Sam Zell

Bad day at LAT Rock

While I was on the road, Mark Lacter picked up the news that Sam Zell ordered staff cuts at the Times and across Tribune, citing the need to reduce costs as profits continue to go south. Newsroom reductions at the LAT are expected to number 40-50, through a combination of attrition, buyouts and, if necessary, layoffs. Memos from Zell and Publisher David Hiller follow below, along with an email disclosing that the Times is postponing its annual editorial awards celebration again this year.

Also, no editor named today. But the New York Observer ran a piece describing factions in the Times newsroom drawing battle lines over the choice of an editor in chief (other than Zell and Hiller, who seem desirous of calling the shots.) The story's details will be familiar to LA Observed readers — especially since many were first reported here — but writer John Koblin adds lots of staffers on the record talking about the schism between those who favor Innovation Editor Russ Stanton and those who prefer Managing Editor John Arthur.

“Is there a divide?” said [editorial page editor Jim] Newton. “Absolutely.”

“It’s a battle over the heart and soul of the newspaper,” said Jeffrey Rabin, a transportation reporter and 20-year veteran at the paper. “What is the L.A. Times? The place is in a panic, it has been for some time and that’s why the choice of who’s going to be editor is so interesting....

“Stanton has a more practical knowledge to make the paper current in terms of technology,” said [columnist Dan Neil. “I don’t think Arthur has the recent experience with multimedia.”

“It’s widely felt in the newsroom that John Arthur, who comes out of the long tradition of working in a newspaper, is the most trusted on the front to manage this paper long term and manage our reputation,” said Mr. Rempel, a 35-year veteran. “Russ is a solid guy, but he doesn’t have the track record to instill the confidence that John does.”

The unattributed quotes are more pointed, as you would expect. Memos follow.

Zell's memo:


As I have said repeatedly while on the employee road show, we will not achieve success by just cutting costs. Ultimately, our battle will be won by growing revenue, and by making Tribune Company a fierce competitor across all media channels — print, broadcast and interactive.

I have also shared the reality of our significant debt levels and financial covenant obligations. These obligations require us to be more disciplined than ever with respect to managing our costs and maximizing the productivity of our assets and people. We need to constantly think and act like owners, and relentlessly strive to optimize the effectiveness of our businesses.

In my recent email about the ESOP, I outlined the assumptions we made in developing our projections for Tribune's financial performance going forward:

• Cash flow in line with that of 2007
• Newspaper revenues continuing to decline
• Broadcast and interactive revenues increasing.

While results so far in broadcasting and interactive are promising, we have not had time yet to realize these gains. Further, a weak economy and significant declines in advertising volume at our newspapers are putting downward pressure on our cash flow. These factors are forcing us to take immediate action, and are the basis for the sense of urgency you've heard me talk about so often.

It is within this context that I am announcing we must reduce the number of staff positions within the publishing group and corporate office through a combination of voluntary separation programs, involuntary layoffs, attrition and closing of open positions. Each of our newspapers is making its own decision about which programs best suit its needs.

Most of the affected positions are in support service areas, such as finance, HR and technology. We are creating a flatter organizational structure, eliminating layers of personnel that inadvertently created bureaucracy. The result will be a streamlined culture that accelerates our decision making, and enables us to act quickly.

I have discussed with many of you our mutual concern about the cyclical eroding of content quality to meet budgets manufactured in the corporate office. I promise you, in time, we will end that downward spiral. Right now, across the company, we're going through a zero-based budgeting process designed to let each business unit develop and be responsible for its own budget. This will make our financial planning and goals more realistic, allowing us to prioritize the work ahead and then staff accordingly.

Down the line we will likely be adding staff where there are opportunities for revenue growth. At the moment, we are still assessing the priorities and needs of our interactive and broadcasting groups.


Hiller's follow-up


As you've just heard from Sam, we are going to be eliminating some jobs at our newspapers and at Tribune corporate. As Sam related, the revenue picture continues to be bad, and well worse than was forecast at the time our going private transaction was completed. We had been planning to find savings over the course of the year, primarily through eliminating positions as they became open, but these current trends require that we act sooner.

So we will be undertaking a combination of steps to reduce staffing across all departments -- including eliminating open positions, a Voluntary Separation Program for eligible employees, and a limited number of layoffs. All in all, we will be eliminating in the range of 100-150 positions across The Times.

We knew we were going to have to go down some in staffing this year, so if there is anything positive here it's that we are able to accommodate some of the reduction through a voluntary program, and we'll also get this done now and hopefully clear our focus for the year ahead. We will be getting detailed information on these plans to you by this coming Monday.

I wish the year were starting with a more positive revenue picture, but the whole industry is facing the same thing and we have to be realistic in dealing with the situation we are in.

I appreciate your understanding and support.


And from newsroom HR editor Susan Denley:

From: Denley, Susan Sent: Wednesday, February 13, 2008 3:31 PM Subject: Editorial Awards With so many changes under way, we're going to honor all the great work we did in 2007 with the Editorial Awards -- later. We've postponed the event from its planned Feb. 29 date. We've got all your entries and they've been screened and judged in the usual manner. We’ll schedule a prize ceremony later and will let you know.

More by Kevin Roderick:
Standing up to Harvey Weinstein
The Media
LA Times gets a top editor with nothing but questions
LA Observed Notes: Harvey Weinstein stripped bare
LA Observed Notes: Photos of the homeless, photos that found homes
Recent Sam Zell stories on LA Observed:
Sad but true: Sam Zell writing a book called 'Gravedancer'
New CEO named at Tribune, old publisher at Times
Tribune exits bankruptcy after four years, ending Sam Zell era *
Judge says he will OK Tribune's plan for ending bankruptcy
Finally, some good Sam Zell news
Zell throws a hundred grand Karl Rove's way
Times employees' suit over Zell deal officially wrapped
Tribune has paid $231 million in bankruptcy fees so far


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