Tag Archives: Tribune Co

Not Dead Yet! Just a Little Diminished Around the Edges!

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I love the scene in Monty Python and the Holy Grail, circa back in my callow youth, where they were collecting bodies from the ‘Black Death’.  If they weren’t dead, a quick bonk to the head speeded up the process.  I think in today’s media world we are seeing this played out over and over again.  I confess I had bought into this talk, but I think there is still some life ‘in the old girl yet.’

What gives me hope is that baby whom cover the industry are starting to see the patterns that are evolving that show some various tracks key newspapers are taking to ensure their survivability. My favorite is from Alan Mutter of Newsosaur who in his recent article “What’s Next for Newspapers”  highlighted three paths that could offer some hope for newspapers and newspaper staffs who are looking for some relief.

Alan’s three possible paths to the future he labels as: Farm It, Milk It and Feed It.  He has plausible representations for each, and it makes for a great read.  This has been made all the more urgent in trying to move towards a recognizable future for newspapers with the decision of Rupert Murdoch to split his media empire into two segments – print and everything else.  That news was met with a round of – “it’s abut time” and the blessings of the market with an upturn.  If anyone really understands the future of media it is Rupert Murdoch.  Whatever sentiment he had for his holdings was dashed with cold water after the media circus in England that has stained his reputation.  His head is now ruling his heart…and his pocketbook.

In the next post I’ll start reviewing these options, and perhaps have some additional ones to through on the discussion pile.  Back soon…now for a viewing of Monty Python on my iPad ap.  A great bargain for a few bucks, and a few moments with some lively songs and the Knights Who Say Nea always leaving me smiling.

Sam Zell…First in Our Hearts and Last In Line for $$$

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The following article ran on April 2, 2007 in the Media Bistro under a byline by Kate.

 Sam Zell – Tribune’s New Owner

Sam Zell, the new owner of the Chicago Tribune Company, has quite a reputation as a motorcycle-riding, cowboy booted swashbucker who came up the hard way.

He’s on the Board of Directors of Equity International.

He likes to take risks, according to Forbes and he’s #52 on the Richest list.

He’s the biggest landlord in America or was, in 2004.

He’s called the “grave dancer”.

He’s “salty to the point of crass”, according to the CJR.

He owns, at least in part, two baseball teams.

So what does this mean for the LA Times? Got any predictions? Send ‘em our way.

After a short run in which he fleeced nearly everyone in sight, including the employees of the Los Angeles Times where he used their money in an ESOP to fund a major portion of his purchase – Sam has finally met his match.

Judge Kevin Carey of the U.S. Bankruptcy Court in Wilmington, Del. ruled that Sam Zell should be the very last creditor to get money in any payout from the Tribune bankruptcy proceeding. The judge found that “Mr. Zell’s investment ranked dead last in the Chapter 11 payment priority competition, ‘at the bottom of Tribune’s capital structure,’” the Wall Street Journal reports.

Ouch…but it couldn’t have happened to a more deserving guy.  We wish you well Sam.  No, actually we don’t!  Go away and don’t come back again.  You will forever be the poster child for all those who hastened the demise of U.S. newspapers.

Digital Media on the Move…Newspapers in Retrograde

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This is a very tough environment for newspapers, and one that does not look to be brightening any time soon.  A lingering recession level of spending and generational and lifestyle changing trends point to a dismal future for any newspapers looking for a resurgence to past days of glory.

Not only is the economy one of the toughest environments that any of us has lived through, it has also drained advertising dollars from established print media and shifted it into digital media.  Talk about taking a barrage of blows to the head and body, this is today’s environment

With that as a backdrop for today’s comments we also have self inflicted news that tells us that ‘they can’t really be serious can they?’ It was reported that Gannett’s CEO of the last six years, Craig A. Dubow, received a parting gift of  – $37M in bonus and retirement benefits.  During his period of leadership the company’s stock declined from a high of $75 a share to just$10. Unfortunately, there are a number of other CEOs who have gotten similar treatment after miserable leadership terms.  Theirs has been the one bright story of the last decade for newspapers.

Aside from the economy the trend to digital news has also accelerated the down trend for newspapers.Now they are banking on some new trends to help rescue them, before the companies run out of money to help cover their severance as they head off to happier pastures.

The iPad has helped drive this new shift, and now the Newstand app recently added to iOS5 on Apple mobile applications appears to be working as well.  The new native app works especially well for magazines, and The Daily, the first iPad only news product from Murdoch Inc.  Conde Nast is reporting a 268% increase in digital subscriptions since Newstand was announced. Still a bit of a stretch a newspapers work through their own versions of apps for both phones as well as tablets.  In some cases they are developing their own tablets in conjunction with manufacturers.

A recent Pew study as noted in a recent Newsosaur article on tablet owners shows that only 14% had subscribed to a paid news app.  Also that only 21% say they would be willing to subscribe if the price was below $5 per month.  83% also said that being free or low cost was a major factor in their decision about what to download.  One good factor for digital users and providers of digital content, including our major ’newspapers’  shows that 43% of respondents said they now spend more time consuming news than before they bought their tablets.

I’ll take that as good news, and it certainly mirrors my own habits.  I’ve been excited to see just how much content I can get for free, but have also found that there is some content I am now willing to pay for, I’ve moved across the aisle and am a willing participant of paid digital content.

The other good piece of news about the ’43 percenters’ is that they too will make the change since their really won’t be as much available on the free channels in the future…unless you go ‘full social’ and get all of your news from your ‘friends.’  I’m not ready to do that yet…and doubt I ever will.  You would know what I mean if you could see some of them.

Pew study as noted in a recent Newsosaur article on a recent Pew study that only 14% had subscribed to a paid news app,  Only 21% say they would be willing to subscribe if the price was below $5 per month.  83% said that being free or low cost was a major factor in their decision about what to download.  43% of respondents said they now spend more time consuming news than before they bought their tablets.

Helping to drive the trend to digital deliver of news is  the development and testing going on for a wide array of tablets being developed directly for major newspapers, including the Tribune group and the Philadelphia newspapers.  No final details have emerged, but it appears that they will be available for subscribers.

It was reported, perhaps by union insiders, that in the recent negotiations for a new contract for the paper’s print unions that they were offered a shorter 3 year contract, and that they were lead to believe that the paper had plans to stop printing by that time.

Now we can see what the future really looks like.  As a former newspaper ‘insider’ I know what it costs to print and deliver the papers daily, and a digital only world would be a less costly one for sure.  Too bad digital ad rates are lower that print ones, but that too could change when print fades away.

Another accelerator in our switch to digital comes from Amazon.  With it’s very small price tag the Amazon Fire which is to be shipped on November 15th could have a great impact on the digital distribution of print and magazines along with a host of other digital media including video and audio.  I know that my son has one ordered for his wife and/or his one-year old daughter, and I will order one for my wife as well if they check out as OK.  If not, then they both will have to settle for an iPad.  Life is tough that way.

Like the Los Angeles Newsgroup here in So Cal, Cox Media has adopted a similar shared editorial program.  This means that the editorial and news staffs are shared, reducing costs for the newspapers. In Los Angeles this appeared to be a big deal with a broad range of papers with distinct markets sharing news staffs.  In the case of Cox it will mean the sharing of staffs from Florida, Atlanta and Texas.  We’ve come to accept the downgrading of the news content on a local basis, since most of the papers involved were 2nd tier any way, but I don’t know that Atlanta and Austin will accept it without a lot of belly aching.  I don’t know about Atlanta, but I bet some larger than life Texas oilman would consider starting his own newspaper in Austin if they felt slighted.  Texas takes this stuff seriously…just like their BBQ.

Back to Southern California!  The So Cal newspaper marketplace continues to stumble forward with few positive signs of positive growth.  The biggest question mark concerns the Orange County Register which is still up for sale.  Some past bidding pitted the Los Angles Times vs the Los Angeles Newsgroup in a potential bidding war…but no winners emerged with both large newspaper groups mired in their own financial problems.

I don’t see any big hitters with deep pockets willing to step forward and take over The Register here.  Texas still has oil, but our key drivers in OC have been homebuilders…and they can’t even afford to take over each other for now.  Who knows what the future will bring, but nothing big on the horizon now for our local media.  We shall slog on with the media who ‘brung us here for now!’

Tipping Point No. 2 for Newspapers

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In July I commented on the report that the Philadelphia newspapers, jointly operating, are planning to introduce tablets for subscribers in the very near future.  This was the first major metro paper to announce, and now the monster Tribune group from Chicago and Los Angeles announced that they too are planning to introduce tablets for subscribers.  Tipping point #2 has been achieved.

For those of us who currently receive 90% of their news via computers and tablets this seems logical and destiny for print and especially, newspapers.  Why?  I think there are a number of reasons why this will happen.  Among them are:

 Newspapers are no longer monopolies in their markets – Once upon a time newspapers owned the world.  They were 10 feet tall, and everyone opened their doors to them.  They were the only game in town for local, and even national advertisers.  That started to decline in the 80’s and was in full flight in the mid 90’s.  There is all sorts of new ways of reaching customers today, and the newspaper is just one of them.  That is hard to swallow for newspaper folk.

Costs of acquiring new subscribers – The cost of acquiring new subscribers has always been high, and has gotten higher.  With starts and stops for vacations among other factors, subscriber turnover can easily be 100% per year, in some cases higher.  Loyalty has declined to lows never thought possible.

Their audience is dying – The age of subscribers has gone up over the years as fewer younger subscribers have replaced those reported in the obituaries.  Younger readers aren’t appearing to replace them – the digital age belongs to the young.

 Costs of print and distribution – Manufacturing and distribution costs are continuing to increase.  With declining circulation in most urban areas it is very costly to print and deliver this product on a daily basis- and still make money.

News is NOW – not tomorrow morning – All of the other factors are critical, but perhaps the single most important factor to the sustainability of printed newspaper is that news is NOW.  With most of us carrying robust phones that are our tether to the world.  This includes the news.  I read my news on my Android phone, and on my iPad.  I still read my LA Times on the weekends.  I like the content, and if for no other reason, it is a habit.  The older I’ve gotten the harder it is to break habits.  I will always read a printed paper some of the time, but I will read digital news several times a day.

I salute the Tribune group for their pioneering efforts.  I truly think they are in the right, if not just the inevitable path for newspapers.  Take the digital subscription money and run!

The Great Southern California Media Auction

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The Orange County Register

The Orange County Register

The dance goes on for control of the Freedom Communications media ‘empire.’  Both in a WSJ article on the sidebar, and then again in today’s LA Times article in the business section it appears that the bidding to purchase Freedom, including the crown jewel, OC Register, has broken down.  That means the price was too high for the outside financing to cover the purchase.  Media News, led by Dean Singleton, is the 2nd largest newspaper chain in the U.S., behind only Gannett.  Media News has a large stable of papers in the area and this would make the chain the dominant player, in terms of circulation, in the state.  The Tribune Company, owner of the Los Angeles Times, was also rumored to have been in the bidding.

In April, the whole saga was laid out in the Newsasour blog by Alan Mutter.  For anyone who cares about the state of print journalism in the state, or in general, it was a comprehensive and fascinating treatise on how things could play out in the bidding for Freedom Communications and the case for media consolidation in the entire Southern California area.  The article “Big Duel Likely for Orange County Register” is a great read, and I would encourage all to view it.

So what happens now, and really what does this mean to consumers and to businesses.  Next we assume, is that the sale process for Freedom goes on.  Terms may change and this could open things up to additional buyers, but Media News and Tribune are still the ones with the most to win.  If either wins, then they will have the dominant print media position in Southern California.  The new larger player would have better economies of scale and could spread their expenses over a larger base.  It would also place the loser of the two media companies in a diminished position, which could in fact, open further discussions to a total combination of ‘winner take all’ as the only real survivable posistion.  What a major change from just a decade back when all groups were profitable.  Looks like a kind of a ‘race to the bottom’ from that perspective.

For consumers this really means fewer choices for their print news, if they even care.  Demographics are working against newspapers and circulation continues to decline, and with that, declining advertising revenues.  Most will be forced to get their news online, and advertising will always find a way into the home – perhaps by a Groupon or one of the new clone ‘dealers’ who will send out their daily messages to subscribers.  In today’s world when so many have clamped down on their wallets this could work for a while.

For businesses they will lose a powerful and flexible tool to reach likely consumers on a daily targeted basis.  This helped to make the newspaper a potent tool in nearly every community, and created virtual monopolies and cash cows for publishers.  Those days are gone.  Newspapers will have to evolve to stay relevant and profitable.  Perhaps they can, but the cards are stacked against them.  I still love to read my paper – but now only 4 days a week.  My wife says I am weaning myself down, and I guess I’ll choose to go along with that.  In reality, as a professional from the industry and heavy news consumer, I too find that newspapers are not as relevant in my life anymore.  Time to take out the recycling, and to read from my new iPad.

 

 

A ‘Little’ Good News for Newspapers?

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There’s good news, and there’s bad news.  Which do you want first.  Take your medicine up front?  Ok here is the bad news.  The circulation of the top 25 newspapers is down again according to the Audit Bureau of Circulation.  The good news, please – it’s not down as much as last year.  Our long nightmare is over…not quite yet.

Two papers, The Wall Street Journal and The Dallas Morning News were both up slightly.  The totals for the top 25 papers are here. My paper of choice in Southern California, The Los Angeles Times was down 8% and it’s Tribune sister The Chicago Tribune  was down 4%.

What does this mean for the newspaper industry – continued tough times.  There does not appear to be any upward tides that will carry them back to their glory days.  Aging demographics of their subscribers, the loss of classified revenues, and the growth of digital advertising are working their charms against them.

The key factor running against newspapers is the fact that they are no longer the monopoly for news and advertising in their markets.  They are still incredibly useful to their audiences, but the high margins of the past will never return.  They are adding services including some very robust digital advertising programs, but not at the same margins.

In my conversations with my old associates at newspapers I find they are soldiering on as best they can, and introducing a number of innovative ways to increase their revenues.  There are many great successes, but just not enough to make the hole smaller in their revenue buckets.  Like many businesses in this new digital age newspapers are finding the going tough, but there are still many tough people working there.  I’m betting that they will find some answers.  If they were racehorses I might take out a bet on a race for sport, but I would not buy the horse.  Time to find a new track to run on.  Let’s see what that Dallas Morning News nag did to run ahead of the rest of pack.  We know the WSJ was juiced by Rupert, so no looking there.

Animal House Meets The Tribune Co. – Party On!

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I’m a newspaper guy at heart.  I found the rush of the daily news cycle, printing and delivering to the doorstep by 5AM to be a real rush.  However, I got another rush this morning when I read the article in the NYT – “At Flagging Tribune, Tales of a Bankrupt Culture.” Wow, I thought they were just playing out a bad hand that poor timing and a weak economy had dealt them, but these guys are something else.

I have had strong relationships with the LA Times, both in competing with them when I was at The OC Register, managing their 31 weekly papers, and later as a business partner when The Times was my media partner in an outdoor advertising company servicing local governments.  I was never impressed with their ‘get up a go,” but they were professional and exuded class.

Now the picture is straight out of Animal House or Old School with Will Ferrell.  It sounds like a lot of fraternity pranks, rude and obnoxious humor and overt sexual misconduct.  I had no idea, and I’m in the industry.  We all knew that Sam Zell made a bad bet, and used employee funds in creating an ESOP to fund his purchase.  It was also bad timing, as were so many other purchases including McClatchy buying Knight-Ridder, and Freedom selling out to payoff family owners who watned to cash out.

No, the big crime is that they have a bunch of clowns in charge.  It’s not just the economy that has hurt them it’s their own inept actions, or inactions that have killed them.  The ultimate bad tag on them is that they are underperforming the industry.  Previous leadership under the Chandler family was very staid and proper, and usually late to the party for the most part.  The new group started the party when they walked in the door, but forgot about the business part.

It’s a sad day for the industry, but there is a great lesson underneath all of their ‘stuff.’  The lesson is that culture trumps all.  They had it at one time, and they lost it.  They will not succeed again until they build a new, functional and professional culture.  We have spoken in the past about Michael Eisner coming in as the new head of the company at the behest of the major debt holder.  I laughed a little about it then, warmed up after some thought, and am know ready to say – Michael, please come!

Michael rescued a declining Disney when they couldn’t get over Walt’s death and couldn’t make decisions.  Eisner turned heads with how fast he could make decisions and he built a new culture, and Disney prospered.  He needs to do the same thing again at the Tribune Co.   That would be worth the price of admission – even at today’s inflated prices at Disneyland.  Hey where can a guy cash in a bunch of old E-Tickets, I want to be there when the fireworks goes off and Sam Zell streaks down Main Street, Will Ferrell style, in all of his naked glory – Old School style.

Mickey Mouse to Lead LA Times ?

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Our long ordeal is nearly over!  It appears that a change is coming to the leadership of the Tribune Company, and it could not come soon enough.  Having endured the Zell years I can say that they were truly awful.  A once great company and key newspapers in Chicago and Los Angeles were turned into rubble.  The purchase of  Tribune, mainly for the real estate – both buildings and Wrigley Field, bought at the height of the valuations for papers, went terribly wrong.

The final resolution has been going on for an extended period and mainly pits groupings of creditors against one another for the best settlement.  The major creditors lead by Angelo, Gordon & Co. and Oaktree Capital Management as well as the ever present JP Morgan Chase are in the driving seat with $8.6 billion in claims.  Many of the smaller creditors are not in agreement with the proposed settlement and have been successful in holding things up.

The key news that came out today is that Michael Eisner, formerly head of Disney is among the group being interviewed as the Chairman of Tribune.  Zell is to be gone, long live the Zell.  Hard to think of Mickey Mouse now leading my dear Los Angeles Times.  Not since Ron Burkle and Jon Peters tried to buy it before Zell.  Wow, I’ll have a comb out and blow dry with my box of Cheerios please!

Eisner could be the leader of a very well traveled group of former senior leaders I won’t bore you with – cause they bore the heck out of me.  One interesting choice also mentioned is Michael Wolff, founder of Newser, the online quick news site and writer for Vanity Fair magazine.  Michael also is close to Rupert Murdoch, having written a biography on him – wouldn’t that make a nice pairing for the future?

I’ll wait here in my bubble for further breaking news on who will be the winner, and who will get tagged to lead Tribune.  This should be really interesting, especially to see what ideas they come up with to payoff the debt to all of the creditors who are still licking their lips in anticipation of a change at the top.