Friday, June 6, 2008

Tribune Co. Plans Sharp Cutbacks at Papers

By RICHARD PÉREZ-PEÑA
THE NEW YORK TIMES

Tribune Company newspapers like The Los Angeles Times and The Chicago Tribune will quickly cut costs — by printing fewer papers and employing fewer journalists — top company executives said on Thursday.

Samuel Zell, the chairman and chief executive of Tribune, and Randy Michaels, the company’s chief operating officer, revealed the cuts during a conference call with Wall Street analysts.

They also said the struggling company has looked at the column inches of news produced by each reporter, and by each paper’s news staff. Finding wide variation, they said, they have concluded that it could do without a large number of news employees and not lose much content.

Mr. Michaels said of the changes, “This is going to happen quickly.”

Mr. Zell said, “I promise you he’s underestimating the level of aggressiveness with which we are attacking this whole challenge.”

They said the company would aim for a 50-50 split between ads and news across all the news pages (excluding classified ads and advertising supplements). Mr. Michaels said this would mean eliminating 500 pages of news a week across all of the company’s 12 papers.

“If we take, for instance, The Los Angeles Times to a 50-50 ratio, we will be eliminating about 82 pages a week,” Mr. Michaels said, leaving the smallest papers of the week at 56 news pages.

Since being taken over in an $8.2 billion deal that took the company private in December, Tribune has downsized newspapers that had already been trimmed under the previous regime. During the call and in a note from Mr. Zell to Tribune employees, the executives signaled that bigger cuts are coming.

Mr. Michaels said that, after measuring journalists’ output, “when you get into the individuals, you find out that you can eliminate a fair number of people while eliminating not very much content.” He added that he understood that some reporting jobs naturally produce less output than others.

He said that The Los Angeles Times produced 51 pages of news for each journalist there, while the figure for two other Tribune papers, The Baltimore Sun and The Hartford Courant, is more than 300 pages. It was not clear whether that meant the ax would fall harder in Los Angeles, or whether the cuts would include Newsday, which Tribune has agreed to sell to Cablevision for $650 million.

The new approach would save on newsroom and newsprint costs, which together typically account for 25 percent to 30 percent of a newspaper’s operating costs.

James O’Shea, who was fired recently as editor of The Los Angeles Times for refusing to cut his newsroom staff, said Mr. Michaels’s statements showed a misunderstanding of how newspapers work.

“The problem is the papers aren’t producing ad revenue, and diminishing the journalism isn’t going to solve that,” he said. He said it was wrong to think that a paper could cut staff without reducing output and quality.

In his note to employees, Mr. Zell wrote that Tribune papers would be redesigned, beginning with The Orlando Sentinel, on June 22. Surveys show readers want “maps, graphics, lists, ranking and stats,” he wrote. “We’re in the business of satisfying customers, and we will respond to what they say they want.”

In an era of fast-falling newspaper ad revenue, Tribune has acknowledged that it barely has the cash flow to service its $12.8 billion in debt, most of which resulted from last year’s transaction, and that it must sell assets to meet coming balloon payments. The company plans to sell the Chicago Cubs and Wrigley Field.

“We’ve finalized the books for the disposition of the team and Wrigley Field,” and sent them to Major League Baseball for approval, Mr. Zell said in the conference call. “We expect that they will go out to private buyers sometime in the next week. Preliminary bids will be due give or take 30 days thereafter.”

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