Television’s second quarter operating revenues increased 2 percent to $292 million in 2008. Television cash operating expenses were up 7 percent, or $13 million, from last year...This means that Sam, Randy and crew are increasing spending on the television side of the Tribune Co., adding 7% more into news expansion and promotion. They crow that this 7% increase in expenses has generated an additional 2% in revenue.
Management Discussion
- The increase in television revenues in the second quarter of 2008 was driven by an increase in market share at most stations.
- Television cash operating expenses were up $13 million primarily due to increases in broadcast rights expense, promotion, news expansion, and other cash expenses.
Here's proof that they are not total zidiots: they realize that investing in the product can produce increases in revenue.
So why not take the same philosophy on the print side, which produces far more revenue? Again, Sam Zell's cutbacks to the Los Angeles Times are not economic necessity. These are cuts of choice.
He wants to turn the Tribune Co. into a broadcast operation. The newspapers--which play a far more central role in community building and news gathering than any individual local television station--are victims of this strategy.
Zell needs to be challenged: in public, in news interviews, on the golf course. Why are you cutting back on newspapers while investing in television? Why are slashing reporters so much more than other media owners?
The answer is: because he can, partner.
11 comments:
It's "Tribune Co." (no "the") referring to the whole company and "the Tribune" referring to the Chicago newspaper. This matters in cases like the first paragraph, which sounds like a billion-dollar loss for the newspaper.
Every newspaper company in the country cutting back and letting people go - Gannet announced another 1000 layoffs today.
Face reality. Face reality. Face reality.
The problem is not Sam. Sam doesn't own Gannet. The problem is the lack of a business model that can compete with online news.
How does society pay for jounalism in an Internet media environment? Lots of very smart people are trying to figure this out -unfortunately too many journalism insiders with a vested interest in the unsustainable status quo don't seem to want to talk about this seriously.
"Please? Please? Can't everything just be the way it was?"
No.
Gannett is laying off 3% of its workforce. Zell is laying off 25% of his. The reality, anon, is that Zell is the outliar. Misspelling intended.
it's really quite simple:
revenue is down because circulation is down. circulation is down because people aren't buying the product as it is today, and yet, you want to continue making the same product anyway.
this is the same sort of mistake Detroit made in the 70's, when they failed to jump on the market trend and produce smaller, better made cars.
today, Detroit is on life support and so is the newspaper industry.
i'd sell the Times building, and cut all those jobs, saving huge amounts of overhead and turn the LA Times into the "LA Times On Line". hire out sections and columns to a variety of established bloggers, to give a more rounded, multi-viewpoint flavor to the product, as opposed to what there is now, as well as keeping some of the current reporters. everyone works from home, and that saves the company more money.
for print, i'd support the "hyperlocal" papers, since they seem to be doing ok, but once again, with regional editorial oversight and local stringers working from home. contract out the printing and distribution, so your overhead is both reduced and predictable. keeping them in the black is the only way to keep them open.
business as usual will eventually result in no business at all. you can either adopt a new business model that produces a profit, or you can do nothing and fail utterly.
until the print side can produce a profit, either through a better, more desired product, or new revenue streams from new sources, the only route to a positive bottom line is cost cutting. the TV side gets investment because it produces a return on said investment. print journalism is a black hole for investment, and it makes no sense to continue to throw money away on it.
you and your friends won't like this viewpoint, but denying the validity of an essential truth doesn't make it any less so.
Is that you above me, Randy/Sam/Lee?
Sam is not an outlier. He may be trying to right-size by amputation rather than by slow wasting, but what he's doing is what every newspaper owner in the country is doing.
Look at http://graphicdesignr.net/papercuts/
We need to figure out how journalism is going to work in this new media environment. So far nobody seems to know - I sure don't - and not too many people want to talk about it
"it's really quite simple:
revenue is down because circulation is down. circulation is down because people aren't buying the product as it is today, and yet, you want to continue making the same product anyway."
that's really quite inaccurate. but maybe if you say it enough times, it will be true, just like how saddam was behind 9/11.
none of the above: i'm an LA native, and long ago, when i was young and had a future, i used to deliver first the Times and then the Herald to stores & news racks all over the area where i grew up. before that, i sold the sunday editions in front of the local church.
nothing like spending your weekend mornings from about 0200 on, kneeling in the back of a pickup truck, rain, shine or freezing ass cold putting together sunday papers and then leaping off the truck to toss slugs in the rack so you can haul out the old ones and put in the new ones.... at least it prepared me for the military.
business is business, and optimism can be defined as doing the same thing over and over in the same circumstances and expecting a different result. life is tough, but it's tougher if you're stupid.
the day of big staffs and low production are over. look at the most successful blogs: how many relevant articles do they turn out daily, and yet the Times was happy with one article a week, that may or may not get printed? evolve or die.
can you give another reason for circulation to be down, other than people not buying the paper? we canceled our subscription because we weren't getting the papers we wanted on the days we were supposed to get them for the price we were quoted.
we now get the Daily News, a similar product, for less money, and they manage to deliver it correctly. why would we want to switch back to the Times?
I work at a Tribune paper. It is a paper still making money. Revenue is down, but profit is still present. Circulation has also stabilized. The biggest hit has come in classified, with over $60 million lost since 2000 in that area. From that take what you will, but this paper did not deserve to lose 60 people from its newsroom.
redc1c4,
No, we can't give another reason for circulation to be down, other than people not buying the newspaper (in many cases because they now read it free, online). But what you don't seem to understand is that dwindling circulation is not the issue here. Revenue from subscriptions is just a tiny fraction of the total revenue. Advertising, THAT's the big boy.
The main issue newspapers face today -- I've said it before and I'll say it again, -- is the drop in ad revenue. Classifieds have gone to Craigslist or EBay, and the same is true for much of the real estate advertising. Consolidations of major retailers such as Rob-May & Macy's, etc. have had an effect as well (fewer chains = fewer ads), and so has the writer's strike (fewer movies = fewer ads). The general slow economy and housing market is killing us too. High gas prices have an effect on car sales, and when car makers have less money coming in, they too are less likely to blow a lot on ads. The list goes on.
Combine all of this with management's inability to make our websites more profitable, and this is what you get. Zell's irresponsible loan doesn't make things any better. The papers are still making money... just not enough to service this enormous debt of his. So you see, all of this has very little to do with circulation.
By all means, stick with the Daily News if you're happy with the service and the content of the paper. I think almost any journalist will tell you we're happy as long as people still read a paper... Any paper. Each and every one of them still beats talk radio or blogs as a news source.
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