Is Tribune’s Plan to Make Its Newspapers 50-50 Editorial/Advertising Zell’s First Step In Closing Them Down?

Philip M. Stone June 11, 2008

Sam Zell seems to take great delight in shaking up the newspaper industry so when he announced that Tribune newspapers would reduce their news hole to a 50-50 split between editorial and advertising (instead of the normal 60-40) that really got some pretty astute print analysts declaring the end is near.

Take John Morton’s view of how Zell plans to save editorial costs. “To the extent you diminish your product, I think you diminish your success, in print or online. It’s a strategy, basically, of gradually closing down,” he told the New York Times. And that’s from a newspaper broker whose view is so respected that just about every media writer has quoted him at one time or another over the years in describing the state of the newspaper industry.

Then there is Michael Kinsley, the founding editor of Slate, who in the online magazine takes Tribune CEO Randy Michaels to task (Michaels was one of Sam Zell’s former buddies from radio days whose main ideas seem to be that what worked for radio should work for newspapers, too.)  “This Michaels is clearly a bright man. It won’t be long before he figures out that you can have an equal number of advertising and editorial pages if you have none of either and simply stop publishing the paper. That way you won’t have to employ any journalists at all.”

Another analyst often quoted by the media is Ken Doctor who is the lead news analyst for Outsell, a leading info market analytics firm. He wrote in his blog that he cannot believe that Tribune is going to resort to deciding how much editorial product is produced “by seeing how much will fit into the new downsized papers. You're going to ratchet down the amount of editorial content (and staff), leaving the decision of what you are going to give your print readers essentially in the hands of print ad buyers?

“Surely, we can make good journalistic arguments about the folly of that. Journalism's never been mainly a quantitative business. But let's look broadly at ‘product.’ Would Randy Michaels, who rebuilt Clear Channel on a low-cost model, let the amount of radio ads sold determine how much programming listeners got? I don't think so; you've still got to have a consistent product for listeners or readers.

“Readers are already fleeing newspapers -- and I'm talking about decades-long readers, not the young whom the industry too often blames -- because they see every day that less is less. This change, however it looks on a spreadsheet, will only hasten that decline.”

And Alan Mutter, a West Coast influential blogger, wrote, “The problem is that no business can remain successful over the long term if the only way it addresses declining sales is by cutting costs. You not only begin to degrade the product but eventually run out of things to cut. Businesses must grow sales and profits to build value. If they go the other way for a sustained period, they will falter and potentially fail.”

The problem facing Zell, Michaels and the Tribune Company is that the advertising recession has really hit the much needed newspaper cash flow – advertising revenues down 15% in Q1 from the year before -- to pay the $1 billion in interest and principal this year. Zell, who said when he took over Tribune that he wasn’t selling any newspaper, has already resorted to selling Newsday to Cablevision for some $650 million – at least $70 million more than anyone else was willing to pay in a deal structured to save around $200 million in taxes. That plus new credit arrangements took care of 2008 debt liabilities.

Zell says advertising has improved since March, but with newsprint prices expected to rise at least 15% he believes a new business model is absolutely necessary for his remaining nine newspapers. So the “brilliant” idea that he and Michaels announced to the financial community was that they were going to cut a total of some 500 pages a week from all the newspapers and that would provide “substantial” savings. Their goal is a 50-50 split between editorial and advertising instead of the customary 60-40.

The cuts would mean, for instance, reducing the Los Angeles Times by about 82 pages a week – so don’t be surprised if The Times, The Chicago Tribune and others becomes a bit of a “fast read” on Mondays and Tuesdays. Who knows, maybe readers will prefer it that way and editors will really have to be editors in choosing what runs and at what length.

But what was really nasty is that management has decided the way to tell if a journalist is pulling his weight is to see how many bylines are received in any given week. According to Michaels, reporters at The Times generate about 51 pages a year of copy while at other Tribune papers such as the Hartford Courant and the Baltimore Sun a reporter produces about 300 pages of copy.

The trouble with judging journalists by byline, of course, is how you persuade them to blog, pod, video and all the rest if their actual worth is determined by how many stories they write. The smart reporter will quickly figure time is better spent writing print stories to get the byline number up and forget those extraneous duties.

As far as Michaels is concerned, “You can eliminate a fair number of people while eliminating not very much content.”

This writer admittedly comes from a news agency background and has never understood why newspaper chains don’t operate in a news agency fashion. For instance, in covering the Obama campaign the Chicago Tribune is obviously going to blanket cover the senator from Illinois. Is it really necessary for the L.A. Times, The Baltimore Sun and the other Tribune newspapers to have their own people covering that campaign? Why can’t they use what the Chicago Tribune provides? If there are local angles, especially if the senator visits the newspaper’s state then sure, add the supplemental coverage, but why not depend on the Chicago’s Tribune’s daily story and updates for the prime piece?

In the same vein, is it necessary that all those newspapers have a movie reviewer? Los Angeles is the Hollywood’s home. The Times’ coverage of the movie industry and its movie reviews are second to none. While the Chicago Tribune has a great movie review tradition, is that actually affordable in this day and age?  Why not just use the Times’ review? Local likes and dislikes aren’t that different.

The idea here is to use some brains in figuring out the best use of manpower, rather than counting bylines. Is it necessary for several newspapers within a group of non-competing newspapers to cover the same story? Nice in the days of 30% margins but today, affordable?  There is a reason why news agencies came into being, and there is no reason why a newspaper company that has newspapers in non-competing markets shouldn’t take a close look at the news agency model.

By the way the above paragraph emphasizes this should be used only by a newspaper group in which its newspapers are not in direct competition with one another. Where this really shouldn’t be done, but is, is in such places as the San Francisco Bay Area where MediaNews owns newspapers that used to compete with one another on municipal beats but now they have one reporter covering for everyone. That may be good for the bottom line, but certainly not for journalism.