The former Chicago Tribune and Los Angeles Times editor talks about the "deal from hell," Tribune Company’s bankruptcy, and journalism’s scramble for footing on the internet
Published: November 16, 2011
JO: When I first joined the Tribune [in 1979], it was still a private company. And I got to the point where I thought, if you can run a paper and still make a lot of money that’s fine, just so long as you’re producing good journalism. We [journalists] didn’t pay enough attention to the kind of arguments that Bagdikian was making. In the newsroom you hear [about], and I talk about it in this book, the wall between business and editorial, and we were pretty comfortable with that. It shielded us from having to think about making it go as a business. So our voices were not really heard that much, because we weren’t in the room, because we chose to stay out of the room, or somebody chose to keep us out. And I think that was damaging, because the business [side] needed to hear from journalists, and journalists needed to weigh in on business decisions, and [journalists] should have become aware of the threats to the business model that developed. We didn’t take them seriously enough until it was too late.
CP : Can you expand on this?
JO: The wall existed for good reasons, historically. But we [journalists] were kind of a mystery to [the business side of the paper] too. When they look at our budget, they . . . would say, “Well, really, do they need all those editors? Do they really have to have two people checking every story—can’t you do it with one?” And because there was really no relationship across that wall, it kind of inhibited a lot of relationships. [The business side] didn’t have the background. And it would hurt us too, because they’d say, “Well listen, man, this classified ad thing is going away,” and we’d think, “Well, they always say that every time the economy’s bad, blah blah blah,” so we all just merrily skipped along—into the jaws of a complete disaster.
CP : When I started as a reporter, in 1988 at the Providence Journal, we had reporters you just never heard from. One was purported to be up in some office writing novels. One guy was doing people’s taxes. Were newspapers just too fat and lazy?
JO: Probably. But I think it was the way we reacted to the internet . . . that really hurt us. If you look at the newspaper industry itself, there is an incredible lack of [research and development]. Everybody kept thinking that this was gonna last forever.
CP : In your book you write, “The conventional wisdom is that newspapers—and by that I mean the credible, edited information they deliver, and not just the paper and ink—fell into a death spiral because of forces unleashed by declining circulations and the migration of readers to the Internet.” Is the industry in a death spiral? Or is it in a transformation?
JO: I think it’s—if you’re talking about newspapers? They’re in a death spiral until they can figure out a way out of this thing. And they haven’t yet. The problem is, with a newspaper, and people tend to forget this—when you strip away a lot of it, a newspaper is a manufacturing business. It has a product that it puts out every day. The steepest cost is putting that paper on somebody’s doorstep. The trucks, the drivers, the newsprint . . . everything like that is 80 or 90 percent of the cost. You can’t continue that as long as you charge only 25 percent of the cost to put that paper on their doorstep and rely on advertising for the rest.
The economics of advertising online are different. That advertising is not coming back [to newspapers]. So you need to figure out how to get people information that’s so valuable that they’re willing to pay a little more for it. And I think that’s really what I’ve been trying to figure out here at the news co-op.
CP : Seems simple. Just charge. That’s what The [New York] Times is doing.
JO: Yeah. I think you’re seeing more and more papers starting to do that. That’s probably a good thing to do. People say, “Oh, they can’t.” But the reality is that newspapers still generate most of the news.
CP : Why did you quit the LA Times?
JO: I didn’t quit LA, I got fired. We had a difference of opinion about the future direction of the paper. I thought that this process of, “We aren’t gonna hit our cash-flow targets so we’ve got to cut the budget again,” I didn’t think that was a path forward. I thought we needed to figure out new ways to get revenue. . . . I said, “Look, we have a revenue problem, and we keep treating it like it’s a cost problem.” They were tired of hearing that kind of stuff. They just wanted someone who would cut the budget very steeply.
CP : Did you have a PowerPoint presentation and a plan for how to get more revenue?
JO: I didn’t have a plan—but I had a pretty good idea of where I wanted to go. But we had just been taken over by Sam Zell, and it was a heavily leveraged buyout.
CP : Yeah, when I read that plan back then, I thought, Wow, he just took everyone’s pensions and told them they own the company—but it’s $13 billion in hock.
JO: Actually, you gotta be careful about that, because he didn’t take anybody’s money—not yet, at least. But what happened was . . . everybody had a lot of their stock invested in the Tribune company—the employees were the second-largest stockholders when Zell took over. So when he took over, he bought all that stock [at $34 a share] and they could put that all in the IRAs. When he created the ESOP [Employee Stock Ownership Plan], that was the pension plan going forward. So anyone who was working at Tribune at that time and was relying on the ESOP to be their future pension plan is out of luck, because that’s gone.
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