Tribune to Fire L.A. Times Publisher Austin Beutner
Updates on this story, at Politico Media
Tribune Publishing will announce Tuesday the termination of highly regarded L.A. Times publisher Austin Beutner, I’ve learned.
Beutner’s leave-taking may be announced as a resignation. The firing is an unexpected one, though one built on long-brewing differences between Beutner and his boss Tribune Publishing CEO Jack Griffin. It also follows quickly on Tribune Publishing’s rejection of overtures from a would-be buyer for the Times, an acquisition that would have taken the Times private. The firing and sales overture rejection are not unrelated.
Tribune Publishing told me it wouldn’t publicly comment on the unfolding events, nor would others involved.
Beutner’s quick departure — just one year after Griffin appointed him to the job, and just four months after Tribune’s acquisition of the San Diego Union-Tribune and the subsequent creation of the “California News Group” — should send shockwaves through the news publishing world.
First published at Politico Media
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Tribune touted Beutner as a nontraditional publisher — a find pulled out of the worlds of both private equity smarts and deep local and civic connection in L.A. —when his surprising appointment was announced. Beutner’s hiring, just one week after Tribune split from the parent company, we were told, was symbolic of the new post-split Tribune.
The abrupt leave-taking raises a wider question about Tribune Publishing’s ability to transform itself. As the third largest U.S. newspaper group, with nine largely metro properties, its fortunes are closely watched within the industry.
The California News Group makes up about 40% of the company’s revenue and Sunday circulation, although it should be noted that Tribune doesn’t formally break out performance by property. Now, with Beutner out and the jobs of the top echelon that he just hired on in question, Tribune will have to start over in Los Angeles. That’s a daunting proposition, given all the turnaround issues CEO Jack Griffin faces throughout the company.
Griffin had taken command of the company in August, 2014, as Tribune Media separated out Tribune’s broadcast assets from print – and kept all the related newspaper real-estate and substantial digital business assets. His appointment of Beutner, and then trumpeting of the accretive acquisition of the Union Tribune in May, served as prominent chords in this transformation strategy.
Griffin’s strategy has met the headwinds of an overall newspaper market that worsened in 2014-2015, even compared to the consistent down years it experienced since The Great Recession.
Griffin has tried to remake a one-class public company on the fly, within the awful newspaper marketplace. He’s hired Denise Warren, ex of the New York Times, to head the digital business and business operations of six of the company’s papers — all but the Chicago Tribune and the southern California papers. He appointed WSJ veteran Michael Rooney to oversee flagging national sales.
Griffin also replaced his CFO, John Bode, soon after the split, surprising observers. Last week, Tribune bid goodbye to Ghalib Kassam, head of technology, who had joined Tribune Publishing in May 2013.
Throughout, Griffin has had to make the case to investors that the turnaround plan is steady as she goes.
Tribune’s second quarter, though, reflected the wider industry’s worsening financial performance, and surpassed it, with same-to-same revenues down 10%. The company’s ongoing struggles can be traced in its share price. That price closed under $11 before the Labor Day weekend, further weakened by the overall stock market tumble, and not buoyed much by the recent announcement of a $30 million stock repurchase plan. That price is now less than half of its go-to-market split price of a year ago.
Why Beutner’s gone
So why, with that complex of a turnaround headache would Griffin change horses in L.A.?
Observers of the internecine warfare at Tribune can tick off lots of issues that lie in the background of the move.
While Beutner had pushed forward strongly with civic involvement, aiming to reshape the Times into a leading public citizen, Tribune leadership felt his contrarian spirit at every turn. While Griffin has been rebuilding his central team, largely in Chicago, the feeling just got stronger: Beutner wasn’t a team player. Whether on nuts-and-bolts matters like budgeting or just in terms of personal relationships, the estrangement between Griffin’s team and Beutner’s has grown steadily.
In part, that’s a profound difference in strategic thinking; what kind of products and services would these newspaper companies offer their audiences and advertisers? And that makes this just another chapter in the long-running Chicago–L.A. split that has characterized Tribune ever since its acquisition of Times Mirror papers, anchored by the Times, in 1998.
While Griffin has sought to standardize and find efficiencies, Beutner, in his one year, has been building a longer-term strategy that aimed to claim greater service to community and audience — and then claim to more advertising and reader dollars. Given the pressures of the market, and of Tribune’s tight financials, the pressure of time exacerbated all the tensions that built up so quickly.
The relationship between Griffin and Beutner can’t be called hostile. In fact, the two didn’t talk that frequently. While Beutner’s selection as publisher had been spearheaded by Eddy Hartenstein, the last Times publisher pre-split, Griffin had acceded to it. But Hartenstein, now chair of Tribune‘s five-person board, didn’t stand in the way of Beutner’s firing. The board, told of Beutner’s lack of team playing and “empire-building,” backed Griffin’s decision last week. In fact, Beutner’s detractors whispered that the empire Beutner sought to build might have extended to the political realm, believing that Beutner’s high public profile might lead him to the 2018 California governor’s race.
Some have speculated that Griffin removed Beutner after seeing him as a threat to his own job. That seems far-fetched, given that Beutner didn’t believe that Tribune has sufficient national scale to be a logical national news company. Rather, he tried to build a new local model, one that is now on a death watch (“Austin Beutner’s California turnaround plan”).
What’s next in California
Then there are the dollars and cents.
By all accounts, the Times underperforms its peer Tribune dailies. By how much? That’s a big question. It ranges from a point or two of revenue to more like a handful of them, depending on whom you want to believe. Further, the questions of how national sales, cost allocations and strategic technology decisions are handled just provided more points of conflict, atop ones of strategy and personality.
Now, as the Tribune prepares to appoint a new publisher — Baltimore Sun publisher Tim Ryan is rumored to be the new Tribune guy in charge — one early question will be how Tribune re-budgets the Times and its sister, the Union-Tribune. With a Times newsroom of 500 and budget of about $70-75 million a year, that newsroom has been more protected from budget cuts than its peers in Tribune, and other papers across the country.
With Tribune already in the process of headcount cutback to maintain its small profit, how much of those 500 jobs may be targeted as 2016 budgeting becomes Job 1? In L.A., insiders fear a cut of between $10-20 million in the newsroom.
The privatization argument
The drama of the changes at Tribune and the Times offers a compelling tale of this moment in American newspaper decline. Any strategy dependent on improving quarter-by-quarter profits would seem to defy the continuing reality of the business.
That’s why the renewed interest of businessman and philanthropist Eli Broad doubles our interest here. Broad first showed interest in the Times, and maybe Tribune more widely, two summers ago, when it looked like Tribune would sell its newspapers. It never formally put them on the market, and then spun them off into the separate company.
The Broad idea: Institutions like the Times need privatization and capital if they are to find a way forward. That notion borrows from the private acquisitions of the Washington Post (Jeff Bezos), Boston Globe (John Henry) and Star Tribune (Glen Taylor) of the last two years.
Yet, the new Broad entreaty has been apparently rejected by Tribune Publishing. Why? Sources cite the tax hit that such a sale might entail, though others say that a “sponsored split” – a tax workaround – could avoid such a result.
It’s no coincidence that Broad’s move and Beutner’s firing occurred in parallel time. As publisher of the public Tribune, Beutner was expected to be that team player. At the same time, he understood – better than most newspaper proprietors – that only long-term strategic change might save the institutions like the Times. In the (quick) end, balancing those two viewpoints proved impossible. Beutner was shown the door, and Tribune must once again re-start its engines, with one of the flagging newspaper industry’s most innovative leaders gone.