LA Times cutbacks, papers for sale, and other speculation

I'm told a memo was circulated this weekend among Los Angeles Times staffers asking for volunteers to take buyouts as a way to lessen or avoid layoffs at the paper.

The Chicago Tribune, the Times's sister paper, laid off 20 people on Friday, "many of them" from the newsroom, WBEZ reported.

Times employees are in a state of anxiety, as LA Observed pointed out last week, as rumors of layoffs swirl amid continued efforts by owner Tribune Co. to crawl out of bankruptcy. Investors are impatient and layoffs are a quick way to improve the financial picture in the short term.

So, is this about boosting profits and satisfying debt holders? Or should we believe the Wall Street Journal's speculation that the Times could be being readied for sale - with a smaller payroll making for a more attractive sales price?

And since we're speculating... Could the Tribune be raising cash as a way to up its bid for the Orange County Register? The Register's publisher announced Friday that he'll at the end of September, which would indicate a deal is in the works. MediaNews Group had emerged as the top bidder for the paper, but negotiations broke down last month. This was followed by a flurry of layoffs in MediaNews's Southern California newspapers - a sign the chain is looking to up its ante.

From hell

James O'Shea, who was fired in January 2008 as editor of the Los Angeles Times, has a new book out later this month called "The Deal From Hell: How Moguls and Wall Street Plundered Great American Newspapers." A companion website is coming soon.

The book is a retelling of the history that led to a disastrous merger between the Chicago Tribune and the Los Angeles Times and the layoffs and bankruptcy that followed. I have a copy on my desk - it was delivered late Friday - but I haven't read it yet. The chapter titles give one a good sense of what's inside, as "Otis Chandler's Legacy" gets tarnished by "Market-Driven Journalism" and the inevitable march to "Zell Hell" begins.

"It would be easy to condemn the people who caused this modern tragedy as venal and evil," O'Shea writes in the preface. "Thousands of friends and colleagues the world over have lost jobs because of the way the industry has been managed. Some were venal, all right. But most of the people who led newspapers to this point in history were smart and thoughtful. They thought they were doing the right thing, and that's what makes the story of what happened so terrifying. It shows disaster could happen to anyone in any industry."

The book will be out June 28.

More furloughs for LANG

LANG employees will have to endure yet another round of furloughs. Fred Hamilton, CEO and publisher of the nine-newspaper chain, sent a memo today telling employees that they must take 5 unpaid furlough days between May 16 and July 2. LANGers will also stop accruing vacation between these dates.

For Hamilton to hastily order furloughs to be taken over such a short period of time indicates just how much pressure the company must be under to boost its bottom line before the end of the fiscal year (June 30). Indeed, Hamilton says in the same memo that LANG employees will be able to take an additional 5 paid holidays in the next fiscal year to make up for the short-term pain.

This leads me to wonder if this dramatic, last-minute action is related to a possible deal to buy the Orange County Register. LANG's parent company, MediaNews Group, is in a bidding war with the Tribune Co., owner of the Los Angeles Times, to buy the Register.

It's also likely the chain is simply trying avoid further layoffs, given the revenue demands of some of its investor owners, who agreed to swallow $765 million of debt as MediaNews emerged from bankruptcy last year. The furloughs and vacation freeze come a week after layoffs at the Long Beach Press-Telegram. Hamilton said the latest actions should keep future pink slips to a trickle:

...today's action does not preclude other cost reduction measures including and not limited to reductions-in-force. At this time such actions will likely be limited and will continue to be an expense reduction alternative until the economy and our performance measurably improves.

As expressed in the past, we regret any inconvenience this action may cause you but until our financial challenges are clearly behind us, such actions are necessary.

The full memo is here.

(This post was edited)

Four things that won't surprise you

1. Journalist and pundit Jonathan Alter is leaving Newsweek, possibly for a gig at Bloomberg.

2. Visits to the New York Times homepage are down between 5 percent and 15 percent since the paywall went up.

3. Tribune Co. and MediaNews Group are the leading bidders for the Orange County Register.

4. A freelancer has sued on behalf of unpaid contributors to AOL-Huffington Post.

(All links found via Romenesko)

Bidding deadline for Freedom Communications approaches

Bids to buy Freedom Communications, the publisher of the Orange County Register, are due by tomorrow, the Wall Street Journal reports.

Bids for assets of the Irvine, Calif., media company, which owns the Register as well as other newspapers and local television stations, are due Thursday, the people said. Possible bidders include Denver Post publisher MediaNews Group Inc.; Tribune Co.; Gores Group; and Platinum Equity, owner of the San Diego Union Tribune, these people said.

-snip-

It remained unclear what prospective bidders might offer for Freedom's assets and which pieces each might pursue. The entire company won't likely fetch more than $1 billion, said people familiar with the matter.

What's ahead for MediaNews - and what's left behind

In the best of possible worlds, the shakeup at MediaNews that left company president Jody Lodovic without a job and CEO Dean Singleton with a (severely?) diminished role would serve as an object lesson in how moral cheapness leads to downfall; a final judgment on mass consolidations and layoffs divorced from any sense of journalistic mission, ethics or service; karma for all the dedicated journalists told their dedication was a childish distraction, and for all the readers told they must accept lower and lower standards under the same brand name.

But, I doubt such lessons will be learned. There are now two forces at work in MediaNews, and neither of them is reflection. The first will accelerate change, which is inevitable. The second will shape the change, which is worrisome.

The first force results from the removal of Singleton as CEO. The new directors are no less interested in moneymaking than he and no more interested in quality journalism. Yet, they come without the baggage and ego that clouds strategic decision-making.

The second force results from the removal of the baggage and ego that at least served as a check on the most drastic consolidation plans. The new board is not going to try to preserve a newspaper company, as Singleton has. This could be a benefit to innovation, creating a potential for a sane and creative digital strategy (which is sorely lacking in MediaNews). But this also removes a check on pain.

Martin Langeveld, a former MediaNews executive now at Nieman Journalism Lab, has an excellent post about what to expect, and he makes a convincing argument that Singleton no longer much of a hand in in the company:

While Singleton may have ideas for strategic consolidations, without Lodovic he lacks the necessary financial engineering savvy, and without control of the board, he can’t make anything happen. The new title for Singleton looks and feels like a face-saving ambassadorial position.

In other words, it is time to look beyond Lean Dean. He is not the future.

So, who is in charge and what do they want? Alden Global Capital is the group that now has board control of MediaNews, and the investment company has a deep financial interest in a number of other distressed newspaper companies, many of which might be ripe for a leveling consolidation. Again, from Langeveld:

Clearly, Alden is the outfit with the most skin in the game, having investments in MediaNews, Freedom, Philadelphia Media, Journal Register, Freedom, Tribune and Postmedia. (Incidentally, as a further extension of this network, JP Morgan Chase, which has been involved in the Tribune, Freedom and Journal Register reorganizations, is the largest stockholder at Gannett, with a 10.2 percent “passive” investment.)

With all these interrelationships among investors and “distressed” newspaper firms, it’s not hard to see why Dean Singleton might say that achieving some kind of “consolidation” will be a full-time job. Still, it seems unlikely that Singleton will get to pull the strings, when the money behind the interlocking investment structures is controlled by billionaire Randall Smith, Alden’s founder, who built his fortune through investments in junk bonds and distressed properties. Alden acquired most of its newspaper stakes through its Alden Global Distressed Opportunities Fund, which it launched in 2008 and which is now worth nearly $3 billion. Alden has offices in New York, Dallas, Dubai and Mumbai, along with a tax-haven presence on the Channel Island Jersey.

The beginning of the consolidation process is likely to be here in Southern California, with some form of merger between MediaNews Group's Los Angeles Newspaper Group and the Orange County Register, owned by Freedom Communications. But Alden also has a stake in the Tribune Co, which owns the Los Angeles Times. This could lead to a distribution partnership that serves as a basis for mergers in other parts of the country.

Again, Langeveld:

For example, in New England, a combination of MediaNews, Journal Register and Tribune would have properties in Connecticut, Rhode Island and Massachusetts — totaling about 25 percent of circulation in those states, on a par with the current California partnership. On a countrywide basis, the companies in which Alden appears to have a stake and some degree of influence, as detailed above, have about 15 percent of all circulation and if fully merged, would be about 10 percent bigger than the current champion, Gannett.

Hopefully, we'll see more reporting on Randall Smith, the billionaire owner of Alden, and get a sense of where he wants to go.

Another Tribune Co. exec bails out

Tribune Co. COO Gerry Spector announced he is leaving after three years on the job, the Chicago Tribune's Tower Ticker blog reports. Spector's departure appears to be part of the de-Zellification of Tribune, as part of a deal to dig the company out of bankruptcy.

From the Tower Ticker:

Spector's decision to leave at the end of the year was announced Tuesday by the four-man executive council  to whom he has been reporting since October's resignation of Randy Michaels as chief executive of the parent of the Chicago Tribune and other media properties.

 -snip-

Spector, 63, who first allied with [Sam] Zell as a 25-year-old accountant, held senior management roles in a number of Zell's ventures and played a critical role in building his property management company from scratch.  He first became an officer of Equity Financial and Management in 1973.

Like his boss, Spector is a motorcycle enthusiast who traveled the globe as a member of Zell's Angels. A graduate of Roosevelt University and Senn High School, Spector spurned suits and ties for a colorful collection of sweaters but generally maintained a much lower profile than either Zell or Michaels.

(found via FishbowlLA)

Four in the morning

1. Tribune Co. announces a modest profit-sharing plan with employees and better employee outreach. Romenesko

2. There are some leaks WikeLeaks founder Julian Assange cannot abide. Cutline

3. US population grows slowly, Census data show. California's population grew 10 percent, but for the first time in the state's history, it will not add another House seat. LAT

4. The FCC is poised to adopt net neutrality standards that no one seems to like. WaPo

Four in the morning

1. A welcome respite from the Larry King love fest: "As refreshing as it has been that King generally checked his politics at the door, it also happens that he sometimes left his brain there too." LAT (via LA Observed)

2. The deal that gave the Tribune Co. to Sam Zell, and landed the company in bankruptcy, also made many executive rich(er). The Chicago Reader got a list - and points out that the bankruptcy court might claw back some or all of it. Chicago Reader

3. The whitewashed wall at MOCA that the LA Downtown News first reported on is finally starting to get the attention it deserves. fishbowlLA

4. The Rolling Stone website is no longer a complete mess. fishbowlLA

Reuters America created, Tribune Co. interested*

Thomson Reuters has launched a wire service, called Reuters America, to compete with the Associated Press. The content comes more cheaply and that caught the attention of the still-bankrupt Tribune Co., which signed up to be RA's first client. According to fishbowlLA, the contract could save Tribune, which owns the Los Angeles Times, up to $4.5 million a year - any effect on quality is yet to be determined.

*Noted: For those who worry Thomson Reuters might do its work on the cheap... Remember when head of Thomson Reuters said this about foreign coverage?: "Why does The New York Times need to have 600-700 journalists? Why not 30 journalists with 30 apprentices?"

Feds probe Tribune Co. deal

The Labor Department has opened an investigation into Sam Zell's leveraged buyout of the Tribune Co., the Chicago Tribune reports.

From the story:

The U.S. Labor Department is investigating Tribune Co.'s employee stock ownership plan, as well as Lisle-based GreatBanc Trust Co., hired by Tribune Co. to serve as plan trustee and represent employee interests in the $8 billion deal, according to Tribune Co. bankruptcy filings.

Court filings show that the Internal Revenue Service also has audited the ESOP, which Zell employed in the novel transaction to shield Tribune Co. from sizeable tax obligations once it went private.

Los Angeles controlling

As a consequence of the changes made in the Tribune Co. bankruptcy case, the Washington bureau of the Los Angeles Times will once again be controlled by the Los Angeles Times, LA Observed reports. When Sam Zell took over the paper, the huge Times bureau merged with the smaller Chicago Tribune's bureau, and much of the editorial control was handed to the Chicago bosses. In the two years since, many of the Times' most experienced reporters abandoned ship, leaving a much smaller bureau in DC to serve the Tribune chain.

Zell to go

The news was forecast more than a year ago: Sam Zell will leave Tribune Co. once it emerges from bankruptcy proceedings. The Wall Street Journal reports that Zell told CNBC, "I think when we're done with the bankruptcy process I will turn it over to whoever the creditors decide they want to run it, and wish them a lot of good luck."

That Zell is leaving on his own volition is one way of looking at it. Another way is that the creditors are going to strip him of his financial stake in the company, which is what gave him control over Tribune, and send him on his way.

Michaels gone

The slow-motion firing of Tribune Co. CEO Randy Michaels has finally reached its end. He's gone, a board of four will take over until a new CEO is named. LA Biz Observed

Tribune Co. is supposed to file bankruptcy plan today

The Wall Street Journal reports that Tribune Co., which owns the Los Angeles Times, Chicago Tribune and other media outlets, will file its plan to emerge from bankruptcy sometime today. A former News Corp. executive, Peter Chernin, is on a short list to replace Randy Michaels as CEO.

From the Journal:

People familiar with the matter said Mr. Chernin is being considered, and might be interested in, heading Tribune's new board. His spokesman said he isn't interested in the CEO job but declined to comment on whether he was approached about or is interested in becoming chairman ...

Tribune's post-bankruptcy team isn't expected to include Chief Executive Randy Michaels, who is expected to resign by the end of the week after damaging revelations about the company's culture. People familiar with the situation say he will be succeeded temporarily by a four-person team comprising Tony Hunter, publisher of the Chicago Tribune; Eddy Hartenstein, publisher of the Los Angeles Times; Nils Larsen, chief investment officer at Tribune; and Don Liebentritt, Tribune's chief restructuring officer.

Randy Michaels watch, day three

Tribune Co. CEO Randy Michaels has "decided to resign," according to the Chicago Tribune, and company executives have a succession plan in the works that includes Los Angeles Times publisher Eddy Hartenstein.

From the story:

Randy Michaels, Tribune Co.'s embattled chief executive, has decided to resign his post at the Chicago-based media company and intends to leave the company before the end of the week, sources close to the situation said.

He will be replaced by a four-member office of the president that the sources said would comprise Eddy Hartenstein, chief executive and publisher of the Los Angeles Times Media Group; Tony Hunter, president and publisher of the Chicago Tribune Media Group; Nils Larsen, Tribune's chief investment officer; and Don Liebentritt, chief restructuring officer.

The development comes after weeks of turmoil at the bankrupt company, brought on by assertions that Michaels and his management team displayed boorish behavior and fostered a sexist, hostile work environment. The Tribune board met Tuesday, but no announcement on Michaels' fate followed.

-snip-

The sources said Michaels had willingly decided to make his exit, having concluded that it was best for the company under the circumstances. He and the board had determined that the turmoil was distracting employees, threatening to hurt business and complicating the company's efforts to emerge from a contentious bankruptcy process.

Does anyone else think the unnamed sources sound a lot like the company executives who forced Michaels to willingly resign his job?

Tribune has done a good job of turning what should have been a single "CEO fired" story into multiple days of incremental updates and anonymous leaks that have probably bored most readers and will end with Michaels announcing he's going to step aside for the good of all involved.

Tribune innovation guru Lee Abrams quits

Lee Abrams, chief innovation officer for the Tribune Co., quit today, two days after being suspended for sending out a companywide memo with a racy video parody attached.

The Chicago Tribune summarized his tenure at parent Tribune Co thusly:

Championing change at Tribune newspapers and broadcast outlets, Abrams repeatedly accused TV news of clinging to a late-20th century look, sound and feel. He wondered aloud whether readers knew that a newspaper dateline meant the reporter was actually writing from the location where the story occurred.

Abrams also advocated new and different styles of storytelling and conveying information. In Houston, where the Tribune TV station has virtually no viewers to lose, he was developing an anchorless newscast.

It's not known what will happen to Abrams' Tribune projects and initiatives with his departure.

 That's about as impartial as it gets.

Lee Abrams suspended, but not for the right reasons

Tribune Co. innovation officer Lee Abrams got suspended today for emailing around a memo with links to "inappropriate" videos, including a parody video from the Onion labeled "Sluts." It's likely he'll be fired.

However stupid this memo was, it's really not the reason Abrams should be suspended. How about all of the other memos Abrams sent out that simultaneously failed to innovate and succeeded at breaking every rule of effective communication? Indeed, is an Onion video really more harmful to the Tribune Co. than having its Chief Innovation Officer say this (blanket sic):

I was in Los Angeles, sitting in this casual little meeting waiting for someone to show up, and there was this lady who had just got back from four years in Iraq, I forgot her name, I met 300 people in two days, and she was telling me about security problems, bullets in the background and all that, and it really struck me that there should be pictures of her with Iraqi children in the newspaper to show she was there. Whereas in the newspaper, it just says, “Times Staff Reporter.” I really never thought about it, that there was really a person over there going through hell to get this.

Or write this:

Think like your reader. Were does the paper intersect you reader's life? If you had a real job what stories could we collect that would make your live easier or make you smarter..

Or any of this:

Historically, TV kills newspapers in NOTICABILITY because it's while its BETTER CONTENT in print, it's usually not packaged very well and doesn't get the traction it deserves. A little of what CNN and FOX do ala "Historic Election 2008" with big logo, intro music and always at a reliable time are components we can all do better...or hopefully BEST ... or we'll be handing it over to other media...and that would be tragic.

Frankly, I'm more offended at his punctuation choices and his gratuitous use of the caps lock to MAKE HIS POINTS than his latest memo.

Having heard Abrams speak to the LA Press Club, I'd say he's a perfectly nice man who has had some interesting thoughts about broadcasting, especially radio. His rambling memos, however, show a contempt for the care and thought most reporters put into their writing, as well as a willful ignorance about what journalists actually do. They are mind purges that, even when they get right what newspapers do wrong turn, are not insightful or useful. He did more to help blogs like mine than he ever did for media outlets that were supposed to benefit. He should have been let go long before he hit send on the latest memo - his bosses owed him, and every other Tribune employee, that kind of good judgment.

(h/t LA Observed)

Tribune might soon emerge from bankruptcy

Bankruptcy proceeding rarely lend themselves to gripping narrative; and so it goes with the Tribune Co. bankruptcy case, as the media conglomerate slouches toward the exit door with senior and unsecured creditors, but not junior creditor groups, in tow. From the LA Times:

Tribune Co. and several of its most important creditor groups announced a broad new settlement Tuesday that brings the company closer to resolving its nearly 2-year-old bankruptcy case.

-snip-

Still absent from the settlement, however, are several key junior creditor groups, including major bondholder Aurelius Capital Management, a litigious New York hedge fund known for disrupting large bankruptcy cases. Sources close to Aurelius have said the fund plans to file its own plan by the court-imposed Oct. 15 deadline.

So we'll have a clearer picture by late Friday as to how this drama is going to end.

NY magazine can think of 13 reasons to dislike the Zell/Michaels era

Some are new (to me), some are old. The list includes radio stunts:

Radio stunts, like CA$H GRABS ("in which a viewer was led into a bank vault and allowed to scoop up dollar bills," sometimes cheered on by Hooters waitresses) were inserted into evening news broadcasts at member TV stations.

 And bonuses:

...the top level cronies of Zell and CEO Randy Michaels (he hired about twenty top managers from his former days as a radio manager and shock jock) received a total of $57.3 million in bonuses going into 2010. The previous year they only made $5.9 million in bonuses. 

There are 11 more, as you might have guessed.