The Wall Street Journal-20080122-Why Los Angeles Times Can-t Keep an Editor
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Why Los Angeles Times Can't Keep an Editor
James O'Shea found out two weeks ago at lunch in Union Station that he'd be the second editor in 14 months to part with Los Angeles Times Publisher David Hiller in a fight over budget cuts.
Mr. Hiller had asked for what would amount to $7 million in reductions: $3 million in newsprint costs and about $4 million from other parts of the budget, so that the paper would be able to devote news coverage to this year's political elections and the Olympics. In a memo sent to Mr. Hiller the previous week, Mr. O'Shea protested, not just against the cuts but the underlying strategy.
At the lunch at Traxx restaurant not far from the paper's squat moderne headquarters in downtown Los Angeles, Mr. Hiller said, "This paper just has to get smaller and smaller," Mr. O'Shea recalled in an interview. "I said, 'If that is the kind of paper you want, if that is the future that you see for the paper, then maybe you need an editor who believes in that, because I don't.'"
It seemed to Mr. Hiller that Mr. O'Shea was "unable to make the hard choices" by asking that the newsroom budget increase to about $123 million from $120 million. "They were proposing an increase in a year when, like all newspapers, revenue was down dramatically," the publisher said in an interview yesterday. "The idea that a newsroom budget would be increased was regrettably totally unrealistic."
Like Mr. Hiller, Mr. O'Shea came from the Chicago Tribune, where he had been managing editor and had been known as a dutiful manager of the shrinking budgets plaguing all newspapers today. He was expected to be less confrontational than his two predecessors at the Los Angeles Times, John Carroll and Dean Baquet, who had departed over budget cuts from Tribune Co., which acquired the Times in 2000.
"I could get $7 million out of the budget, that wasn't the problem. It was the process," Mr. O'Shea said. What he couldn't stomach any longer was the company's repeated calls for expense cuts to balance the budget. He believes the way to stop the downward spiral at the Los Angeles Times is about raising revenue, which could come about with a combination of cuts and careful investments in journalism.
"The way out of this problem is not retrenchment. If you don't invest in good, solid, accurate, fundamental journalism, you are going to just continue the decline and fall. You'll get to a point where you won't be able to reverse it."
Mr. Hiller, however, said the paper had invested judiciously. "We're looking to grow revenue or to improve the revenue picture everywhere we can . . . That is a very important part of the answer. But fundamentally the idea that you can increase spending in the newsroom, and spend your way out of the problem of declining revenue is wishful thinking."
While Mr. O'Shea insists that he was fired, Mr. Hiller said it was a mutual decision, but he said that "at some point it is more semantic. The fact is we didn't see eye-to-eye." Mr. Hiller said even before their disagreements he had expected Mr. O'Shea to be a transitional editor at the paper, serving only a year or two. "It was a question of whether we do it now or six months from now," he said, adding that he expects to soon make additional changes at the paper.
The latest drama at the Los Angeles Times is the story facing the broader newspaper industry. As circulation drops and ad revenues deteriorate, newspaper companies are struggling to figure out how to stay afloat. Third-quarter net income at Tribune Co., for instance, declined 7% as newspaper advertising revenue fell sharply. At the company's newspapers, which also include the Chicago Tribune, Long Island's Newsday and the Baltimore Sun, revenue declined 7% to $871 million. Ad revenue fell 9%, reflecting declines of 6% in retail ad revenue and 18% in classified revenue. Print ad revenue was down at the Times about 10% last year, or about $80 million, Mr. Hiller said.
"We need to change course and try something different because we've been cutting and cutting little by little over the last five years, and it hasn't done a damn bit of good," Mr. O'Shea said. "This paper at one time had 1,190 full-time employees. Now it is in the 800s. It has cut 6,000 pages of newsprint on the paper over the last several years."
Mr. Hiller countered that last year, the newsroom added more than 100 new people, about 50 to the online staff. Between attrition and a buyout, more than 130 employees left the newsroom. While the overall staff size decreased, he said, "at the end of the day, you have 100 new passionate, terrific people to the newsroom. This in an era of supposed cut, cut, cut."
Mr. O'Shea's exit comes little more than a month after Tribune Co. was taken private in an $8.2 billion buyout. Chicago real-estate magnate Sam Zell won effective control in the buyout and became chairman and chief executive of Tribune. The Chicago-based company owns a chain of TV stations, as well as newspapers.
As he takes control of the company, Mr. Zell is decentralizing it and giving more autonomy to each of the units to operate as they see fit, a move that gave Mr. Hiller more latitude in Los Angeles. Mr. Hiller says he didn't consult Mr. Zell about Mr. O'Shea's departure but that he told him about the decision.
"I've said loud and clear that I am returning control of our businesses to the people who run them. That means David Hiller has my full support. He carries direct responsibility for the staffing and financial success of the L.A. Times," Mr. Zell wrote in an email to employees Monday morning.
On the subject of cuts, Mr. O'Shea said Mr. Hiller told him, "'This is the number, and expenses cannot, cannot, cannot go up.' The funny thing about that is Sam Zell sent out this [earlier] email and said he didn't want people using the word can't."
Both Mr. Hiller and Mr. O'Shea said the paper was improving in some areas. After a string of circulation declines, the newspaper was one of only two of the top 10 U.S. dailies that reported growth in average weekday circulation during the most recent reporting period. Weekday circulation at the Los Angeles Times, the nation's fourth-largest paper, increased 0.5% to 779,682 for the six months ending Sept. 30, 2007 compared with 775,765 during the same period last year, according to the Audit Bureau of Circulations. Traffic to its Web site also grew. The site, latimes.com, had 2.6 million U.S. unique visitors in December, up 10% from 2.4 million during December 2006, according to comScore Media Metrix.
During his talks with Mr. Hiller, Mr. O'Shea pointed to some examples of revenue growth from the past year: The launch of a new Image fashion section, which drew an additional $6 million in ad revenues in 2007. Mr. O'Shea wanted to go through the newspaper section by section and devise business strategies to replicate the success with Image -- not rely solely on budget cuts. For instance, he says the paper could have looked at the Home section to see if revenues could be doubled. If that wasn't possible, then eliminating the section was an option.
"The method that David and the financial people want is they want to put you in a straitjacket. I think it is a sign of something that troubles the Tribune Company deeper. That is, they really don't have any faith in journalists to make these decisions. They treat you like you are budgetary adolescents that can't be trusted," Mr. O'Shea said.
In a farewell speech yesterday in the L.A. Times newsroom, Mr. O'Shea said to employees: "I disagree completely with the way that this company allocates resources to its newsrooms, not just here but at Tribune newspapers all around the country. That system is at the core of my disagreements with David."
Mr. O'Shea, who has been commuting for the past 14 months, says he is returning to Chicago.
Mr. Hiller said being the editor of the Los Angeles Times is still one of journalism's premier jobs, and there are several candidates he is considering to replace Mr. O'Shea, including some from inside the paper. He confirmed that managing editor John Arthur along with innovation editor Russ Stanton both are on the short list.
"We've got to pick up the pace of change," Mr. Hiller said. "We need to rapidly complete the transition to a multimedia-integrated newsroom. We also need to continue to make significant changes to the print paper to make it relevant, interesting and, even, fun."
