Tribune Buys Times Mirror
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TERENCE SMITH: In a season of media mergers, the Tribune Company’s announced $8 billion takeover of the Times Mirror company ranks as the largest newspaper acquisition in U.S. history. It combines two giants, each of which has vast media holdings of its own.
The Chicago-based Tribune Company owns its flagship, the Chicago Tribune, plus three other newspapers, 22 television and four radio stations, and cable and Internet holdings, including a stake in America Online. It also owns the Chicago Cubs baseball team.
The Times Mirror company’s marquis property is the Los Angeles Times, owned for more than 100 years by southern California’s powerful Chandler family. It also owns the Baltimore Sun and the Hartford Courant, and Newsday in New York, plus extensive magazine holdings.
The combined company will be a coast-to-coast media colossusl that ranks third in circulation among America’s newspaper conglomerates, after Gannett and Knight Ridder.
Joining us to discuss the implications of the merger are John Morton, a newspaper industry analyst; Geneva Overholser, a syndicated columnist and former editor of the Des Moines Register; and NewsHour regular, journalist and author Haynes Johnson. Welcome to you all.
John Morton, what’s the significance of this deal for the industry?
JOHN MORTON: Well, I think the most important thing is what is it going to mean for other family-controlled, large family-controlled newspaper companies. Historically, newspaper families have been loath to discard their properties. They have an emotional attachment to them. They’re not like the owners of green bean canneries, for example. And I think what happened in Los Angeles is that the last of the Chandler family who really cared about newspapers was Otis Chandler. He left in 1995. But I think a lot of the other, the remaining family-controlled companies are going to be thinking about, you know, what does the future hold for us?
TERENCE SMITH: Who are you thinking of?
JOHN MORTON: I’ll tell you the ones that basically have been nominated by Wall Street.
TERENCE SMITH: For sale or possible merger?
JOHN MORTON: Yes. If you look at the companies whose stock went up in the three or four trading days after this deal was announced you see what Wall Street’s candidates are. That would include A.H. Belo, which owns the Dallas Morning News; McClatchy, which has newspapers in California, North Carolina, Alaska and Washington state. And Knight Ridder, which is another one that has newspapers, large newspapers, over several places and then finally, Lee Enterprises, which is a company headquartered in Davenport, Iowa, but has a lot of newspapers properties, principally in the Midwest.
TERENCE SMITH: So this could be the beginning of a trend, not the end of it?
JOHN MORTON: Indeed it could. This is something that nobody really thought would happen. If you had asked me a week ago on the scale of, a probability scale of one to 10 with one being the most likely, I would have said this was a nine or a 10.
TERENCE SMITH: Geneva Overholser, you were at the Des Moines Register when it was taken over by Gannett.
GENEVA OVERHOLSER: I was.
TERENCE SMITH: This must have some special resonance for you.
GENEVA OVERHOLSER: Very powerful feelings, as it does for many newspaper people across the country because family ownership is a dying breed. But it was a very different thing. It was owned by the Cowles family. Many newspaper families have not been great. We’ll all agree. But the Cowles family were one of these nobless oblige families that cared about the state of Iowa, huge philanthropists, made an enormous difference in the life of the city and believed, as you talked about families have sometimes believed, that this newspaper was theirs to nurture and that it was a civic responsibility, just made a huge difference. Then bought by the largest newspaper-owning corporation in America, Gannett certainly no –
TERENCE SMITH: How did it change life and the paper itself?
GENEVA OVERHOLSER: The profit margins went up dramatically, which is the single biggest thing typically. There’s no terrible viewpoint that people bring in to it. There’s no one wanting to hurt the newspaper, but there is a business deal that has taken place, and the new owners need to get back their investment. And the way they get it back is to have a very different return.
TERENCE SMITH: Haynes, this is part of a long tradition.
HAYNES JOHNSON: I grew up in the newspaper business. I was just thinking when you were talking here about the dying breed, I’m the dying breed. The question is, for those of us who love newspapers, this consolidation has been going on for years and years and years is what does the individual product, what do they do? Is it driven by profits? That means you cut the news that you actually pay for, that you provide — like to go overseas, you cut your bureaus around the United States. It’s very easy to do that, just to fill the columns with local stuff –
GENEVA OVERHOLSER: Hard not to.
HAYNES JOHNSON: — and easy and you can make a lot more money. Or is there some of us who are still idealistic and romantic and out of the old bat-eyed newspaper idea that it’s a public trust, not just a private profit involved. That’s really what those of us who are old newspaper people, like myself, you wonder where this is now going.
TERENCE SMITH: Let me ask all three of you really, starting with you, John, is this the model for the future, the Tribune Company with its television stations, its newspapers, its media, in a given market, its ability to offer advertisers this choice? Is this the future?
JOHN MORTON: I think it is. And I think this merger is what really is pointing to that. And which is why I think some of the remaining companies are going to look at the future, they’re going to see a dance floor full of elephants. Where are they going to fit in there? I think that is true. It’s a convergence of everything. I mean, at the Tribune Company, they don’t talk about newspapers and television stations. They talk about information gatherers, you know. I mean it’s all to them one thing. They share information. You have newspaper reporters appearing on television, TV reporters writing stories for the newspaper. This kind of convergence is going to go on in the traditional media, I think, and of course part of it is feeding the Internet.
TERENCE SMITH: Is this a bad thing or a good thing? What is it?
GENEVA OVERHOLSER: I think it’s an inevitable thing. It’s with us. Part of what we need to do is figure out how we do hold up the voice of the power of providing this information, the importance to the democracy of the news function — how we hold that up against the profit. Now there’s one thing I think that’s interesting about this. It is all about convergence, but in the case of these companies, they’re all information companies. I mean at least they weren’t bought by a cereal maker. The Tribune Company is an information, a news and information company.
TERENCE SMITH: So that gives you some hope.
GENEVA OVERHOLSER: I think so.
HAYNES JOHNSON: The other thing though when you listed all those properties, there is no newspaper industry. There’s a media industry. And it’s a media/entertainment industry, the Chicago Cubs. If you have AOL and Time Warner and they have all kinds of publications and properties — and you do ask yourself Geneva’s question: Is the democracy best served by that? If it can be, they’ve got the resources to do it if they wish to, but they also have the resources not to do it. Does it matter that you have a lot of accurate, solid, serious, deep information on the society? I happen to think so, but we’ll see what happens with these new –
TERENCE SMITH: Does it matter editorially?
GENEVA OVERHOLSER: It matters enormously. It matters to the people who do it. It matters whether they get decent training, whether they’re paid well, whether we keep recruiting top talent. What has happened in way too many newspapers across this country when they have been bought, not that there weren’t bad family ownerships but when they’re bought by big corporations and the profit-margin pressure is applied, they are typically producing a much less meaningful newspaper for their communities, not in every case. In many of the cases — in very small papers they’re not. But people are not investing in newspapers these days out of the same sense of civic responsibility as they used to in the best cases.
TERENCE SMITH: And, you know, the Tribune acquisition of the L.A. Times also encourages another trend, which is absentee ownership.
JOHN MORTON: Well, that’s true. That’s become so pervasive in this country that anymore if you talk about almost any newspaper, its owner is somewhere else.
TERENCE SMITH: It certainly suggests, John, that the newspaper business is a rather good business. People want to buy these properties.
JOHN MORTON: Oh indeed. The prices have never been higher. The value — I think that’s one of the reasons the Chandler family decided to sell. This is a maximum cash out. They are very profitable businesses. Last year, the average operating profit margin was 22 percent for the newspaper segments of the public companies. There are some businesses that don’t ever hope to get half of that in profit.
GENEVA OVERHOLSER: But are they just squeezing them and running them into the ground or are they reinvesting in them?
HAYNES JOHNSON: I suspect the public today — they see — everything is merged, we’re all part of somebody else’s ownership — drug companies, banks you name it. Most people hate the press anyhow. We’ve always hated the press — we’re in bad order these days anyhow — but some of us still think maybe there’s a reason why we ought to be independent and ought to have the resources to do better. That’s naive perhaps, but I hope it’s not naive because that’s what really raises the question. Maybe this will just be tremendous for news gathering in this country. I’m not sure.
TERENCE SMITH: Speaking of independence, there was another development at week’s end going in the a somewhat different direction. A buyer stepped forward for the San Francisco Examiner, which seemed on the verge of extinction. John, tell us about that.
JOHN MORTON: Well, first off, I’ll have to acknowledge that I have served as a consultant to Hearst in their dealings with the Justice Department –
TERENCE SMITH: Hearst owns the Examiner.
JOHN MORTON: Owns the Examiner and wants to buy the Chronicle and in order to get by the antirust strictures, they’ve put the Examiner up for sale and have sweetened the offer now twice. I suspect when details come out, this will have been a third sweetening in some fashion. Hearst wants to get this over with. They wanted somebody to buy it. They didn’t really want to close it down. They wanted somebody to buy it so they could go on and complete their acquisition of the Chronicle.
TERENCE SMITH: The larger and more prosperous –
JOHN MORTON: The larger and more prosperous newspaper. And that’s I think what’s going to happen. The question is whether the Examiner, by whoever owned, it’s being bought by a local family that owns a large, free weekly newspaper, whether it can survive. And I suspect what they’ll do is move it to the morning and probably make it a free paper.
TERENCE SMITH: But Geneva, this will make San Francisco special. It will have a locally owned and minority-owned [paper] — this is a Chinese American family.
GENEVA OVERHOLSER: A Chinese American family.
TERENCE SMITH: That’s different.
GENEVA OVERHOLSER: That’s remarkable. I embrace it. Who knows what the economic future is. But it’s a feeling.
TERENCE SMITH: John Morton is obviously very skeptical. What about –
HAYNES JOHNSON: I — if I may just say, those of us who love newspapers always feel if a newspaper dies it’s like a death in the family. And it’s a very personal thing. So if one survives here, we say with a little caveat maybe it won’t have the resources to do what it would do but at least it didn’t go under, for now.
JOHN MORTON: I’m in favor, I wish every town still had five or six newspapers, but it’s just not –
TERENCE SMITH: But your longer-term picture of the situation in San Francisco is it will be very hard for the Examiner to –
JOHN MORTON: Yeah, it will be hard for it to survive in any significant, large way. Basically Hearst will wind up owning the only paid circulation metropolitan daily newspaper in San Francisco.
HAYNES JOHNSON: Which is what this story is all about: Money.
TERENCE SMITH: Exactly.
GENEVA OVERHOLSER: I think the public is concerned about it. I think the public is worried about the degree in which money is controlling media interests these days.
TERENCE SMITH: The changing role of newspapers. Thank you all three very much.