As the Los Angeles Times battens down the hatches by erecting paywalls, the Guardian throws journalism wide open. But this is more than story about a schism in business models; it is the tale of what happens when journalism works for the public good and what becomes of the press when it merely serves shareholder returns. In the first of a three-part series, MANDY DE WAAL looks at what happens when newspapers are taken over by money-men who know nothing about journalism.
At the beginning of March, California’s Los Angeles Times joined a scrum of US newspapers that decided paywalls would be the press’ salvation. But the mighty Pulitzer Prize-winning paper is no longer the press it once was.
Starting in the sixties and peaking in the nineties and early 2000s, the Los Angeles Times would win a clutch of journalism’s most prestigious awards, but then came the ‘deals from hell’ and the paper became a sinking ship. Heads rolled and editors left as the men in suits ruthlessly cut jobs at the paper to safeguard investor interests.
“I’ve been trying for days to quit the Times, but I cannot seem to do it. In the first place, every time I announce I’m leaving, a more senior editor ups and quits and grabs all the attention, and, in the second place, I do not know anymore who my editor is, who the editor is, who the publisher is, and who owns the company. I think it’s the Chicago Tribune, although that might not be the case, either, by the end of the day, since the paper is for sale, or being auctioned,” writer Richard Cohen wrote in a column for Slate.
“I walk the halls with my resignation in my hands. It is a brief document, rather nicely written, I think, but either I cannot find anyone to read it or those who do simply shrug, say something like, ‘Get in line,’ or, because they are in the Internet or TV section of the company, cannot read at all. I mean, they’re functionally literate, if words like ‘functionality’ can be considered literate, but they never get the meaning of things. All they ever say is, ‘Reboot, reboot’.”
But let’s not get ahead of ourselves here. Good parables like this should be told from the very beginning, because they serve as exemplars of how journalistic excellence can be screwed by greed. Once upon a time many of the great American newspapers were owned by private families.
The New York Times, for example, is still run by the offspring of Adolph Ochs, an intellectual-cum-refugee-cum-printers apprentice who ended up buying the paper in 1896. The Ochs Sulzberger family is said to be traditional, and treat The New York Times as the clan’s “reason to exist, initiating younger members in its ways and holding gatherings to discuss it”.
Similarly, the LA Times became successful under the editorship of Harrison Gray Otis in the 1800s. After his death, a family – the Chandlers – were the newspaper’s publishers for generations. The sixties were a golden era for the newspaper when Otis Chandler believed that the newsroom was “the heartbeat of the business”. This ideal saw the publisher reinvest in quality journalism, bagging four Pulitzers, more than it had won in almost a hundred years.
But trouble started brewing in 2000 when the Chandlers decided to sell their centurial company the Tribune Company for $8.3-billion plus some cash, stocks and a few seats on the board. Respected media critic for The New Yorker, Ken Auletta, kept a careful eye on the deal saying that initially the Times’ newsroom in Los Angeles welcomed the new owners, but that this enthusiasm soon gave way to embarrassment.
The reason for the shame was “a special edition of the Times’ Sunday magazine devoted” to the opening of the Staples Centre, a sports and entertainment arena with which the newspapers’ publishers had negotiated a profit-sharing plan. “The arrangement, which was kept secret from the paper’s editor until shortly before publication, gave Staples half the advertising revenues for this supposedly independent journalistic enterprise. The Times and its top management had been humiliated,” Auletta wrote.
Tension grew between the Los Angeles Times’ editor, John S. Carroll, and the new owners. Eventually the newsman who had helped the newspaper win 13 Pulitzer Prizes left in 2005. Caroll confided in Auletta that he was tired of the Tribune Company’s “incessant cost-cutting”.
“He believed that, on the contrary, investing in the newspaper would eventually produce higher profits, which was what the company eagerly sought, and that cutting costs, while it would temporarily improve the bottom line, would erode the paper and might someday destroy it. Carroll and the Tribune Company had been arguing about these issues for five years. The resolution would now be left to his successor.”
That successor was Dean Baquet who was Carroll’s second-in-command, but he was forced out very soon after defying orders from the Tribune’s money-men to cut costs by cutting jobs. In the five years since Tribune took over, the Times had chopped the paper’s talent by over 20%. Baquet said no more and was out the door, and in came James O’Shea. No prizes for guessing what happened to O’Shea. He left two years later in 2008 after refusing to slash the newsroom’s budget. With the revolving editorial door turning non-stop, the Los Angeles Times’ circulation plummeted.
However, O’Shea would get his own back by writing a book about the Tribune Company called The Deal From Hell: How Moguls and Wall Street Plundered Great American Newspapers. O’Shea wrote: “Like a lot of people at the time, I was willing to try something, anything, other than what we were doing, which was to just keep cutting costs as the products became less and less appealing to our readers.”
When it comes to laying blame for the destruction of papers like the Los Angeles Times, O’Shea is more than frank. “The lack of investment, the greed, the incompetence, corruption, hypocrisy and downright arrogance of people who put their interests ahead of the public’s are responsible for the state of the newspaper industry today,” his book reads.
More pain was pending for the Los Angeles Times, and it arrived in December 2007 in the form of a foul-mouthed, brutish real estate billionaire called Sam Zell. Like many of the moguls who destroy media companies, Zell had never owned a newspaper in his life, but this didn’t deter him from setting his sights on the Tribune.
Photo: Sam Zell. REUTERS/Fred Prouser.
A lack of media experience only served to embolden Zell who positioned himself as an “expert” in journalism from the get-go. “I’m sick and tired of listening to everybody talk about and commiserating about the end of newspapers. They ain’t ended. And they’re not going to be,” Zell lamented at a press conference to announce the deal, which he labelled “a very low-risk investment”.
Zell’s master plan was to put himself at the helm of the company and take the Tribune Company private with the help of an employee stock purchase plan. However, unlike all his real estate deals, Zell didn’t risk much of his own money, although he did share the risk of the take-over with all the company’s employees. Very soon Tribune was $13-billion in debt.
And then there’s the management “talent” Zell brought to the party. There are wonderful anecdotes about the “talent” Zell hired to help run his new media company. People like Randy Michaels who shortly after the Zell buy-out tried to impress his new colleagues at Tribune by offering a waitress at a hotel $100 to show him her breasts.
The Tribune Company went broke almost a year to the day after Zell had acquired it. But Zell did make news for helping create what is the biggest bankruptcy in US media history. These and other debacles that have beset US journalism are part of the reason why some media are eschewing the “attraction” of public listings and bonehead management like Zell and Michaels to create non-profits. The other reason is that good investigative journalism has been seriously affected by the recession and the fall-out from journalism that serves the church of the shareholder.
ProPublica is a sterling example of this. Enabled by an endowment from Golden West Financial, some of those fine folks who gave the US the subprime crisis, ProPublica writes big, important stories and gives them away to the likes of The New York Times for free. The outfit is run by a journalism supremo, one Paul Steiger, a former Wall Street Journal senior editor whose tenure there realised 16 Pulitzer Prizes.
But let’s go back to the Tribune, the owners of the Los Angeles Times, a company that former editor O’Shea says has leaders that put profits before Pulitzers. “Instead of developing strategies to produce the kind of content that would protect their most important asset — the public trust — they depreciated it like an aging Linotype.”
Since Tribune declared bankruptcy in December 2008 it has racked up well over $233.3-million in legal fees, after a class action suit was brought against the company’s employees because of Zell’s “very low-risk investment”.
Last December the Los Angeles Times lost yet another editor who, after cutting the paper’s staff from 900 to about 550, could take no more. Sam Zell remains one of the richest men in the US and made the Forbes’ rich list yet again last year with a net worth of $4.7-billion.
And, the Los Angeles Times’ pay wall plans? Do you think this is going to turn things around for the paper?
Ask yourself whether the Los Angeles Times is the kind of newspaper you’d invest in so that you might read it on your iPad? We both know the answer to that question. DM
[The next instalment looks at those good guys of journalism, the Guardian. Unlike other newspapers whose profits are sucked out of operations by shareholders, The Guardian reinvests profits to “sustain journalism that is free from commercial or political interference”.]
Photo: The vaulted gates to the LA Times. REUTERS/Fred Prouse.
"Joyfully to the breeze royal Odysseus spread his sail and with his rudder skillfully he steered." ~ Homer