Tribune

Critics can say what they want about the diminishment about the L.A. Times. Its news presence and ability to set agendas, through its reporting and opinion pages, is certainly reduced, but it’s still got the only megaphone of its kind in town. As Gabriel Kahn, a University of Southern California journalism professor and WSJ alum pointed out to me this week, even newsletters that aggregate local news — from such sources as the L.A. Business Journal and KPCC’s Maven’s Morning Coffee, rely heavily on the Times for their citations. Consider that an indication that the next generation of rip ‘n read — dailies’ long-standing complain against local radio news stations — uses the same raw resource as the first one, the daily newspaper’s vast newsroom.

What lesson we’re seeing reinforced: No matter how much anyone may pre-bury the legacy daily, some people understand the huge and remaining value of media today. So maybe a different question needs to be asked. Not the almost trite one — “When will dailies disappear?” — but a new one: “Who will own and steer these old titles into the heart of the 21st Century?”

The new board’s mandate, of course, is to maximize its take on the sale. Tribune newspaper profits run at the roughly $200 million level, maybe a third of which comes out of L.A. So, take the market multiple of 3 or 4 times that number as a price — or $600 million-plus — for the eight papers, even though underfunded newspaper pensions put a drag on that number. Then, if the inflamed passions, stoked by the Koch bid, produce a higher selling price, so much the better.

The board clearly is aiming for a single deal. One deal reduces transaction costs and deal risk, and speeds closing. So who’s likeliest to play in a single auction for the eight Tribune papers, which also include two non-metros in Newport News, Va., and Allentown, Penn.?

The likeliest four: the Brothers Koch, Rupert Murdoch, the B group from L.A. (Eli Broad, Ron Burkle, and Austin Beutner, a well-connected trio of moneyed liberal lineage), and Aaron Kushner’s 2100 Trust.

For the Kochs, the purchase would be a seem to be an extension of their political wars by other means. Of course they protest that notion, and the only track record we have to go on is their profound influence on conservative activist American politics over the last several years.

Murdoch’s L.A. TV licenses come up in 2014, so the cross-ownership issue is immediate and real, and with the FCC in appointment limbo, he’ll not get the waiver relief his lobbyists had hoped to win by now. Flip a coin and I say Rupert goes with his gut and bids.

If he indeed goes for the Times (and other titles, if necessary), consider that Murdoch couldn’t ask for a better competitor than the Koch Brothers. No one’s out in the streets protesting a Murdoch takeover of the L.A. Times or Chicago Tribune. Even Koch opponents whisper that Murdoch would be better — the gray, if not white, knight, to the black hats of the Kochs. It’s a new parsing in the post-Sam Zell era: How do you judge potential ownership these days, except on a relative basis?

Today, though, most of the reporting power, much of the brand power, and thepolitical power still resides in big companies and their leadership. We may well get our strongest display of that early in 2013: In Washington, the FCC cross-ownership debate may move to center stage in January. And around the same time, we’ll probably see the Tribune newspaper auction. As new Tribune CEO Peter Liguori, a broadcast exec, remakes the company as a TV/video shop (WGN America, here we come!), some of the most influential American nameplates — the Los Angeles Times, Chicago Tribune, and Baltimore Sun, among them — will all hit the market at one time. Though 2012 has been a time of unprecedented change, it may prove to be prologue to the year to come.

So Thomson’s ascension is no surprise (“Nine Questions as Murdoch Splits The News Corp. Baby”). Sure, he’s an editor — but he’s a News Corp. editor, and has been for a decade. Robert Thomson has been well schooled in the College of Murdoch. He’s a strategic news executive with a good sense of how emerging editorial and business models mesh, or sometimes collide, in the digital age. Further in the U.S. and Australia, News Corp. has put innovative and strategic business leaders in place as Dow Jones and News Limited move forward — so he has a bench in place. In the U.K., the business questions are more profound, as are concerns about the economy and the deepening business model gloom of the U.K. press overall.

Tribune’s own market assessment of all its eight newspaper properties, part of the bankruptcy proceeding, came in at $623 million, compared to $2.85 billion for the broadcast business. Without competitive bidders, that amount may be optimistic. With competitive bidders — especially in L.A. and Chicago — it may be low. For round numbers, let’s say a competitive bidding process prices the Chicago Tribune and L.A. Times at a combined $600 million. That’s a pricey number given the cash flows of the two papers, especially given that those meager cash flows have only been achieved with continuous cost-cutting. It’s an above-market price, and the owners would need a heedless-to-market buyer to pay it.

Enter Rupert Murdoch. He won his prized Wall Street Journal and Dow Jones from the Bancroft family. He paid $5.6 billion, and then wrote down about half that value within a couple of years. He knew he was overpaying — but it was what he needed to do to get what he wanted.

So, first question: Can Murdoch buy these papers?

Well, he’s got the money and control of News Corp., even if investors have been making increasing fuss over that family control. The company should end the year with cash of something less than $9 billion after it completes planned Foxtel TV acquisitions in Australia.

There is the little matter that News Corp. is in the process of splitting in two. Pressured both by Hackgate and those restless investors tired of the drag the newspaper holdings were having on profits, Rupert agreed to split News Corp. into two companies, one essentially TV- and entertainment-oriented and one largely newspapers. That split, though, isn’t scheduled until roughly mid-2013.

The Tribune properties will come on to the market earlier, probably around the beginning of the year. So pre-division, how exactly does Rupert take about five percent of his remaining cash to put it into the old business? You can bet News Corp. finance people are readying that analysis and argument.

Paid. Magazine. Re-purposed. These are words that didn’t seem to have a lot of commercial value a scant three years, and certainly didn’t appear much together.

AOL is hardly alone in rethinking these big questions. We’re seeing a cascading experimenting around packaging and repackaging content from coast to coast, much of it so far unannounced, but in planning. The movement has been building (“The Newsonomics of 100 Products a Year”) and we can see it including newspapers, magazines, online-only companies, book publishers, and public media. Each are taking new twists, looking for formulas that fit their emerging business models.

At The Boston Globe, a made-for-tablet and smartphone design magazine has joined its food ebooks. The Chicago Tribune, I’m told, is looking at about 20 ebooks to be tested over the next year. Frommer’s is starting to parcel out its guidebook content, in smaller bite-sized slices, with a partner. Wired is trotting out its first ever issue — a retro rocket blast from our collective past — in the Apple app store. ProPublica is repurposing its free web content in paid ebook form, at a faster rate, one a month for the last three months. In Portland, Oregon Public Broadcasting is reimagining its publishing future.

Once you’ve clustered — centralized to the max the administration, circulation, advertising, production, finance and newsroom tasks of all of your own owned properties, you look next door to other companies, for fresh cluster bait. (Wait a minute, wasn’t that the plot line in Aliens or The Blob?)

In addition to this super-clustering, there’s one other big benefit of merger: getting rid of one company’s corporate overhead. Savings here could amount to $25 million or more – annually — for the mid-sized companies in possible play.

Still, it will be an intriguing test. Beyond the immediate test, we’re seeing how flexible news content delivery is getting to be. Demand Media is selling content to USA Today and Hearst papers, while Reuters and Tribune buddy up to Examiner. Mix and match is the order of the day and un-bundling, just like what cable consumers are asking for, is happening. News companies, seemingly on the fly, are more and more becoming more discerning buyers, and sellers, witness Tribune’s new sales of its MODs products.

It’s content chaos, and it’s the new, heightened chaos that AP must regroup even quicker, as it plots its own way in the contemporary news wilderness.

That 92-percent “open” market — maybe 23 million businesses — tells us how early we are in this digital marketing movement. Commerce change is one thing. For those who care about the news, the big thing to watch is whether those dollars, as they move digitally, move to companies that produce news, distribute news — or have nothing to do with news.

Will the cats of newspaper industry be successfully herded? After pouring millions into his Alesia project, Rupert Murdoch gave the retreat order to his would-be Roman warriors, killing the tablet-oriented paid news portal initiative. Though his News Corp is the biggest news company in the world, it still a little less than six percent of the business, by revenue. News is among the most splintered of industries, and that makes getting a critical mass of news suppliers agreed on anything quite difficult. Next up in the effort is the AP-led “rights consortium.” As much as it is an assertion of rights, it is as much about a new drive to capture significant sums of new revenue through smarter application of content-tracking technology. Expect the consortium or new company to go forward by December with double-digit funding in the millions. Of course, News Corp is unlikely to play, while the New York Times and Gannett may chart their own separate paths. Finally, NAA (Newspaper Association of America) task forces have been meeting to try to get industry consensus in two areas: 1) mobile formatting and ad standards; and 2) e-preprints, trying to transition that Sunday circular revenue online.