As civic insurrection mounts against Tribune Publishing’s ownership and management of the Los Angeles Times, the Chicago conglomerate insists it is not interested in selling the paper.
“The Los Angeles Times is integral to the company’s business model,” a Tribune spokesman told the Business Journal.
Widespread calls to restore local ownership have reached fever pitch since the controversial firing last month of publisher Austin Beutner and his replacement with Tim Ryan from the Tribune-owned Baltimore Sun. That prompted a series of protest letters signed by about 100 civic leaders and speculation that L.A. billionaires such as Eli Broad, Patrick Soon-Shiong and David Geffen were interested in buying the turmoil-hit newspaper.
The under-fire Tribune is holding on to the Times, however, and pressing ahead with cost-cutting plans amid declining revenue. Buyout offers were presented to employees last week.
At least 50 editorial positions at the Times, or one-tenth of the newsroom, are expected to be axed. Tribune is dangling a carrot for older staffers to take the deal and there are fears that many years of experience and talent will walk straight out the door, further damaging declining circulation and advertising rates in the process.
Employees who have worked at the Times between one and 10 years are being offered one week of base pay for each year of service. Employees would also receive additional weeks of severance for each decade they have spent at Tribune Publishing. After Dec. 31, the company will no longer offer retiree medical benefits. However, anyone eligible for such coverage that accepts the buyout will receive those benefits for as long as the company still offers them.
“Losing veterans comes with a risk to the future quality of reporting at a newspaper and you can disenfranchise your readers as a result,” said Hamed Khorsand, an analyst at stock research firm BWS Financial Inc of Woodland Hills who last month released a scathing critique of Tribune.
Dismay from some readers also greeted the Times on Oct. 5 – the day the buyout offer was presented – when a one-third of the front page featured an ad for American Airlines Inc., leaving room for only three news stories. That layout decision caused a wave of criticism on social media regarding the conspicuous layout of the ad.
However, Tribune picked up some local support last week. Dana Point hedge fund Mount Flag Media Investment has acquired a 5 percent stake in the company and is seeking a seat on the board. Over the last six weeks, the fund has picked up more than 1.3 million Tribune shares through a series of purchases and stock transfers.
Mount Flag President Jordan Spiegel said in an interview that the firm will ask Tribune Publishing for a seat on its board, adding that the firm feels the stock is extremely undervalued considering the strong brands in Tribune’s portfolio.
“We support management’s strategy and also support the Times having a strong local voice, but feel it’s possible for the paper to benefit from the best of both worlds in having a local perspective as part of a larger umbrella organization,” said Spiegel.
He said Mount Flag would take a “wait-and-see approach” to buying more shares in Tribune but was not interested in buying the Times or the company as a whole.
“We’re just interested in continuing what we are doing, looking at a range of media investment opportunities,” said Spiegel.
Shares in Tribune have plummeted by more than half since April but Chief Executive Jack Griffin recently reaffirmed the company’s commitment to a five-point transformation plan launched last year after going public.
One part of that plan is to step up transition to digital across the company’s 10 papers. Remaining Times employees can expect more digital skills training and new hires in the digital space are expected as the paper puts a priority on boosting that area of its business.
“Our company remains committed to investing in premium content and digital products that will continue to move the company forward,” said a Tribune spokesman.
The Times has hemorrhaged print readership faster than any other major title in the country, according to reports, with daily readers down to 489,000 compared with a daily circulation of more than 739,000 as recently as 18 months ago. Yet it remains the nation’s fourth-biggest newspaper in terms of sales.
The next key date in developments is Oct. 23 – the deadline by which employees can choose to participate in the voluntary buyout plan. Involuntary cuts are expected to be made if the buyout offer does not bring enough savings. The cuts are companywide but the Times is set to be hardest hit.
The task now for Tribune is to make cuts deep enough to bring numbers in line with promises made to Wall Street – something it’s had trouble doing. Last month, the company was forced to lower its 2015 financial guidance.
In a statement posted on his Facebook page last month after his ouster as publisher, Beutner said, “Cost-cutting alone is not a path to survival in the face of continued declines in print revenue and fierce competition in the digital world.”
Beutner declined to comment for this story citing legal reasons.
Tribune’s decision to pull the strings of the Times from its Chicago headquarters had added to the friction felt locally but the company suggests it is interested in mending fences.
In a statement to the Business Journal, a Tribune spokesman said, “Local Los Angeles Times leadership is engaged in fruitful discussions with various members of the civic community. We respect and appreciate the valuable input we have received to date and welcome additional dialogue.”
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