LA WATCHDOG--The firing of Austin Beutner as the Publisher of our Los Angeles Times by the Jack Griffin, the Chief Executive Officer of Tribune Publishing Company, is just the latest episode in the disastrous relationship between our paper of record and the Chicago based newspaper chain. And it certainly will not be the last as we deserve a civically engaged paper of record that is not constrained by Chicago’s bean counting, cost cutting mentality.
This relationship began in 2000 when the Tribune Company acquired Times Mirror, the parent company of The Times, for more than $8 billion. This exorbitant price was justified by Tribune’s plan to slash costs and improve operating profit margins. The arrogant Chicago management also tried to impose its Midwest culture on our news room and editorial board, failing to recognize that sunny Southern California dances to a different drummer.
In 2007, in response to Tribune’s depressed stock price, the controversial Chicago based real estate mogul Sam Zell led a $13 billion leverage buyout of the Tribune. But this resulted in the debt laden Tribune filing for bankruptcy in 2008. After the Tribune emerged from its contentious bankruptcy in 2012, the new owners elected to spin off its eight lagging newspapers into Tribune Publishing while Tribune Media retained its more valuable broadcasting assets (TV, radio, WGN).
[Note: Tribune Publishing’s market value of $275 million is dwarfed by Tribune Media’s market value of $3.8 billion.]
Unlike Gannett and Rupert Murdoch’s News Corp which spun off its lagging newspapers into public companies without any debt, the publicly traded Tribune Publishing is loaded with almost $400 million in debt, in large part as a result of a $275 million dividend paid to its parent company, Tribune Media, in July of 2014. In addition, Tribune Publishing was stripped of its real estate (including the Times Mirror Building in the heart of DTLA) and its very valuable investment in Classified Ventures (Cars.com, Apartments.com) which was later sold for a country fortune.
Beutner (photo right), who was recruited by Eddy Hartenstein, the Chairman of the Board and the previous Publisher of The Times, energized the newsroom and editorial board by stressing high quality journalism, the relaunching of the California and Business sections, the grading of the City’s elected officials, and in depth reporting on issues such as the horrific conditions of Mexican farmworkers, the drought, and the shenanigans at City Hall and DWP.
Griffin, a gruff cost cutter, resented Beutner’s local prominence and independence. He did not buy into his strategy to rejuvenate the paper, even though Beutner was “hitting his numbers” and developing a more engaged product that appeals to advertisers. Beutner was also critical of the Griffin’s Chicago bureaucracy, its centralized operations, and its failure to develop quality digital offerings on a timely basis.
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The spaghetti and meatballs hit the fan when the Tribune Publishing board rejected an offer by multi-billionaire Eli Broad to buy the Los Angeles Times and its sister paper, the San Diego Union-Tribune. While this bid was solicited by Chairman Hartenstein, it raised suspicion as to Beutner’s loyalty, a fact that Griffin used to oust Beutner.
But if anybody should be shown the door, it is the visionless Griffin as Tribune Publishing’s stock price has lost over 50% of its value under his management. But this would not be the first time that he has been canned as he was fired as CEO of Time Inc. (then a division of Time Warner) in 2011 after less than six months on the job because of his abrasive personality and management style.
Now is the time for the major shareholders, led by the Company’s largest shareholders, Oaktree Capital Management (18.3%), a $100 billion asset management company located in DTLA, and Angelo, Gordon (8.8%), a New York City based fund with strong connections to LA, to demand the resignation of Griffin and the reinstatement of Beutner as Publisher of our Los Angeles Times.
At the same time, these two firms, both of which have long standing relationships with Eli Broad, should create a tax efficient structure that will allow the Los Angeles Times and the San Diego Union-Tribune to be locally owned and operated so that they can focus on what is important to Southern California.
(Jack Humphreville writes LA Watchdog for CityWatch. He is the President of the DWP Advocacy Committee and a member of the Greater Wilshire Neighborhood Council. Humphreville is the publisher of the Recycler Classifieds -- www.recycler.com. He can be reached at: [email protected])
-cw
CityWatch
Vol 13 Issue 74
Pub: Sep 11, 2015
