As the Tribune Co. empire unravels, CEO Sam Zell is growing increasingly desperate. Now he’s inciting an openly hostile relationship with his editors. In a call with media and analysts on Thursday, Chief Operating Officer Randy Michaels outlined plans to cut the trim sizes of many of the papers in Tribune’s portfolio in order to save on paper costs. But what will make him public enemy #1 with the company’s journalists were his incendiary statements about reporter productivity.
Noting that Los Angeles Times reporters turn out about one-sixth as many column inches as their counterparts in Hartford or Baltimore, Michaels issued a warning to writers and editors. “When you get into the individuals, you find out that you can eliminate a fair number of people while eliminating not very much content,” he said. “[W]e believe that we can save a lot of money and not lose a lot of productivity.”
Michaels did acknowledge that some kinds of reporting take more time than others, but his warning will earn him no fans among the ink-stained wretches of the newsroom. Reporters hate having their output measured like stacks of cordwood and the practice of counting inches, which is popular with accountants, is universally despised by journalists. The easiest way to jack up productivity, of course, is to rewrite press releases and cut back on editing, which creates a sloppy product that people don’t want to read.
It appears that quality isn’t much on the minds of Sam Zell’s management team these days, however. Michaels also outlined plans to tighten ad-edit ratios, eliminating about 82 pages a week from the LA Times alone. “A paper looks good at 50% advertising,” he said. “[Y]ou can take 500 editorial pages a week out of newspaper and have a 50/50 ad-to-content ratio.”
You can assume that Times staffers are already running the numbers to figure out how many positions will be cut to meet the news ad-edit guidelines. Using Michaels’ estimate of 51 pages per year per journalist and assuming a cut of 4,100 pages per year under the new guidelines, you get a total headcount reduction of 80. And that’s not including the fact that Michaels thinks journalists should produce a lot more copy than they currently are producing. If the Times were to double journalist output, then the paper could theoretically be run with half the editorial staff, and that’s before any page count reductions are taken into account.
Looking at Tribune Co. as a whole, one can calculate some assumptions about coming staff cuts. Michaels said the company “could take about 500 pages out of our newspapers every week.” That figures out to 26,000 pages per year. Assuming the productivity figures outlined above, that nets to a cut of about 100 reporters. Michaels also said that editorial costs make up only one-sixth of the total operating costs of a newspaper. So if you assume, conservatively, that three non-editors can be cut for each editor, the company is probably thinking of a reduction of at least 400 positions. And since everyone needs to be more productive, you can probably safely double that. Please note any errors in my thinking.
Romenesko posts a memo by Hartford Courant Executive Editor Clifford Teutsch that attempts to ease reporter anxiety. Teutsch says all the right things in paying homage to the value of quality reporting, but also notes that “We are going to have to make significant newshole and staff reductions. We want you to know what we face.” Zell and Michaels said that staffing decisions would be left with the management of individual papers but that Tribune would give those executives a lot of data about average productivity across the company’s portfolio to use in making those decisions. Assume that it will be hard for managers to justify maintaining staffing levels that are outside the average range.
Zell commented Thursday that “We underwrote the [buyout] expecting a continued suppression of print revenue, but nobody, including us, expected the kind of dramatic change that occurred in the first quarter.” I’m not so sure that everyone was as bewildered as Sam. Back in April, 2007, I noted in a post on my social media blog that in Zell’s first published interview with Tribune staffers, he had barely mentioned the Internet as a challenge to the paper’s business. This struck me as very strange for a man who was about to take on the challenge of running a vast media empire. Could it be that the Tribune Co.’s predicament was unpredictable only to Sam Zell?
Update: Alan Mutter understands the economics of the newspaper business as well as anyone. I this post, he underscores the seeming randomness of Zell’s tactics. Sam Zell has the permission of investors, managers and even line-level employees to reinvent Tribune Co. and even journalism to some extent, but his recent tactics smack of panic.
Quoting Mutter: “The problem is that no business can remain successful over the long term if the only way it addresses declining sales is by cutting costs. You not only begin to degrade the product but eventually run out of things to cut. Businesses must grow sales and profits to build value. If they go the other way for a sustained period, they will falter and potentially fail.”
This entry was posted on Friday, June 6th, 2008 at 8:03 am and is filed under BusinessModel, Journalism, Layoffs, NewMedia, Newspapers. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.