Guessing Game: Times’ Suitor Likes Suburbs and Profits
The weather forecast for The Times Orange County: Cloudy, chance of storms.
Unsettling, shocked, anxious and, “It’s a hell of an expensive way to get rid of Mark Willes,” are some of the sentiments expressed last week by Times OCnewsroom staffers.
The recent announcement of the planned $5.8 billion sale of Times Mirror Co. to Chicago-based Tribune Co. leaves Los Angeles without a hometown-owned daily paper, but it also leaves much conjecture about the future of the Times OC.
The Times has never hinted that the Times OC may be in jeopardy. But many industry observers question the edition’s level of profitability, if any; they see the Times OC as remaining a weak sister to the Orange County Register.
For years now, the Register has solidified its No. 1 position in the county by scoring small, periodic circulation gains vs. the Times. For the six months ended Sept. 30, the Register had average daily circulation in Orange County of 333,031, to 187,636 for the Times. The Register’s Sunday lead was 388,117 to 253,378.
There has been speculation over whether closing the Times OC or scaling it back to a skeleton staff might not improve the Times’ overall bottom line, with any revenue loss due to a cutback in local coverage more than offset by the cost savings.
And with the cost-efficient Tribune Co. planning to take over Times Mirror, and certainly looking for ways to justify the hefty premium it is paying for the company (roughly double Times Mirror’s prior stock price), that speculation is being fanned.
Food for thought: The Chicago Tribune is known for its strength in the Chicago suburbs. Whether Tribune Co. plans to build up the Times’ strength in its Los Angeles “suburbs,” and whether it views the Times’ Orange County edition as a way to achieve that end, remains to be seen.
Steven Lee, the Times OC’s new president who just barely took over, did not return phone calls seeking his comment on the deal.
Times staffers interviewed for this story said even editors and the publisher appear to be in the dark about what the future holds.
Newspaper analyst John Morton, based in Washington D.C., said he believes the OC Times will survive and the journalistic quality will remain the same, but there may be a difference in how the papers are run. Morton points to the fact that the Tribune has fewer employees and greater revenue, with an operating margin of 29.2% vs. the Times’ 18.2%.
But if there are job cuts, it is likely to be on the business side, not the editorial side, he said.
“The last thing Tribune wants to do is damage the reputation of a company they just paid $5.8 billion for,” Morton said.
The Register itself speculated in its story on the Times-Tribune deal that it would likely lead to increased local news competition.
But a former ad executive with the OC Times said the Tribune is a better-run business. If Tribune Co. can’t improve the Times OC’s performance through revenue growth or cost savings, it might eliminate the edition, he said.
“Tribune Co. has to find a way to pay for the purchase,” he said.
Times staffers were looking forward to some answers to their questions during a meeting last Friday with Jack Fuller, president and CEO of Tribune Newspapers, at the Times’ LA headquarters.
An internal memo distributed last Monday by LA Times Publisher Kathryn Downing noted that if positions were cut, employees would be compensated with severance packages.
“It is too early to know the answers to many of your specific questions,” said a memo from Times Mirror CEO Mark Willes.
While uncertainty is the predominant feeling in the newsroom, there are sparks of optimism.
“I can’t imagine them just bailing on OC,” said one staffer.
Another hot topic in the newsroom is stock options. When the deal goes through, employees stand to make a hefty return on their stock and options. Each staffer was given 100 shares last year, said one reporter. n
