Sunday, October 02, 2005

Tribune Media's ailments

LA TimesNPR's David Folkenflik (on Morning Edition) had an update Friday morning on the woes surrounding Tribune Media, which "is facing an eroding financial situation compounded by circulation scandals that have left the company in crisis." In some ways Tribune's problems are emblematic of what happens when a relentless drive for ever-higher profits eats into a media corporation's (supposed) public service mission and a broader societal drive to maintain diversity through regulation.

Tribune is one of the country's larger media entities - media scholar Robert McChesney (author of Rich Media, Poor Democracy) would describe it as a "second-tier" media company, right behind the Big 5 (or 6 or 7, depending on what you count) TNCs such as Time Warner, Viacom, Disney, News Corp, and so on. (Other powerful "second-tier" companies include Liberty Media, Knight Ridder, and Sinclair Broadcasting.) Tribune owns some pretty major assets nationwide: nearly 30 broadcast TV stations, "superstation" WGN, the Chicago Cubs, and - most significantly for concerned newsies - some major newspapers, including the Chicago Tribune, Newsday, the Baltimore Sun, and the Los Angeles Times. And the company's in trouble.

The company's problems seem to lie primarily with their newspapers, which have seen falling circulation and loss of advertising revenues. According to the Folkenflik, the company's newspapers recently secured a profit margin of "only" 17.5 per cent (high by almost any other industry's measures, but low for the obscenely profitable mainstream media). In other words, Tribune's making bags of money but not enough, because Wall Street expects it to make even more. So the company's managers (and its shareholders) are willing to see deep cuts to get their profit margins up. However, Tribune's "focus on the bottom line" has seen many of its brightest news editorial talent defect to other publications. Cost-cutting at Tribune's most prestigious paper, the Los Angeles Times has, according to some, compromised the quality of one of the country's top papers. But Tribune's bean-counters seem to think that higher profits can only be regained by focusing more on entertainment and local news (of the "fluff" variety) and less on "hard" news.

The company's financial problems go deeper, however. The January 2005 decision by the Justice Department not to contest a federal court ruling that blocked a relaxation of media cross-ownership rules also hurt Tribune. When it recently acquired most of its big newspaper holdings from Times Mirror, Tribune was hoping to be able to keep both newspapers and broadcast properties in rich markets such as New York. (This reduces competition, enables greater "synergy," and allows media companies to pool newsgathering resources, e.g., between the newspaper and local TV news staffs, thus allowing the company to lay off a good chunk of its workforce; shareholders love that!). But with the old cross-ownership rules either still standing, or in some flux, the company doesn't know whether it'll be allowed to continue owning both.

(This state of affairs, frankly, is very confusing at the moment. As CJR Daily explains, back in June 2004, the 3rd U.S. Circuit Court of Appeals in Philadelphia rejected the FCC's sweeping recommendations to relax most ownership regulations. "The three-judge panel did, however, uphold the FCC's decision to lift the ban on owning a daily newspaper and television station in the same market. But the appeals court sought further clarification of this rule and other regulations" [My emphasis.] So the cross-ownership ban probably will finally go. But the FCC clearly is influenced by public opion and shifts in the political winds, which right now tend to oppose further deregulation in general. There's a new FCC commissioner, Kevin Martin, who's replaced the hapless Michael Powell; people are unclear about how Martin will act. So no-one can be certain that the FCC will, at the end of the day, actually lift the newspaper-TV cross-ownership ban. Markets hate uncertainty, so Tribune's stock price is suffering. Clear? No, not really, I know . . . )

Anyway, if the stock price keeps going down, and profits are less than the 20-30 percent "expected" by shareholders, it seems that the main thing to do is to make more cuts, especially in the newspaper division. And inevitably the thing that gets cut is hard news - the sort of thing news is supposed to help us be engaged citizens in a thriving democracy.

Makes you wonder if this is the best way to run a newspaper.

6 Comments:

Anonymous Anonymous said...

I tend to feel an absolute disgust for news and public service organizations that run their companies on the basis of a bottom-line. Yes, I understand that all companies need to have profits in order to survive in such competitive media marketplaces as TV, radio and newspapers. However, there is no reason that this interest in profit should undermine the quality of news output or prevent quality journalists from joining specific news teams because of economic reasons. An important way to get people to buy your newspaper or watch a news program is to have quality substance within that paper or program. This may be a very consumer-driven approach to understanding media profits, but more readers means better and more advertisers, which equals profits for these companies so concerned with their revenue, rather than their product’s intrinsic value.

-Libby Donaldson

10/04/2005 2:56 PM  
Anonymous Anonymous said...

Possibly I am just making this up in my head but it seems that media companies and companies in general today just duck out when the money starts to dry up even a little. Obviously the main point of any business is to turn a profit, why though do the companies get worried so quickly? I mean if they are the top dogs in the market making the most revenue it would seem they would have enough back up cash to hold out. The company could at least wait it out and try new things before just dumping the whole idea, just to make more income. AOL-Time Warner merged and then before you knew it they were changing the name back to just Time Warner. Although that is just a name they barely seemed to give it a chance. I guess it seems that if they have all this money then instead of getting all freaked out, the company should just put more into their product and the consumer will come.

-Josh Gravelle

10/05/2005 1:18 PM  
Anonymous Anonymous said...

As we learned in class, some of the earliest newspapers were actually started because of the lure of profits from advertising dollars. It is all well and good to think that the media is suppose to be run by an altruistic desire to serve the common good of the people, but human nature doesn't always fill this need. Greed and power are very powerful conditions of human behavior, but when greed is threatened, power takes a back seat. As the predominate desire for profits emerges, corporations will follow market trends to insure dividends for shareholders. Yellow journalism and penny papers showed this aptly with the stories, real and invented, that they printed to gain the larger circulation numbers and the profits that followed this. Altruistic writing seems to predominate more in magazines, on-line sites and blogs which tend to be written with a slant in opinion. So, without reading several of these, because of the apparent bias in these writings,it is hard to get the perspective of both sides of the story. We may well be heading to a future in news reporting that will actually be news research on our part---we will have to do the work to get the whole picture.

DJ

10/06/2005 6:50 AM  
Anonymous Alexandra Miller said...

I think it is terribly unfortunate that FCC regulations might force Tribune to cut hard news. Already I find trouble acquiring newspapers with hard news. When I do get my hands on the New York Times, Democrat & Chronicle and other newspapers of the like, the hard news is usually in the back. And so, already it is obvious that hard news takes a "back seat." However, the fact of the matter is is that the Tribune, like ANY OTHER company/industry/business/human being - is just trying to make money. That's what it's all about. So, they've got to do what they've got to do. Perhaps if they didn't cut more hard news then they would go out of business and before we knew it there would be NO newspapers ... let alone newspapers with soft news. I believe that the FCC should deregulate. I have never been a fan of the FCC's strict guidelines from the Howard Stern case , to this one. As long as the media industry is not completely comprised of monoplies, I think that the FCC should have a more hands off approach.

10/06/2005 1:05 PM  
Anonymous Anonymous said...

It is unfortunate that Tribune is suffering financially, under both their standards and those of stockholders, but I do not think that the credibility of their newspapers should suffer as well. It seems this is what they are doing however, by shifting focus away from hard news and more on "fluff". In terms of profit, this solution seems best to Tribune considering the ban on TV-newspaper cross-ownership. Although I don't support the way they are beginning to run their newspapers, I agree with the ruling of the FCC on this debate. If the FCC made their regulations even weaker than they already are, other big corporations in addition to Tribune would throw their hats into the ring. TV-newspaper cross-ownership would transcend the "fluff" and soft news of TV journalism right into print journalism, which leaves hard-news-seeking readers in the dust. TV news should stay separated from newspapers before all serious news is lost; it would damage journalists and engaged citizens alike.

- Kelly Nichol

10/13/2005 11:57 AM  
Anonymous Anonymous said...

The first question that comes to my mind is whether or not Tribune considers itself a serious news company or not. It seems that everything, all business, is purely focused on maximizing pofit while compromising quality. One would think that people who are in the media/news business would do everything possible to get the latest news and information to the public because it would in some way increase their image and therefor boost sales. This is obviously not working for Tribune seeing as they are working with a lowly 17.5% profit margin. But, with this in mind, when is the decision made to just make sacrifices in order to raise the quality of their publications. I know that this is unrealistic in our capitalist society, but as a consumer I am generally concerned with this trend. When I feel like most of the things I buy these days are made to fall apart within a certain time frame, forcing me to go out and spend more money, this issue with Tribune "making cuts" just reinforces my thinking that everthing is now all about money.

-Sam Minassian

10/25/2005 10:22 AM  

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