Wall Street not happy about LAT

Tough talk in Crain's Chicago Business about the L.A. Times being a serious drag on the Tribune Company—and charging way more for ads than the waning circulation numbers justify. Here are the lede and some of the more pointed remarks:

Tribune Co. Chairman and CEO Dennis J. FitzSimons faces no bigger task in reversing his company's long slide than repairing its flagship newspaper, the Los Angeles Times.

Circulation and advertising at the Times, which account for nearly 20% of the Chicago-based media conglomerate's total revenue, have fallen sharply since Tribune acquired it in 2000. Now, Mr. FitzSimons and his L.A. management team the second Tribune has installed there since the $8-billion Times Mirror Co. merger need to find a solution before Wall Street loses patience.

"They've been throwing anything they can think of at that paper and nothing seems to work," says media analyst Edward J. Atorino of New York-based Benchmark & Co. "Wall Street likes the company, and we love Dennis, but if results don't start improving . . . it's going to be merciless."

For Tribune executives, the Los Angeles problem is "critical, and it's the most troubling kink in the turnaround story," says Eric McKissack, CEO of Chicago-based Channing Capital Management LLC, which holds more than 600,000 Tribune shares. "It'll be very difficult to turn the company around without turning the Times around...."

"When Tribune bought the Times, there was a sense that it was an underachieving paper that could be turned around with the right management," says James Goss, an analyst with Barrington Research Associates Inc. in Chicago. "Well, it's six years later, and I think they're beginning to understand why Times Mirror couldn't figure it out."...

On a recent conference call with Wall Street analysts, Tribune Publishing President Scott Smith said the pace of advertising revenue growth in L.A. slowed in the first nine months of 2005 and declined 3% during the fourth quarter, when total ad lineage dropped nearly 13%. (He didn't provide specific numbers.)...

"Our ad revenues grew 8% last year and our movie category grew, too," says LA Weekly Publisher Beth Sestanovich, a former advertising director at the Times. "We've got a lot of advertisers defecting from (the Times) and sending a piece of what they were spending there to us."...

The circulation story isn't much happier. The Times' declines have outpaced those seen at local rivals the Orange County Register and the Long Beach Press-Telegram. Weekday and Sunday circulation numbers at the Times have dropped about 9% since 2003, despite an industry-leading 10 Pulitzer Prizes during that time.

At least one analyst says he believes staff cuts threaten to undermine the Times' editorial prominence. "After four to five years of cutting costs . . . they are left largely cutting into the 'muscle' of their newspapers," Lehman Bros. analyst Craig Huber wrote recently.

Link via Romenesko


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