Tribune Co. Turmoil Highlights Industry Problems
SCOTT SIMON, host:
The future of one of the nation's most prestigious media companies keeps getting cloudier. The Tribune Company owns the Los Angeles Times, the Chicago Tribune, Baltimore Sun, and eight other daily newspapers, as well as the Chicago Cubs and more than 20 television stations. Dissatisfied investors in the Tribune Company have forced the corporation to put itself on the auction block. Now the auction was supposed wrap up over the last week, but it drew little interest. Still, there are reportedly some new parties now interested, including, possibly, Rupert Murdoch. NPR media correspondent David Folkenflik joins us now. Thanks very much for being with us, David.
DAVID FOLKENFLIK: You bet.
SIMON: And there was a time when the Tribune was considered kind of a model of how to expand into other media. What happened now that the newspapers are on the block?
FOLKENFLIK: Well, first off, was that in the late 1990s they picked up the Times Mirror company which was a smaller cadre of major newspapers, including the Baltimore Sun, Newsday, and of course, the Los Angeles Times. They did this right at the height of the market. In late '99 it went through in early 2000 and then, as you may recall, the bubble burst. At the same the Internet bubble kind of collapsed a little bit at that time. Since then, newspapers have been hit by a series of problems, just structurally. A lot of readership has migrated online, but the advertising revenue they get from online is not nearly as great as the amount they're paid for readers in print, in the old fashioned version. They haven't been able to figure out how to turn this corner. Newspapers haven't been able to deliver the promised increase in accelerated profits year over year. So that even though Tribune is a very profitable company, they, like the Knight Ridder Company a year ago, were forced to put themselves on the block. They're forced to do so, in large part, because of the Chandler family, which ironically enough was the one that sold Times Mirror back in '99.
SIMON: I have to ask you the name David Geffen comes into play.
FOLKENFLIK: It certainly does.
SIMON: A movie mogul who now says this is what I want to do with my life, own the LA Times.
FOLKENFLIK: That's correct. The one caveat about David Geffen is that he has made an offer specifically for the Los Angeles Times. When the Tribune Company management begrudgingly put the company on the auction block at the behest of the Chandler family, they said they would not consider bids for individual parts of the company. It could be that the management agrees, reluctantly, to sell the company off for parts - but unless that happens Mr. Geffen's not going to be in the game.
SIMON: There have been so many complaints that the Tribune has fired many personnel at the Tribune papers, specifically the Los Angeles Times. Would new owners necessarily stop that process, or what editorial changes might portend.
FOLKENFLIK: Well, it's completely dependent on who those new owners are. It's a real coin flip as to what direction this goes for a paper like the Los Angeles Times, long one of the bellwethers of print journalism.
SIMON: A lot of newspaper readers in all of those markets have complained about the cutbacks of the paper. And what's that meant, in what they pick up on their doorstep or pick up in the subway station every morning?
FOLKENFLIK: Well the Los Angeles Times, to take the sort of biggest example, used to have about 1,200 journalists some years back, not so many years ago. It now has about 940. And there was a plan afoot to knock out another 150 journalists from its staff. That's a significant diminishment in its reach and scope. It's seen even more severely, in some ways, at the smaller sister papers, like my old paper, the Baltimore Sun or at Newsday in Long Island -also a very distinguished newspaper, which no longer have foreign bureaus. They had award winning foreign coverage. Severely cut back, not quite eliminated their Washington coverage. You know, one of the things about newspapers is they really are the muscle that drives much of journalism in this country, that sort of inspires broadcast outlets to cover stories. And there's a diminishment in the number of full staffed news outlets really doing that in the way they once did. You know you get a market like a Los Angeles, it is incredibly wide geographically. It has, you know, well over 100 languages spoken widely there -very complex and yet the Tribune Company is asking the Times to cover that region and to cover the world with increasingly constrained resources.
SIMON: The newspaper business hasn't necessarily been a good business over the past few years. And if you own a lot of papers like the Tribune, it's particularly not a good business.
FOLKENFLIK: Well, staggeringly enough, they actually make terrific levels of profits, between about, call it 18 and 27 percent profit margins - terrific for most industries. The problem is, they haven't been able to sustain continued profit margins or increased profit margins that they had been over the years promising the major shareholders. But it's actually fairly significant profit levels.
SIMON: NPR's David Folkenflik, thanks very much.
FOLKENFLIK: Great to be here.
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