Tribune Publishing Prepares to Play More Defense
After a mid-month lull, the drama of Tribune Publishing’s future is becoming more public again — on both coasts, and at the mothership in Chicago — highlighting a company still on the defensive.
On Sunday, recently fired L.A. Times Publisher and would-be Times buyer Austin Beutner will get a national stage for his take-back-the-Times campaign.
“At this point in time, my most important thing is to make sure the message gets out that it starts with the journalists, that we need local organizations,” Beutner told Brian Stelter, host of CNN’s Reliable Sources in a web excerpt of the interview to be broadcast Sunday Morning. “And that’s a very different exercise than talking about whether there’s a deal or not for The Los Angeles Times or The Chicago Tribune or any other news organization.”
Of course, it is the potential deal for the L.A. Times and its now-sister San Diego Union Tribune that signals the next act in this high-profile drama that began with Tribune Publishing CEO Jack Griffin’s firing of Beutner on Sept. 8 — a story I was able to break.
First published at Politico Media
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That firing first prompted public protests in Los Angeles. Then Griffin gave a couple of disastrous interviews with the New York Times and Crain’s Chicago Business (Media Notebook). In one interview, a former Time editor-in-chief offered a surprisingly nasty appraisal of Griffin’s short tenure as head of Time Inc. in 2011: “… He had no clue what to do except spend millions on multiple consulting firms.” After the other, Griffin found himself ridiculed for apparently suggesting that younger readers would return to print, which then prompted a corporate clarification.
While Griffin hasn’t been available for subsequent interviews as the company moves through a quiet period in preparation for a Nov. 5 third-quarter earnings call that may be contentious, Tribune Publishing has hired a company skilled in crisis communications to help it navigate the roiling waters. John Hahesy, a director of Issues Management and Media Relations at Boston’s Preti Minahan Strategies, has been working with Tribune. The company declined to expand on his role.
(Meanwhile, in New York, Beutner gave a talk to the Columbia journalism school that was promoted by powerhouse New York communications firm SKD Knickerbocker—though Beutner told POLITICO that was a favor from some old friends and a one-off. At any rate, he is not without resources to continue to deliver his message about Tribune and the L.A. Times.)
TPUB’s recent public stumbles, which followed the Beutner firing in short order, have been accompanied by a steep drop in its share price to as low as $7.72 from its initial offering price of $25.50 in August, 2014. (Over the last two weeks, perhaps on speculation of a sale of the whole company, the price has moved up to just under $10.) Clearly, the company also needs to make new arguments to investors, as at least two Tribune-following analysts have expressed a lack of confidence in the Tribune turnaround plan, particularly after the company revised its earnings guidance by as much as $30 million in annual earnings.
The retaining of Preti Minahan, then, makes sense. Company executives have become exasperated as public sentiment — from L.A. civic protests to the national press woes — have put the company on the defensive. They can’t comprehend how a fired publisher in one city could provoke what they see as such a one-sided national public reaction to what they say is a fundamental question of internal company strategy.
It’s as if CEO Griffin pulled the pin on a hand grenade in firing Beutner, and then left town holding the grenade.
Tribune’s new media strategy faces a new challenge as early as today. Today is the final day for employees at the in-question L.A. Times — and at all Tribune’s nine metro operations — to decide whether to apply for a buyout. That buyout is the most generous Tribune has recently offered (“Behind the scenes of the L.A. Times buyout drive”) and offers the Tribune its best shot at rapidly reducing expenses to meet that revised earnings guidance it has issued to Wall Street.
Those buyouts — for 50 newsroom positions or more in L.A. and an unknown number throughout the country — will mark another decisive turn in the company’s journalism. At the Chicago Tribune itself, housed in the Tribune Tower (just placed up for sale by Tribune Media, a now-separate company), anxiety about the buyouts and their impact also runs high.
As Kevin Roderick, a Times alum and editor of L.A. Observed, put it Thursday describing the unfolding picture locally but with wording that applies across the chain, “Certainly the LA Times will be a leaner, cheaper, less experienced organization that will be asked to do more, and will still be talked about constantly as a takeover target as the value of the Chicago-based parent Tribune Publishing continues (probably) to drop.”
News will leak out about the number of buyouts taken at the Times and across Tribune over the next month, further putting the company on the defensive.
As concerning as that stream of negative attention may be, Tribune may also be considering the follow-on from a second New York Times story. Headlined “Financial Dispute at Tribune’s California Newspapers,” the top-of-the-business-page piece went into unusual detail on a set of internal Tribune email communications. At issue: What exactly caused the earnings drop Tribune issued on Sept. 22?
In emails, Tribune’s California execs said that their properties’ performance couldn’t be blamed for the lowered earnings guidance. The issues, read through the story’s lines: Why then did Tribune squarely put the blame for the down earnings on the California papers and their fired publisher? Further, did Tribune, a public company, provide the most accurate view to the market about it revenue issues?
To that last question, Tribune Publishing responds, “Speculation by unnamed sources about the guidance revision has no basis in fact. Tribune Publishing is in a quiet period, and we look forward to updating investors with our third quarter earnings announcement.”
The New York Times piece captured the oddity of the earnings announcement, issued after a Friday market close. As the Times noted, “The staff members point out that the company had not previously issued guidance outside of earnings calls, or singled out a particular part of its business for credit or blame.”
Any one of these matters — Beutner’s firing and civic reaction to it; the down earnings guidance and its causation; and the major buyouts — would be enough for a big newspaper company to handle these days. After all, the newspaper business climate, with print advertising revenue dropping more quickly than even last year, offers a big enough challenge in and of itself.
To that transformation challenge, CEO Jack Griffin has stuck to his guns, both before and during the recent travails. He stays on message, pointing to his five-point transformation strategy, a strategy that now drawn has drawn support from some investors, including Mount Flag, which recently took a five percent stake as well as increasing skepticism from two financial analysts, Macquarie and BWS Financial.
On this third quarter call, in early November, Griffin may well be called upon to provide more specific data on progress towards the goals in that plan. Further, analysts may expect a deeper report on the top-to-bottom digital review, led by Denise Warren, the company’s president of digital. That review includes both the business and the enabling technology of Tribune digital operations.
The acquisition of earnings-accretive newspaper properties in and around Tribune’s current markets forms one of those five transformation goals. I’ve learned that Tribune Publishing found itself outmaneuvered by Gannett, which recently announced an acquisition of 15 Journal Media newspapers. Tribune officials had had discussions with Journal Media about buying its Milwaukee Journal-Sentinel, located a close one-and-a-half-hours from Chicago. The J-S might have fit Tribune’s criteria for acquisition, but Gannett made its own deal.
Tribune Publishing declines to comment on its acquisition interest in the Milwaukee paper.
Into this last quarter, the ultimate question is whether TPUB will be a buyer or a seller. Oaktree Capital Management, the company’s largest shareholder, at 18%, let it be known Thursday that it wasn’t averse to seeing the company sold, while saying it wasn’t critical of the decision to fire Beutner and was supportive of the company’s cost-cutting plan.
“There’s obviously some price at which it would make sense,” said the Oaktree source. “But it’s all academic because nobody has put a price on the table.”
Consider that an invitation. Eli Broad probably does. L.A. businessman and philanthropist Broad, and his associate and friend Beutner, put together a plan to buy Tribune papers two years ago, when it first appeared they would be sold. (They weren’t, instead being spun off into the company that has become Tribune Publishing.)
At this late October reading, given the train of current events, I believe the odds are better than even that there will be a new bid by Broad, and a wider group of investors before year’s end. That bid may start as one for the Times and the Union-Tribune, but will likely morph into one for the whole company, raising whole new questions about newspaper valuation, civic value and the larger direction of the American metro press.
