When the Tribune Co. acquired Times Mirror in 2000, it promised dazzling returns from the synergy between its newspapers and television stations in major markets. Here's why those bold dreams haven't been realized.
By Rachel Smolkin
Howard Schneider resigned as Newsday's editor two years ago, but he hasn't lost his zest for a story. Forty minutes into an expansive interview about the Tribune Co. and its "synergy" strategy, he gets excited. "To me that's the lead," he tells me, "that Tribune did have the answer, I can't say The Answer, but certainly directionally had the answer and had the assets and a vision of sorts, but for all the reasons we've discussed: a flawed business plan, lack of execution, a failure to invest, lack of will and lack of staying power, they didn't see this out."
Tribune's 2000 purchase of Times Mirror, including Newsday, the Los Angeles Times, the Hartford Courant and the Baltimore Sun, gave it both newspapers and television stations in the top three markets of Chicago, Los Angeles and New York. Tribune executives touted the tantalizing possibilities of synergy, the notion that cooperation between TV and newspapers in these markets and others would reap editorial, promotional and advertising windfalls. Tribune's leaders envisioned these regional media powerhouses forming a cross-country chain that would compete for lucrative national advertisers as well.
The day after the acquisition announcement, the Boston Globe quoted Tribune's then-chairman and CEO, John W. Madigan, as proclaiming the creation of "the premier multimedia company in America." In the Courant, Madigan said his company's "presence will be defined by taking what are essentially local market media companies, and putting them together into a major, national footprint."
One year later, delivering the keynote address at the Bear Stearns Media, Entertainment and Information Conference, Madigan called the Times Mirror acquisition a "fabulous opportunity," and asserted, "It is no different than the AOL/Time Warner merger, except that it's not as large!"
AJR shared the optimism of Tribune's executives; its May 2000 story "Tribune's Big Deal" examined the Chicago-based company's ambitions to distribute its content via print, TV, Internet and radio, and discussed its desire to "create a network of regional media hubs in Los Angeles, Chicago and New York that will be irresistible to national advertisers." The story observed, "Sounds like the Tribune Co. 'got it' far earlier than most."
But Tribune's exhilarating hopes have gone largely unfulfilled. Despite faithful cross-promotion across platforms and some – albeit often grudging – cooperation among its properties, the synergies have not materialized as expected, nor has the predicted national footprint. The reasons for the underwhelming results are complex, driven in part by bad timing, bad luck and a bad newspaper economy. Innovative but misguided business assumptions complicated Tribune's strategy, as did the melding of two very different cultures, relentless cost-cutting and friction over centralized versus local control of Tribune operations.
Six-and-a-half years after Tribune unveiled its purchase of Times Mirror to great fanfare, the company must decide whether to stick with synergy, redefine it or abandon it. Tribune's stock, which closed at $37 on the last trading day before the acquisition announcement, peaked at $53 in early 2004, then plunged to almost half that by April 2006.
After a blistering outburst about the depressed stock price by the Chandler family of Los Angeles – the same Chandlers who sold Times Mirror to Tribune for $8.3 billion – Tribune's board took action. A special committee of seven independent directors is overseeing management's exploration of what to do next, which could include unloading the company; selling some or all of Tribune's 25 TV stations, its 11 daily newspapers or the Chicago Cubs; or taking the company private. If the TV stations go, the synergy strategy, at least as it was envisioned in 2000, will disappear along with them.
That vision was at the heart of the Chandlers' complaint. The Chandlers, who became Tribune's largest shareholders after a $2-billion stock buyback in June that they opposed, also occupy three of 11 seats on the board. In a June 13 letter, board director William Stinehart Jr., one of the Chandler trustees, wrote that the "basic strategic premise of the Tribune/Times Mirror merger was that the cross-ownership of multiple premium major media properties in the nation's three largest media outlets would provide a platform to produce above-industry performance for both its newspaper and broadcast assets and for strong growth in interactive and other media opportunities. This strategy has failed."
Contacted for comment on this article at his law offices in Los Angeles, Stinehart said, "I don't speak to the press," and hung up. The day after the acquisition announcement, the New York Times quoted Thomas Unterman, the former chief financial officer of Times Mirror and an adviser to the Chandler family trusts, as saying the profit potential of the joint TV and newspaper cities was "what caught the Chandler family's interest."
Tribune executives had planned to prune Times Mirror newspaper operations perceived as flabby at the time of the merger. But the cost-cutting did not abate after that initial tightening. In 2005, Tribune eliminated 900 jobs – about 4 percent of its workforce – mostly on the publishing side. In its May 2006 stock buyback announcement, the company said it would make cuts worth $200 million over the next two years. Scott Smith, Tribune's president of publishing, told the New York Times that $40 million of that would come from newspapers.
John S. Carroll, whom Tribune recruited to take over the beleaguered Los Angeles Times after the acquisition, left the paper in August 2005 in large part because of unyielding pressures to cut costs. "It seemed to me that there were three pillars on which the acquisition rested," the former Times editor says. "Number One, the so-called 'synergy' of owning multiple media outlets in each city; number two, the hope of cashing in on the very large market for national print advertising; the third was cost-cutting. The first two failed. So we've put the whole load on the cost-cutters, and the result has been a ravaging of the Times Mirror newspapers." His blunt assessment came a month before his successor, Dean Baquet, was ousted from the Times for his very public refusal to enact further newsroom cuts.
Carroll says the underlying assumptions of the merger "probably weren't a very good idea to begin with, but, in fairness, the company was very unlucky in its timing. With the dotcom collapse right at the time of its purchase, they were operating with a heavy handicap."
The staggering challenges Tribune is confronting are by no means unique within the industry. Knight Ridder is kaput after shareholder pressure forced the company to sell its papers earlier this year. Ad revenues have been stagnant; competition from the Internet is mounting; and circulation is falling. Particularly hard-hit have been newspapers in large cities – the backbone of Tribune's synergy strategy. In the six-month period ending in September, the Los Angeles Times' daily circulation dropped 8 percent, from 843,432 in 2005 to 775,766 this year. Newsday's fell 4.9 percent, from 431,957 to 410,579.
The TV stations have fared no better, hammered by factors including a new method of measuring audience. In Los Angeles, KTLA garnered an average 204,000 viewers a day during sweeps periods in the first 10 months of 2001; the same period in 2006 netted only 102,000, according to Nielsen Media Research. In New York, WPIX's average viewership dropped to 167,000 from 316,000.
The company also has been beleaguered by difficult circumstances unique to Tribune. Its gamble that the Federal Communications Commission would lift rules barring cross-ownership of newspapers and television stations in the same market has been stymied, first in the courts and then by a bureaucracy slow to issue new rules, creating uncertainty around synergy's core.
Tribune's optimism that it could prevail in an inherited tax dispute between Times Mirror and the Internal Revenue Service proved unfounded; the company is appealing a billion-dollar tax bill in that case.
The company also had to set aside $90 million to repay advertisers after revelations of circulation fraud at Newsday and Hoy, its Spanish-language sister publication, between 2000 and 2004. Nine people, including seven former executives, have pleaded guilty in connection with the scandal, which inflated Newsday's circulation by about 100,000 copies and doubled Hoy's sales.
"What we didn't anticipate was revenue falling off so significantly, and we did not anticipate a fraud at Newsday," says Jack Fuller, a former president of Tribune Publishing and a pivotal figure in the acquisition. "We bought it, and then the Internet bubble burst, and then the whole industry suffered."
Fuller says the circulation scandal at Newsday "distracted everybody. It took a lot of energy and time thinking about that subject. It cost a lot to settle with the advertisers who had been lied to. It meant that Newsday was a considerably smaller newspaper, had a considerably smaller circulation than it was assumed to."
In an e-mail exchange after we spoke, Fuller added that the anticipated synergies between newspapers and TV were not the biggest factor in the company's expectations for positive financial results early on. In "modeling what we expected from the transaction, the cross-media synergies were considerably smaller than cost savings we anticipated we could get from the LA Times (and did get, more quickly than we expected). These did not involve editorial, by the way," he wrote. "We also anticipated more than we were able to achieve in national advertising as a result of being able to sell across the top three metropolitan markets in the country (NY, LA, Chicago)."
Tribune denied my requests for interviews with the company's current leaders. In an October 17 e-mail, Tribune spokesman Gary Weitman cited various factors for turning down the requests, including "disclosure problems, strategic review underway, quiet period with earnings on Thursday, and scheduling issues."
Instead, Weitman later offered a short statement, which did not answer the questions I had posed but said, in part: "We believe that owning newspapers and television stations in the same market gives Tribune an edge over its peers, especially as it relates to news coverage and promotion." It didn't mention advertising there but did in the next sentence in connection with the Internet: "In addition, the benefits of our newspapers and, increasingly, our TV stations cooperating with our Interactive division are very significant from a news content and advertising standpoint."
Tribune Chairman and CEO Dennis FitzSimons was asked about synergy at an October 24 off-the-record employee meeting at Newsday. He "totally backed away," a staffer recounts, replying that he wasn't CEO at the time of the merger (he was then Tribune's executive vice president and president of Tribune Broadcasting), and that each property has to do what makes sense for it. "The energy on synergy, the excitement and enthusiasm about synergy just wasn't there," the staffer says. Another staffer recalls FitzSimons saying that if Tribune forced synergy, properties might comply but engage in "malicious obedience" and allow it to fail.
"The fact that the synergy strategy so far has not proven out is no reflection whatsoever on the people who adopted it," says Robert Torray, president and chairman of the Maryland-based investment management firm Torray LLC, which owns more than 2 million shares of Tribune. Torray, who says he's close to FitzSimons, adds: "Things have changed a lot. The media business has been weak. Television has been weak. Radio has been weak. These are things that were completely unforeseeable. I think it's just one of those – we're in a transition period that could not have been foreseen five, six years ago."
Hindsight is always clearer than foresight, and the Tribune Co. was unquestionably star-crossed in the timing of the acquisition. But some of the more than 35 journalists, analysts and advertising experts interviewed by AJR raised questions about the fundamental business plan guiding the acquisition.
The strategy of enticing advertisers with a Los Angeles-Chicago-New York model may have rested on a flawed assumption: Newsday is located in Long Island, not Manhattan, and has the bulk of its circulation and resources there.
Anthony Marro, who preceded Schneider as Newsday's editor, respected Fuller and was pleased at the prospect of Tribune ownership. He'd increasingly felt that the Chandlers – with the exception of the legendary L.A. Times Publisher Otis Chandler – weren't committed to the newspaper business. His publisher, Raymond Jansen, wasn't hostile to the transaction either, but he was dubious that the sales strategy would work. "He told other people at Newsday that he was skeptical that they could generate additional revenue from selling in those three markets," Marro says. "I know that he was very skeptical of it right from the start... His feeling was in the case of Newsday that it got all of its national advertising not because it was in New York, but because it wasn't in New York." (Jansen declined to comment for this article.)
The three-market strategy had additional problems. Rishad Tobaccowala, chief innovation officer for Publicis Groupe Media, one of the world's largest marketing and ad agencies, says that advertisers look for local, regional or national opportunities to target particular audiences. "There's no one who says, 'I happen to have the top three markets as my market,' " he says. Tribune "can't get national advertising because they don't really have a national footprint. They just have three or four key markets... What am I buying if I put the three newspapers together? What am I buying special? Nothing."
Tobaccowala, who is also CEO of Denuo, a Chicago-based Publicis consultancy for emerging technologies, doesn't think Tribune executives talked enough to marketers and advertisers before the acquisition, or if they did, they didn't ask the right questions. "I think they were very insular. The hope was if they supplied it, there would be demand... This is an idea that probably made sense for 4 or 5 percent of the market, but it probably didn't make sense for 95 percent of the market," he says. "I don't know if anybody actually paid attention to the market. In hindsight, I'm wondering what the hell they were thinking."
Bob Shamberg is CEO of Newspaper Services of America, a Chicago-based company that places print ads for retailers such as Home Depot, Safeway, Sears, BMW and Qwest Communications. "Larger advertisers aren't looking for one buy, one bill," he says. "They're looking at, 'Who's going to reach my target audience most effectively?' " Like Tobaccowala, Shamberg says advertisers need a compelling reason to opt for a package instead of making the best individual media buys they can. "Based on the fact that it doesn't appear that they have struck too many deals, they clearly did not come up with a sufficient incentive to sell the package."
In September 2005, a Deutsche Bank report explored strategic options that might brighten Tribune's performance on Wall Street, including buying Knight Ridder. "While some of Tribune's woes are event-specific (eg, the Newsday circulation scandal) or partially out of Tribune's control..we believe that the market has grown increasingly skeptical of Tribune's overall strategy of owning both TV and newspaper in top 30 markets," said the analysis by Paul Ginocchio, David T. Clark and Matthew Chesler.
"In our view, the Top 30 market focus makes sense... We are far less convinced on the TV/newspaper dual ownership and convergence front. As several top-level newspaper executives (including a respected CEO) have told us, 'the jury is still out on convergence.' While convergence may be working in Tampa for Media General, the benefits in other co-ownership markets is ambiguous at best. We (and seemingly the market) are unsure that Tribune newspapers gain much from the company's ownership of TV stations."
What advertising synergies did materialize tended to benefit the TV stations. Bob Gremillion oversees Tribune's southern Florida assets, the South Florida Sun-Sentinel and WSFL-TV. In addition to enthusiastic cross-promotion between the two properties, newspaper sales managers or account representatives often bring a TV sales rep on calls to introduce them to clients. Newspapers more often deal directly with clients, whereas TV stations typically have to work through advertising agencies.
"The newspaper actually helps the TV station with client access, client contact and is responsible for a fair amount of revenue that goes to the TV station," Gremillion says. "It doesn't work in reverse very much because newspapers have all the clients that want to be in the newspaper."
South Florida was not part of the Times Mirror acquisition, but Vinnie Malcolm, vice president and general manager of KTLA in Los Angeles, echoes Gremillion's observations. Malcolm says joint sales calls between his team and the L.A. Times' peaked about a year ago, but it's "much harder to move the needle" in adding advertisers to the newspaper because the Los Angeles Times already dominates its market. "Our [advertising] base is smaller on the broadcast side."
Edward Atorino, a media analyst at the New York-based brokerage firm Benchmark Co., says that Tribune's strategy has yielded some benefits on the Web, but in terms of the synergies between KTLA and the Times, or WPIX and Newsday, "the success has been minimal. They simply haven't had much synergy." He adds that in Chicago, where the company owns the Chicago Tribune, the Cubs, WGN-TV, WGN radio and the news cable channel CLTV, it's "a different story. They dominate Chicago media, and synergy is very effective."
Atorino isn't sure whether problems replicating that success have stemmed from fragmented large markets, or the execution of strategy, or geography: Newsday is in Long Island and WPIX is in Manhattan; KTLA is in Hollywood and the Times is in downtown L.A. "Dennis FitzSimons didn't buy Times Mirror; John Madigan did," he notes. "Dennis took over, and the bottom was already falling out of the bag, so to speak... You can't blame top management because there was a crook down in Newsday."
From the beginning, Tribune executives faced an uphill battle in marrying two very different newspaper company cultures – a vital component for successful synergy. Some former Times Mirror editors chafed at the notion that they should use other outlets' stories or work with their sister newspapers and television stations (see "Uncertain Times," December 2004/ January 2005). On many fronts, Tribune executives initially responded by adopting an evolutionary approach, urging cooperation rather than ordering it.
"It would have been, I suppose, much easier to command that we were going to collapse foreign bureaus and collapse Washington bureaus and so forth, but that's not what we did," says Gerould Kern, vice president of editorial for Tribune Publishing, who has urged all the papers to share content and work together. "We've had tremendous positives come out of that. Every newspaper has a richer vein of journalism to draw on than it did before."
The measured approach frustrated Newsday's Schneider, who embraced Tribune's strategic vision of trying to add value across its media platforms as the proper path in a transformative media environment. "In New York, where Newsday and WPIX were the major assets, the execution was based on a very evolutionary philosophy. We were aggressive on promotions, but slow on the editorial side," he says. "We should have been more aggressive on working together."
When synergy did not net the anticipated successes on the business side, Schneider felt the company lost its focus. "There was fuzziness about the mission editorially, a go-slow philosophy, and the failure to recognize that there would be some additional resources needed," he says. "It was not only a way to reduce resources."
Even Chicago, generally touted as a synergy success story (see "Synergy City," May 1998), disappointed Schneider. Although he was impressed by the vigorous cross-promotion among media outlets there, "I didn't see any breakthrough kinds of work across all those areas."
James O'Shea, the Chicago Tribune's managing editor who was named as Baquet's successor in Los Angeles this week, says there are problems, albeit surmountable ones, with cross-platform cooperation. "There's a clash of cultures that I think people tend to underestimate," he says. "We're a very competitive group of people." In addition, television stations tend to favor faster, flashier fare – what O'Shea calls the "bang-bang stories" – than their print counterparts. He recalls that a joint project WGN about potholes in Chicago did work well, but only because of a special effort by both partners.
O'Shea says cooperation was further hampered by the fact that not all the editors "were on the same page, particularly John Carroll. I don't say this as 'It's his fault.' I think he had a genuine philosophical difference of the prevailing view of synergy, of how these things would work together." But O'Shea adds, "When you had the biggest paper in the group saying they didn't want to play, that was a major impediment to making the whole thing work."
Carroll says he never heard "synergy" defined very precisely and isn't exactly sure what it is. But whatever it is, he's not a fan.
Take the Times' spasmodic efforts to cooperate with KTLA. "We were being exhorted to work with KTLA, and we did a few things, but if you looked at KTLA, it didn't have much in common with the Los Angeles Times," Carroll says. "One Sunday there was a very slick advertising brochure about KTLA distributed in the Sunday paper, and it had profiles of their journalists, some of whom were exceedingly good-looking. One of the first pieces of information they had about the journalists was their sign of the zodiac. I thought, 'How in the world do you blend this with Los Angles Times journalism?' "
He adds tartly, "I suppose we would have been good synergists if we had started listing the zodiac signs of our reporters."
Carroll, who had been editor of the Baltimore Sun before taking over the Times, resisted what he viewed as pressure to "blur the provenance" of copy from sister papers by publishing it in the Times and labeling it as though it were staff copy. He also strongly believed that the Times, as one of the nation's premier papers, should be almost exclusively staff-written. "At one point, a very high-ranking person told me that people at one of the other papers were having morale problems because we didn't publish their stories," he recounts. His reply: "I can't take responsibility for morale problems at any paper other than my own."
Carroll, now the Knight Visiting Lecturer at the Joan Shorenstein Center on the Press, Politics and Public Policy at Harvard University, was equally obstreperous about Tribune's efforts at a group-wide launch of "Your Money," a Sunday section produced by the Chicago Tribune's business news department that offers user-friendly financial stories and tips.
No one directly asked Carroll to publish the new section. Instead, the request was put through the Times' business editor, who took it to him. But Carroll says he later learned his decision to forgo the section was "considered extremely bad form." He adds: "The section turned out to be lousy. It was an embarrassment to all the papers that ran it. I've heard from their editors, from a number of editors, about how chagrined they were to have it in their Sunday papers."
Kern considers the section a success that tapped into the publishing group's talent and gave many papers a new resource. "It has helped with advertising as well. The banking and investment sector of advertising was doing quite well for us, and this became a channel that was attractive to those advertisers. What's lost in that? I think there's a lot that was gained."
He says the section expands and contracts in each market depending on advertising; some newspapers run four or five pages, others only a few. The South Florida Sun-Sentinel in Fort Lauderdale uses portions of the package. "We haven't done this thing wholesale throughout our newspapers," Kern says. "I completely understand that local origination is really important if you've got the resources to do it."
Kern also oversaw the company's relocation of all its Washington bureaus into one space in late 2005. The combined center is an architectural triumph that preserves each bureau's individual identity and privacy while also offering shared spaces. Among those is a joint news desk, alternatively described to me as the "control room of the Starship Enterprise" and an "avant-garde martini bar," where editors gather two or three times each day. Journalists' initial fears that Tribune would simply toss everyone into one common area never materialized.
One of the company's goals for the relocation was to reduce duplication of "routine" stories. Kern compared the first six months of this year with 2003 and concluded that duplication has been cut in half, while the level of content-sharing in the newspaper group has gone up 50 percent.
But those efficiencies have come at a steep price for a group of papers with a tradition of outsized ambitions in their national and foreign coverage. While the L.A. Times and Chicago Tribune each absorbed about a 10 percent reduction before the move, the midsize and smaller papers were hit much harder. Newsday's renowned Washington bureau dropped from 14 people to six; the Hartford Courant's fell from five to one. After Sun Editor Tim Franklin objected, his bureau dropped from 10 to seven – an even larger cut had been considered.
Rafael Lorente, a former Washington correspondent for the Sun-Sentinel who left in July 2005 to join the University of Maryland's Philip Merrill College of Journalism as a visiting professor, says the cuts confirmed everyone's fears about synergy. "Everybody was always afraid that it was about budget cuts, and they told us it wasn't, but everybody was afraid it was, and that's what it turned out to be about." He adds that journalists in the Washington bureau generally get along well. "Had synergy been about cooperation, you probably could have gotten something decent out of it."
Lorente says the cuts shortchange the rich, community-based reporting that each correspondent delivers for his or her own newspaper. He had carved out a niche with his Haiti and Cuba coverage, cultivating national security sources and breaking a nationally important story about President Bush's Cuba commission in 2004. "L.A. is never going to care about Haiti the way Fort Lauderdale does, and I can't blame them," Lorente says. "The 'little papers' went out of their way to do things that were sort of value-added, to do stuff that the big papers might overlook, and it didn't do them any good."
After a much remarked upon period of friction between the L.A. Times and the Chicago Tribune, the two papers have established a partnership that will become increasingly visible next year if the Tribune Co., or at least its publishing group, remains substantially intact. "In the coming year, we're going to start a much more coordinated way of covering foreign and national news," Kern says. "The headline is L.A. and Chicago are going to form the basis for daily coverage for the network of foreign bureaus, and everyone is free to do enterprise." He describes 2007 as a transition year and says he hopes the new setup will improve foreign coverage by giving papers more flexibility.
Two Tribune papers, the Chicago Tribune and the Sun-Sentinel, have Cuba correspondents. Kern says the company is still developing the right strategy for its Cuba coverage; he expects to keep the status quo for now.
Newsday, which has garnered more Pulitzer Prizes for international reporting than either L.A. or Chicago, is planning to phase out its bureaus in Beirut and Islamabad, the last outposts of a proud legacy. The Baltimore Sun is losing its remaining foreign bureaus in Moscow and Johannesburg. Its correspondent in Jerusalem will become part of the Tribune network, most likely reporting to Chicago or Los Angeles rather than Baltimore.
"Honestly, it's been painful," Franklin concedes. "The Sun has a rich tradition of foreign correspondents going back 120 years. The bureaus have been a source of pride for the newspaper." He says the Sun remains committed to international reporting, but it will be largely project-focused.
O'Shea says journalistic synergy freed his reporters at the Chicago Tribune from writing some routine process stories, enabling them to focus more on projects such as Cam Simpson's 2005 series "Pipeline to Peril," which exposed how some subcontractors deceived and coerced foreigners into working on U.S. bases in Iraq. The series won the George Polk Award for International Reporting.
But it's hard to replace the depth of knowledge and unique perspective that each paper's overseas correspondent can offer, as Newsday's Mohamad Bazzi demonstrated so deftly during the Israel-Lebanon crisis, and the Tribune's two correspondents in Cuba have illustrated with their reporting on a secretive regime (see "The Limits of the Parachute" and "Cuba Countdown," October/November).
Deborah Nelson, the former investigations editor at the L.A. Times' Washington bureau, thinks the Tribune's move toward consolidating its foreign and national coverage is a "really bad idea," but "they've been able to slip it in." Nelson, who left the Times this summer to join the Philip Merrill College of Journalism full-time, calls the Washington setup "just one baby step away from a monolithic bureau" and cites the blurring of bylines and efforts at coordinating news coverage as further examples of "baby steps" toward a single news report. "By doing it so slowly," she says, "it can happen, and one day it's too late to stop it."
The cuts in Washington and in the Tribune's foreign bureaus are a small but potent symbol of company-wide tightening. The L.A. Times had 5,300 employees when Tribune took over; the staff now hovers at about 2,800. Although the newsroom was not hit nearly as hard as other departments, the editorial staff fell from about 1,200 to 940.
In a mesmerizing eruption of internal tensions, Times Publisher Jeffrey M. Johnson was forced out October 5, three weeks after he and Baquet publicly rebuffed their bosses' orders for more cuts. "Newspapers can't cut their way into the future," Johnson told his paper. "We have to carefully balance economic realities with serving our readers."
While anxious journalists have focused on the struggles over staff cuts and the autonomy of each paper's news operation, a related issue is playing out behind the scenes, one that could have major ramifications for the company's synergy strategy moving forward.
Joel Sappell, executive editor of L.A. Times Interactive and an assistant managing editor for the print edition, says the company is confronting a mixture of Web issues that raise fundamental questions about centralized versus local control and where the appropriate middle ground should be.
"As much as you see cutting at the newspaper, I've seen an equally controversial issue on the Web side of Tribune, another level that's equally roiling," he says. "While the newspapers are experiencing these pangs of centralization, so are the Web sites... It's the other story at Tribune right now, and it's a very, very high stakes one. There's a sense of urgency mixed with desperation mixed with uncertainty that doesn't always make for easy decision-making."
In the Chandlers' scathing June letter, their disdain for the Tribune Co.'s Internet strategy was unsparing, citing "a history of cost-cutting and retrenchment in these areas, its failure to purchase and invest in such businesses at the pace of comparable companies with more successful interactive businesses and its decision to limit local interactive growth initiatives at the newspapers in favor of a 'one size fits all' corporate approach."
The statement Tribune provided for this article listed five bullet points for Tribune Interactive "growth strategies." Among them was: "Provide national advertisers with a single point of entry and consistent ad placements across our network, enabling them to reach extremely targeted or broad national audiences." Another was: "Improve our technology to provide users with the highest quality news and information, including video and user-generated content, on a platform that allows to [sic] quickly roll out new features and functionality across our sites."
Metromix, Tribune's entertainment Web site that debuted in Chicago (metromix.com), has expanded into Baltimore and Orlando, and Tribune executives want to bring it to other markets as well.
"Wow, have you seen that new Web site with the edgier-than-thou 'tude?!" Sun columnist Laura Vozzella wrote sardonically in November 2005. "Baltimore.metromix has a take on Charm City that out-alternatives the alternative weekly... But here's the real shocker: This rebellion is brought to you by Tribune Co., The Sun's corporate parent. (And I mean that in the most corporate and parental sense of those words.)" She added that like similar sites linked to other Tribune markets, baltimore.metromix will be directed by an "executive producer" – based in L.A.
A Metromix expansion that creates consistent, targeted content would be attractive to advertisers, says Jeff Marshall, senior vice president and managing director of Starcom IP, a digital marketing group owned by Publicis. "If they can replicate this all across the different markets, they have the ability to capitalize on local advertising and national advertising. Right now it's mostly local." Marshall spoke with Tribune sales staff over the summer about the idea. "They said they've been talking about that and working on it," he recalls. "We talked about Metromix as a brand: Is that the right brand, or should it be a different brand?"
Tribune also is pressing forward with the Gen3 Project, a company-wide initiative to develop standardized templates for all of its newspaper Web sites. Individual papers could choose from an array of models. News of Yankees pitcher Cory Lidle smashing his plane into a Manhattan high-rise might have received a banner headline and a large photo on Newsday.com and more understated treatment on latimes.com.
Sappell describes Gen3 as "controversial among some editors in the constellation of Tribune sites" because of the difficulty in balancing the company's wish to create efficiencies with individual papers' desire to craft unique Web sites that appeal to local readers. But he does see potential for the standardized system to free local Web designers to focus on more creative initiatives. "This is not being done through fiat," Sappell says. "There is participation by all the Tribune Web sites on this..but ultimately the decision has been made, and we're participating in a made decision."
L.A. Times leaders wanted to expand two features on their Web site, but were frustrated by delays in securing cooperation from Chicago to move forward, according to three sources familiar with the discussions. The first piece, a destinations section, would focus on vacation spots popular with southern California travelers, including Mexico, Hawaii and San Francisco, and would allow readers to place airline or hotel reservations. The second feature, a Calendar section, was envisioned as the premier listings service in Southern California, an interactive space for neighborhood goings-on.
"The controversy has kept us from being able to develop either up to now," a Times executive said in October, adding that the fight over the Web initiatives contributed to the tension that led to Johnson's removal October 5. Eventually, a deal was brokered under orders from Tribune Publishing President Scott Smith and Tribune Interactive President Timothy Landon, who were acting with FitzSimons' support. The Times dispatched three product developers to Chicago for the summer to assist with projects that were a higher priority for Tribune Interactive before getting the go-ahead for its dual Web initiatives, first destinations and then Calendar, sources said.
Asked about launching a local version of Metromix, Sappell said in October that the site was being developed for Los Angeles, and "then the question is how Calendar and Metromix coexist. The answer is supposed to be that Metromix would appeal to a younger reader. But obviously there's a lot of concern among everybody on the Chicago side and the Los Angeles side about how these two can coexist."
Sappell also is working with KTLA to provide local breaking news video on both the station's site and latimes.com. In October, he said he soon planned to launch two daily two-minute newscasts produced by KTLA's staff for latimes.com as well as "commutercasts" offering traffic updates during the evening rush hour.
Early next year, he expects to expand his Web site's video coverage of live events. Each day, the Times will work with KTLA to identify breaking news stories that can be streamed live onto both the newspaper and television station Web sites. The Times will subsidize KTLA's costs to deliver the video streams, and the two properties will share revenues.
When Tribune advanced the notion that it should be able to package "content" in different ways and across different mediums, it plunged into the vanguard of a philosophy that is only now taking hold industry-wide. Newspaper companies have finally accepted that an era of transformation is upon them and that to survive they must find new outlets for disseminating their news and "brand" (see "Adapt or Die," June/July).
John Morton, a newspaper analyst and AJR columnist, says that synergy hasn't brought the benefits that Tribune anticipated, and he doesn't think that it will until the advertising environment brightens and the rules about cross-ownership of TV and newspapers are finalized. But he rejects that notion that synergy is a failure. When I point out that many advertisers apparently aren't interested in the cross-media packages Tribune is selling, he replies, "That's old thinking, though. The [media] companies that are going to do best are going to offer lots of options. There is going to be a convergence of information providers. Whoever owns the most horses in the race is going to be better off in the end."
O'Shea offers this observation about synergy between newspapers and the Internet: "As we evolve into the future, if we don't learn to make that kind of thing work, we're doomed. If we don't figure that out as an industry, I think there's going to be a lot of very, very small newspapers."
Whether Tribune chooses to salvage or sell the company, its turbulent synergy experiment holds important lessons for the rest of an industry struggling to find its place in a new-media world. When should media companies try to lead advertisers toward new ways of buying, and when do innovative sales strategies founder? How much control should a media conglomerate exert over individual properties? When does a centralized Internet strategy make sense as a way to attract national advertisers and increase efficiency, and when does it slow innovation, stifle creativity and stymie revenue opportunities at the local level? Is there any reason for a newspaper company to own television stations, or do strategic partnerships with outside stations work as well as those within a single company? With more newspapers handing video cameras to staffers, what can TV stations add?
Schneider, now dean of the journalism school at Long Island's Stony Brook University, adds a few questions of his own: Is the primary goal of synergy to drive readers from one platform to another – to cross-promote – or is the true motivation to add value to the journalism, making that company's brand synonymous with quality? Does a company have the nerve to stay focused if it hits a rough patch? Is it willing to add resources strategically, or is synergy really a euphemism for a tamping down of ambitions at once-proud papers?
"At its best, I always felt at the heart of this there was something very exciting, very dynamic, very worthwhile," Schneider says. "I think we may have had the right plan. That's the real tragedy. We didn't execute it; we didn't follow through; we didn't have the resources; we didn't have the staying power."
He adds: "When newspaper companies go through hard times financially, and they're subject to such pressures from Wall Street, they begin to throw stuff off the ship, and there's a willy-nilly quality about this. They're cutting just to stay afloat... They abandon their strategies prematurely. It's not just a Tribune issue."
Editorial assistant Raechal Leone contributed research to this report.