Whither goest thou, Tribune?

Interesting column in today's Hartford Courant. Haar tells it like it is:

http://www.courant.com/business/columnists/hc-haar0618.artjun18,0,3449576.column?coll=hc-utility-home


Why Tribune Schism Could Matter To You
June 18, 2006


News about the news business moves almost as fast as free food in a newsroom, and creates even more chaos.

So it's been a hectic couple of weeks here inside the walls of The Courant, as the newspaper's parent, Chicago-based Tribune Co., lurches through some tough tribulations. Unofficially, the company is in play, meaning there are powerful forces that want to break it up or sell it outright.

That would mean big changes not only for us on the inside, but for you, the loyal news consumer who cares about broad coverage of central Connecticut. Since Tribune management has made deep cuts and is not popular among many employees, it's tempting to hope for new ownership. But as the old Israeli saying goes, be careful what you wish for; it might come true.

Tribune, under pressure because of a relentless decline in its share price, declared May 30 that it would cut costs by $200 million a year, sell $500 million in businesses and borrow money to buy back $2 billion of its $9.7 billion in shares.

This, after Tribune shares had fallen from a high of nearly $53 in early 2004 to less than $28. Earnings are decent; The Courant alone nets tens of millions of dollars in profit per year. But newspapers and TV stations aren't growing, so Wall Street pummels media company stock.

Members of the Chandler family, which owns 12 percent of Tribune, made their opinions clear on Wednesday. It was neither pretty nor surprising to people who follow Tribune.

You guys in Chitown are incompetent managers without a real strategy, the Chandlers said in an entertainingly blunt filing with stock regulators. Your plan to get share prices back up is a farce. Sell the whole company or break it apart.

"Morale at many of the newspapers is already quite low and will be driven lower with a new round of cost cuts," the Chandlers said.

The Chandlers threatened to lead a broad shareholder revolt. Tribune's management and independent board members are sticking by their plan. As of late Friday, no other major Tribune investor had publicly joined the Chandlers, though one large shareholder had also pushed for deeper action.

The June 26 deadline for stockholders to offer shares to Tribune will be telling, as success would mean protection for the company.

 

Part II:

It's a nervous time for the denizens of daily deadlines at The Courant and sister company WTIC-TV, Channel 61, for sure. In Connecticut, Tribune also owns the Advocate chain of alternative newsweeklies; WTXX-TV, Channel 20; The Advocate and Greenwich Time daily newspapers in Stamford and Greenwich; Valu-Mail, the direct-mail advertiser; and a whole bunch of websites.

What would new ownership mean for news coverage? No one knows for sure, but the bet among close observers is against more and better-quality journalism. Quite simply, a buyer is more likely to cut costs - read, news staff - than to add or hold firm.

This question from a newsroom wit came my way this past week: "Are we in a situation where we actually have to root for Tribune? This is dire."

The answer is yes, and that about sums up the state of publicly traded, corporate newspaper ownership these days. Dire indeed.

Other possible options? Private equity funds would be as likely as not to cut costs. Privately owned newspaper chains, such as S.I. Newhouse and Cox Newspapers, are somewhat more insulated from the need to pare expenses, but are not on buying sprees lately.

In fact, several news industry analysts said this past week that they could think of no large paper in America that had seen new owners immediately increase newsroom staff since 2001, when ad sales turned downward and competition from websites heated up.

There are exceptions, in theory. The Baltimore Sun, part of Tribune, reported Friday that the foundation started by the family that once owned that newspaper would like to be part of a local ownership group, if one emerged. "It's important that The Sun aspire to its previous level of excellence, and I think that's more easily done when the paper's focused on quality rather than on return to stockholders," the foundation's president told The Sun.

Here in Hartford, many are wondering whether a benevolent local group could step up as a buyer. But The Courant would fetch upwards of $400 million, maybe more. People investing that kind of dough tend to like to see hefty returns.

"Throughout the history of newspapering, some of the worst newspapers in the country have been owned locally, so local ownership is no nirvana," said John Morton, an independent news industry analyst in Silver Spring, Md.

All of us - journalists and old-line readers - are coming to terms with a permanent New World Order. The Courant peaked at 395 newsroom jobs in 1994 - including reporters, editors, photographers, graphics staff and administrative employees. Today, the number stands at 265 after one large buyout (which happened before Tribune bought The Courant's previous parent in 2000), two small layoffs and significant erosion. Some chains - chief among them Gannett, the largest in the nation - run newsrooms far leaner.

The reason Tribune has been unpopular among many employees is not only because of the cuts, but also because the top executives of this newspaper company are not newspaper people and they tend toward central control - what the Chandlers called "one-size-fits-all" management.

Further, as this columnist stated last November, CEO Dennis FitzSimons has yet to articulate exactly why the company's 26 TV stations and 14 newspapers - among them the Los Angeles Times, once controlled by the Chandlers; the Chicago Tribune; and Newsday in New York - are better off together than apart. "Convergence" between newspapers and TV stations in the same markets has not produced the promised benefits, and might not remain legal.

This Tribune flap, combined with the recent breakup of the giant Knight-Ridder newspaper chain, makes clear that the clash between public-company ownership and the journalism values many of us cherish has reached a crisis. And as bad as it seems, it could get worse in a hurry.

Dan Haar can be reached at dhaar@courant.com

 

After what McClatchy got for selling off the KnightRidder papers one-by-one, I'd expect the Tribune company to be next. There is just more value in the individual or small groups of papers than in the media companies' stock, actually lots of value. There were no shortage of bidders.

Acutally, this is perhaps a very good thing for the industry. The breakup of the corporate profit-hungry giants eventually is better for all because all these papers are still very healthy even if the stocks aren't. Problem is the short-term might be hard to take because there might be job losses in the breakups.

 

Wow. Great column. Shitty situation, but spot-on analysis.

 

Of course, they COULD get bought up by...

 

Dan can write.
little-known fact about Dan Haar -- he began his journalism career as a photographer and was a brilliant one, piles of regional and national awards, etc. one day years ago he just decided he wanted to write. he retired his cameras and started at the bottom covering meetings. you see the end result. the guy is just as brilliant a writer.

 

I will kill myself.

Like most papers, The Courant was a load better two decades ago than it is now. But at least it's respectable. If the hallmark paper of my home state goes under the JRC flag, I'm burning my birth certficate.

 

Maybe the Trib Company should just get rid of the Cubs.

 

Hey, I thought Gannett was the one hated by everyone.

 

Most tribune papers, especially The Courant in wealthy Connecticut, are making a boatload of money. As Harr said. It's the TV stations Trib has to ax... as it did today, dumping Albany's station.

 

It's not a question of making money. It's a question of growth.
Wall Street does not see the growth in the newspaper biz. So Wall Street crushes share price. And falling share prices makes a lot of people less rich than they once were, which makes those people unhappy.
I was at a seminar where Times EIC made a great, simple point:
Newspapers are great cash businesses, but they're not great growth businesses.
Can't say it any better than that.

 

The Trib-Times Mirror deal was predicated upon the assumption the feds would loosen rules restricting ownership of TV stations and newspapers in the same market. That never happened -- hence, Trib Co. is going kablooey. Actually, it seems pretty strange to me to base multibillion deals on assumptions, but I'm not a CEO, so maybe there's something I don't know.