of 2010.


Before arriving at the Tribune, Michaels was forced out as CEO of Clear Channel Communications when allegations of outlandish sexually-charged behavior by him and his hand-picked co-executives finally became too much. More from Carr’s report:


There have been complaints about Mr. Michaels in the past, however. In 1995, Mr. Michaels and Jacor settled a suit brought by Liz Richards, a former talk show host in Florida who filed an E.E.O.C. complaint and a civil suit, saying she had been bitten on the neck by Mr. Michaels and that he walked through the office wearing a sexual device around his neck.


“They were like 14-year-old boys — no boundaries at all — but with money and power,” Ms. Richards said in an interview.


During and immediately after Mr. Michaels’s tenure at Clear Channel, three lawsuits were filed contending sexual harassment at the company. One plaintiff, Karen Childress, a senior executive, said she was fired after complaining about receiving lewd e-mail from senior company executives. In her complaint, Ms. Childress also stated that women who slept with male executives at the firm were promoted. The cases were settled out of court. Clear Channel declined to comment on the lawsuits.


And then there is this:


Michaels was vice president of programming and a DJ at WFLA in Tampa. Richards said on ABC TV’s investigative news program “20/20” that Michaels once walked the station halls with a large rubber dildo around his neck, accosting and chasing after female employees. She claimed he also turned the station into a “frat house” atmosphere. Caricatures of Richards giving blow jobs were drawn on the employee sign-in board and the station manager liked to brag about receiving oral sex from Richards, which never actually happened. Richards claimed that Michaels encouraged this type of behavior. Not wanting to make the details of this suit any more public than they already were, the suit was later settled out of court.


And this:


That corporate culture extends down to the stations in various ways. It was given national exposure in the ’90s when Jacor jock Liz Richards, working out of WFLA in Tampa, Fla., sued the company, including Michaels personally, for sexual harassment.


Interviewed on ABC’s “20/20″ program in 1992, Richards alleged that male co-workers dubbed her president of the “Cunt Club,” that on the employee sign-in board someone drew a caricature of her with a penis ejaculating in her mouth and that a station manager falsely bragged to colleagues at a business dinner about getting head from Richards in a limousine.


Gary Kelly, a friend of Richards’, appeared on camera to tell about the time he showed up at a station event to meet Richards and was told by her boss that the single mother of two was busy giving blow jobs in the parking lot.


At the time, Michaels was vice president of programming and an on-air personality at WFLA. Richards said he had a hand in setting the station’s tone — she told ABC he once roamed the station halls with a flexible rubber penis tied around his neck, accosting female employees.


Just four months after Rauner’s GTCR installed Michaels as CEO of their new media venture, Michaels was arrested for operating a vehicle impaired (the Ohio equivalent of DUI). Michaels’ conviction on the charge of reckless operation of a vehicle was discharged due to a police procedural error.  


It was reported in January that Merlin Media’s sale of its stations in New York and Philadelphia “closes the book” on Merlin Media as a company, and likely the radio career of Michaels.


On March 18, Republican voters will decide which of four gubernatorial candidates to field against Governor Pat Quinn in November. In the meantime, we’re sure the media will keep ginning-up the rumor mill on Rutherford. That’s easy after all. And we definitely expect the Tribune to stay on Rutherford while it largely ignores Rauner. The Tribune’s “coverage” of Rauner’s nursing home problem was for example largely just aped from the campaign’s undocumented talking points.


The record is clear that Rauner was accepting of a chronic sexual harasser heading up his firm’s hundred million dollar investment. It may not matter for the GOP Primary as a lot of reporters and Republicans seem little concerned with doing their jobs.


But it’s likely that General Election voters – and especially female voters – are going to care once Quinn and the Democrats happily start the education the morning after the Primary.


Doug Ibendahl is a Chicago Attorney and a former General Counsel of the Illinois Republican Party.


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