JIM LEHRER: Next, the continuing difficult times for the Los Angeles Times. Jeffrey Brown has our Media Unit update.
JEFFREY BROWN: For the third time in less than three years, one of the nation’s leading newspapers has parted ways with its top editor in a dispute over cost-cutting.
James O’Shea was fired by the Los Angeles Times this weekend after he rejected a management order to make newsroom budget cuts. Fifteen months earlier, O’Shea’s predecessor, Dean Baquet, was dismissed in a similar dispute. And in 2005, John Carroll resigned, blaming “financial pressures.”
The L.A. Times is owned by the Chicago-based Tribune Company, which just last month was taken private in a buyout by real estate magnate Sam Zell.
Joining me to update the situation is Jon Fine, who writes a weekly column called “Media Centric” for BusinessWeek magazine, and Tom Rosenstiel, director of the Project for Excellence in Journalism, a research organization. Among his many past jobs in journalism was a stint as media critic for the Los Angeles Times.
L.A. Times especially battered
JEFFREY BROWN: Well, Tom Rosenstiel, I'll start with you. The last time this happened, there was public trauma. This time it seemed to come up quickly. What happened?
TOM ROSENSTIEL, The Project for Excellence in Journalism: Well, events are moving somewhat more quickly. Sam Zell took over the newspaper at the end of the year.
And the publisher, David Hiller, has been charged with coming up with a plan for the next year. And it was within the working out of this plan that O'Shea, who had come from Chicago, who'd been sent by Chicago after the last editor last time...
JEFFREY BROWN: Specifically by the Tribune Company to deal with this, right?
TOM ROSENSTIEL: O'Shea is a Tribune man working for David Hiller, the publisher, another Tribune man. And what happened was that they had a disagreement over fundamental vision.
As O'Shea puts it, Hiller wants and the Tribune wants to simply cut back, to shrink the newspaper. And O'Shea became convinced that you could grow the L.A. Times both online and in print with some small strategic investments.
JEFFREY BROWN: Jon Fine, we see turmoil at a lot of newspapers these days, but the L.A. Times seems to have a very particular case, particular problems. Tell us a little bit about the paper and what's going on.
JON FINE, BusinessWeek Magazine: Well, certainly uniquely among the large and top tiers newspapers of the country -- I'd include the Los Angeles Times with the New York Times, the Washington Post, the Wall Street Journal.
The Los Angeles Times has always had difficulty pretty much knowing exactly what it is. They've had national ambitions which they couldn't quite sort of manage. They couldn't really compete with the New York Times and the Washington Post.
And the sort of fail-safe position for newspapers is, "OK, we'll cover the local market." Well, what is the local Los Angeles market? It encompasses several million people. It encompasses a population greater than most states in America, in fact.
So how do you make this work? And, unfortunately, you do have to make it work.
It's not the Tribune wants to shrink the newspaper. It's that newspapers are shrinking.
I'm a journalist. I don't like to see journalists lose their jobs. But we're operating in an environment where big-city newspapers everywhere are having a terrible time, where revenues and profits are off, you know, significantly, double digits, at most Tribune newspapers. And, by the way, we're entering a recession, and newspapers are a cyclical business.
Again, I don't like to see journalists lose their jobs, but if I understand the reportage on this correctly, Tribune was seeking cuts of about $4 million on a newsroom budget of about $120 million.
I don't think a cut of under 4 percent in times like these is really the craziest or worst thing in the world. So I'm not really ready to fit Tribune and David Hiller and Sam Zell for black hats on this one just yet.
Like I said, it's been a very difficult time for the L.A. Times. It's painful to watch the diminishment of this newspaper. But a lot of that diminishment just has to do with everything that's happening in newspapers right now.
Split between local and national
JEFFREY BROWN: Tom Rosenstiel, from the inside, from the journalists there, where do they see the hurt? Where do they see it showing up in their coverage, in their reporting?
TOM ROSENSTIEL: Well, there's a debate over whether this paper should be a national newspaper with grand ambitions or a local newspaper.
JON FINE: I'd actually take -- I take offense to that. I take issue with that. I mean, they can't afford to be a national newspaper. They couldn't when times were fat; they can't really do it now. It's sad but true.
JEFFREY BROWN: OK, go ahead.
TOM ROSENSTIEL: You asked me the question of where the reporters see this.
JEFFREY BROWN: Right.
TOM ROSENSTIEL: And that's one place. Another is that the Web site of this newspaper was somewhat malnourished and lacked competitiveness with other major papers.
The L.A. Times is one of only three newspapers in the country that has a full set of international bureaus, along with the New York Times and the Washington Post. The Wall Street Journal does in the business area.
The other thing is that there's a culture clash inside the Tribune Company. The Tribune bought a larger company when it bought Times Mirror a few years ago in 2000. And the L.A. Times was a company and a newspaper of larger ambitions than the Tribune.
It aspired to be as good a newspaper as any in the country. Tribune never operated any newspapers with those kinds of ambitions. The Tribune aspired to be a good local and regional newspaper around metropolitan Chicago.
The dispute I think is not over the number, whether it was a $4 million cut or a $10 million cut or even a frozen budget. There are differences in the reporting on this.Â It's whether there's a long-term plan at Chicago over the future of this newspaper and the others in the chain or whether they are sort of operating quarter-to-quarter and year-to-year.
There's also pressure now with Zell in that there's a larger amount of debt in the Tribune Company and they need to service that debt. And that pressure is more intense than it was before the sale.
Paying the price for privacy
JEFFREY BROWN: Jon Fine, what about that move to taking it private with Sam Zell? Now, we're seeing this with several papers around the country now. What are the implications for going private for the newspaper business?
JON FINE: Well, there's a couple of implications. The first one and the most important one is that you're freed from the quarterly demands of Wall Street.
And Wall Street has been very harsh on newspapers right now, because it's hard to know what's going to happen with newspapers on a quarterly basis, except they're going to keep declining.
The downside of that is that you're owned by the bank. And Sam Zell, I don't have the exact ratio in front of me, but Sam Zell just took on a really staggering amount of debt. And as long as his kind of profits stay at a certain level, he's basically OK. If they slip below that, the situation gets ugly very, very quickly.
It's really challenging. I'm personally interested to see what a new operator like Sam Zell does. I would not ever argue that Tribune, the old Tribune management covered itself with glory when it came to newspapers, particularly the Los Angeles Times.
But it's not like by going private the road is necessarily easier. You're taking one set of pressures off, which is the quarterly-to-quarterly thing, but at the same time you've still got to answer to the banks. And you don't want to cross the banks.
JEFFREY BROWN: You're nodding. You agree with that?
TOM ROSENSTIEL: Yes. You have essentially fewer owners. When you have a public company, you have many owners. And they are -- it's dispersed.
And even though a lot of them are large, institutional investors, you can make a more indirect case. They are not really your bosses in quite the same way as when you're dealing with a handful of banks.
Editor needed for direction
JEFFREY BROWN: Let me ask you something back to the editor leaving. How important -- I'll start with you, Tom -- how important is an editor anyway? I mean, what difference does it make who's running the paper?
TOM ROSENSTIEL: Well, it's an interesting question, because newspapers have been likened to steamships that move very slowly, in terms of their direction.
And when a reporter is sent out on a story, if that reporter has his or her own personal standards and is given a certain amount of time, they're going to probably do as good a story yesterday or tomorrow as they did the day before yesterday when there was a different editor there.
But an editor provides vision. An editor decides what's going to be on page one, what gets rewarded, who's given more time, who's given what beats. They set a direction.
It has a big impact on things like the flow of talent, recruiting. Do the best people leave? Do they put in the extra hours? And that's been a serious problem at this newspaper now for over a decade.
JEFFREY BROWN: Jon Fine, we have time for a brief response on that, the role of the editor.
JON FINE: Well, the most important thing the editor does right now is he decides -- you know, he fights with the corporate owners on the budgets, and he decides where to allocate the bodies.
It does matter quite a bit. If the next owner -- I'm sorry, if the next editor of the L.A. Times comes in and says, "You know what? This Web site thing, dumb idea. We're going to cut back on it." Well, that's a really big problem. That's the only places where newspapers can grow.
If the next editor comes in and says, "Do we really need to spend $5 million on the Beijing Olympics? Maybe we can have that and put that money to something that will be unique to us," that can be something interesting.
I like your point that the editor may not matter quite so much anymore. But someone still has to captain the ship, even if the ship is in troubled waters, even if there's a million people tugging and offering direction online and internally. There still needs to be someone there, and that position still is important.
JEFFREY BROWN: All right, Jon Fine, Tom Rosenstiel, thanks a lot.