Tribune Media's ailments

NPR'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.