LA WATCHDOG-The stock of Tribune Publishing Company, the owner of the our Los Angeles Times and The San Diego Union-Tribune, has lost about two-thirds of its market value since the Company was spun off as a publicly traded company from Tribune Media in August of 2014. This has cost the Company’s shareholders almost $400 million.
Operating profits have also tanked by almost 50%, from $264 million in 2013 to a projected $145 million this year while revenues have dropped by less than 10%.
With this destruction of shareholder value, you would have thought that the controlling shareholders of the Company would have sacked Jack Griffin, the Company’s multimillion dollar a year President and Chief Executive Officer.
Unfortunately, this ham handed executive visited Los Angeles on the Tuesday after Labor Day and summarily fired Austin Beutner, the Publisher of our Los Angeles Times. While Beutner had done an excellent job of reinvigorating the newspaper by improving the its content and engaging the community, he was viewed as a threat to Griffin’s control of the Company as Beutner had a relationship with fellow Angeleno Eli Broad, a wealthy entrepreneur who had recently made an unsuccessful attempt to purchase The Times.
Griffin has developed a “Five-Point Transformation Strategy” to revive the Company and its nine daily newspapers which have seen double digit declines in advertising. But this plan appears to be flawed as it is more focused on cost cutting rather than revenue growth, quality content, and improved civic engagement.
Lip service is given to the benefits of “platform” publishing where the local markets can benefit from Tribune’s technology, marketing, and management. But Tribune appears to be unwilling to fund the investments needed to improve its web sites and mobile apps or develop new products or verticals to attract local and national advertisers.
The unwillingness of the Company and its Board of Directors to consider Eli Broad’s offer to purchase The Times and the subsequent firing of Beutner provide the major shareholders with the ammunition to jettison Jack Griffin (photo right), hire an experienced CEO, and replace the Board of Directors with qualified individuals that have experience with newspapers, new media, and disruptive technologies.
Tribune Publishing should also develop a new, long term strategy that engages its local readers and emphasizes high quality journalism, the creation of areas of expertise, vigorous oversight of our politicians and local government, and increased civic engagement while at the same time embracing new technologies to deliver content to a broad based and mobile audience.
To help finance the necessary investments, the Company should eliminate its dividend, saving about $18 million a year that would be invested in the news room or new and improved technologies.
During the recent investor presentation, Jack Griffin discussed maximizing shareholder value. But this may not be a valid concept for Tribune Publishing given the disruption in the newspaper business and the many other stakeholders who have a vested interest in quality journalism and their local communities.
One alternative would be to reincorporate the Company as a “public benefit corporation” which would allow the management and its Directors to consider goals other than maximizing shareholder value. For example, quality journalism, civic engagement, and the oversight of City Hall might be factors that may be considered in addition to the stock price and the shareholders’ economic well-being.
At the same time, Tribune Publishing may be able to develop a tax efficient, economically viable model that allows for local entities to take control of their “newspaper” while preserving some of the benefits of Tribune Publishing’s platform. This would apply not only to the newly formed California News Group (Los Angeles and San Diego), but other markets such as Baltimore, Hartford, Orlando, and even Chicago.
The current prospects for Tribune Publishing are not very encouraging given its deteriorating earnings trend and falling stock price. But this may be an opportunity for Oaktree Capital, the Company’s largest shareholder and the architect of Tribune Broadcasting’s emergence from a long and arduous bankruptcy, to make the best out of a bad situation by developing a creative, tax efficient strategy with new management and a more comprehensive mission.
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Petition – Free Our Los Angeles Times
The City and County of Los Angeles deserve a newspaper of record that, in the words of Austin Beutner, is its “civic conscience which holds accountable those with power, helps celebrate what is good in our community, and provides news and information to help us better understand and engage with the world around us.”
Our Los Angeles Times must continue to reengage the Southern California community by investing in high quality content, award winning journalism, and new technologies. It can no longer live with the “cost cutting to prosperity” strategy of its owner, the highly leveraged Chicago based Tribune Publishing Company.
To achieve the goal of a vibrant, engaged, and civic oriented LA Times, we call on Tribune Publishing Company and its major shareholders to spinoff our Los Angeles Times into a separate, locally controlled company and to reinstate Austin Beutner as Publisher.
Free Our Los Angeles Times. Sign NOW!
(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 79
Pub: Sep 29, 2015
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