For decades, the best newspaper in America on any given day was either the New York Times, the Washington Post, the Wall Street Journal or the Los Angeles Times.
Today, the LA Times not only has plummeted out of daily journalism’s top tier, but also become a ghostly poster child for everything that’s gone wrong with our newspapers since the advent of the digital age. Not long ago, the Times had a daily circulation of more than 1 million—virtually all of it to valuable home delivery subscribers—and a staff of more than 1,200 journalists. It maintained one of the world’s largest networks of foreign and domestic American bureaus.
Today, circulation is half what it was and the staff more than 50% smaller; its news report grows narrower and more parochial by the week in a city and region ever more cosmopolitan and diverse. Physically, the daily and Sunday editions are hollow shadows of their former selves with sections of 12 or fewer pages common. The number of display ads—and the Times’ advertising department once famous for its drive and creativity—is stunningly low. If you want to get really depressed, go through the paper on any average day and count the number of “house ads”—those that actually are placed by the paper itself for promotional purposes. Their current number in the Times is unpreceded and, from a revenue standpoint, unsustainable.
The handful of experienced journalists who’ve hung on through the Times’ painful decline continue to produce some remarkable work of real service to their readers, but those pieces seem rarer with each passing month. The shrinking paper mostly serves up the predictable, the shallow, the police blotter and the sort of callow, underreported, poorly written stories you get when too many young, poorly paid reporters are working with too little instruction and direction from too few editors.
The Times’ tragedy is that, while all of American journalism has suffered from the impact of the digital revolution, the once great Los Angeles paper also has had to endure the self-inflicted wounds of venal and incompetent management.
One of the myths of the wrenching transformation through which American journalism is passing is that the difficulties have been compounded by print journalists’ resistance to change. That may have been somewhat true a decade or more ago, but the facts show that reporters, editors and photographers have repeatedly reinvented their roles in response to the demands of the digital environment and continue to do so. The best of them—editors like Dean Baquet at the New York Times and Marty Baron at the Washington Post, both of whom were forced out of the LA Times—have insisted that that while change is mandatory, the ethics of good journalism must remain the same, no matter what its format or presentation. That’s not resistance; that’s principle—and, some of us would say, sanity.
On the other hand, the failure of the newspaper industry’s business executives and—with the sole exception of the NY Times’ Sulzberger family—its proprietor class has been all but total. None of them ever has been able to see a way through the digital transformation. Most of the families that once owned the great papers have simple scooped up their money and walked away from the communities from which they profited so handsomely for so long.
The LA Times’ Chandler family sold all of their newspapers, including the Times, to the Chicago-based Tribune Company for billions, then used their positions on the purchaser’s board of directors to force a sale of that company—essentially selling the Times twice. Only Chandlers could do that, while fervently believing that they have a preternatural right not to pay taxes on any of their loot.
There’s no need to recount that appalling events that followed—a sale to the repellant Sam Zell, a hellish bankruptcy that probably will be studied in business schools for decades and the spinoff of the Tribune newspapers without any of their physical or real estate assets. The Times’ current owner is Tribune Publishing, a company with too much debt and too little revenue that, to any fair eye, looks set up to fail. Oh, the one thing it has in common with the previous regimes is an utter lack of vision and, therefore, an inability to do anything but make further cuts in staffs and products that grow more wane by the quarter.
If they were parents, somebody would have taken their children away by now.
That brings us to the latest wrinkle in this melancholy drama: Tribune Publishing is run by an ex-magazine executive named Jack Griffin, best known for being fired as Time Inc.’s CEO after less than six months in the post. His strategic notion, besides continuing to slash costs and staff, is gobble up all the smaller papers around his larger ones and then achieve new revenues by “combining” operations. (That translates into by laying off more people and doing less for readers who will, sheep like, continue to pay the same money for their print papers. Certainly there’s no functioning Tribune digital strategy, since—as Poynter analyst Jim Warren has pointed out—all the chain’s nine papers have a combined digital-only subscriber base of just 88,000. The NY Times, by contrast, has over 1 million and is growing steadily.)
Griffin’s Tribune already has purchased the UT in San Diego and now is preparing a bid for the bankrupt Orange County Register and Riverside Press Enterprise, which were steered onto the financial rocks by the goofy hustler Aaron Kushner. A group of Orange County insiders also is preparing a bid as is Digital First, which owns the sprawling and lightly manned LA News Group. Just how tenuous Griffin’s strategy and Tribune Publishing’s position in all this came out into the open last week with a stunning sequence of financial manipulations.
Chicago investor and tech entrepreneur Michael W. Ferro was allowed to become the company’s largest shareholder with 16.6% of the chain’s stock, 5.22 million shares newly issued and sold to him at a discount for $44.4 million. Ferro, who also controls the Chicago Sun Times, has replaced former LA Times publisher Eddy Hartenstein as non-executive chairman of Tribune Publishing’s board. The bottom line here? Tribune, which already is carrying $400 million in debt on its books, doesn’t have the cash on hand to mount a credible bid for the Register and Press Enterprise and can’t raise additional funds in the capital markets because its revenues are too low.
So, Griffin essentially fleeced his existing stockholders by increasing the number of shares in circulation without increasing the company’s market value. Simultaneously, he totally eliminated the company’s dividend, which at 9% was one of the few things attracting investors to a company whose share price has fallen by more than 70% since the spin-off. The day Ferro’s investment was reported, the stock fell a further 14%; it’s now trading at just $6 and change from a launch price of $25.20. The willingness to alienate existing shareholders in this fashion—the dividend cost Tribune just $18 million last year—speaks volumes to the desperation in Tribune Tower.
From a financial standpoint this actually is a little-frogs-in-a-little-pool story. (It wasn’t all that long ago, that the LA Times alone was easily valued at more than $1 billion on its own, but that was before the guys from out-of-town got ahold of it.) Here’s the question we really ought to be asking and which public officials in Orange and Riverside Counties ought to put on the table: When anyone looks at the history of Tribune’s stewardship of the newspapers it already owns, can anyone really contend that they’ll do right by the people of two other communities?
If they were parents, somebody would have taken their children away by now.
Griffin and his crew are desperate executives trying to hold onto their high-paying jobs for as long as possible—and nothing more. If, as so-called businessmen, they have so little regard for their stockholders, why—as publishers—should they be expected to respect the interests of their readers?