Yesterday was a big day for Tribune Publishing. The parent company of the LA Times reported it took a $6 million loss in the first quarter with ad revenues off 12 percent, rejected the $815 million bid by Gannett to take over the company, and began to reveal its secret strategic plan for the Times. In short, controlling owner Michael Ferro and his aides want to put the LA Times in a separate unit of the company, grow the LAT as a worldwide brand with seven new bureaus in what the Ferrovians call entertainment cities, and use "artificial intelligence" to target ads and viewers better than the smartest people in the media and advertising worlds have been able to up to now.
Now usually, if a newspaper's CEO said it would be opening bureaus in Hong Kong, Seoul, Rio de Janiero, Mumbai, Lagos, Moscow and Mexico City — several of them places where the LAT has been before — there would be rejoicing all around. But this is Tribune Publishing, and Ferro, and there's just no reason (yet) to believe it's going to actually happen, has been thought through or would succeed. By the way, there was no mention, apparently, of anything about making the Times a better newspaper for readers in Los Angeles or fixing the broken website design.
Anyway, analyst Ken Doctor isn't buying what they are selling — or even taking it seriously. "In the likely last chapters of the Tribune saga, parody precedes event," he writes at Politico. He notes that only three financial analysts bothered to sign in for Tribune Publishing's Wednesday call with Wall Street, and that Ferro himself didn't even join the call at which the "artificial intelligence" gambit and the plans for new foreign bureaus in an odd selection of cities, what Doctor calls the Lagos gambit, were introduced.
Consider those plans a showing-the-flag first defense against the Gannett offer, and ones that will likely provide a curious footnote historically. In fact, the notion of adding new international staff – however admirable it may appear to a nation that could use more global coverage – offered the odd resonance of another newbie Southern California publisher offering outsized expansion plans.
Just two years ago, Orange County Register publisher Aaron Kushner moved first into neighboring Long Beach and then greater L.A., after hiring much reporters to cover his Orange County communities. That foray – one without much of a business plan – ended in tears and bankruptcy.
Tribune’s plan seems smaller and more exotic, but it’s impossible to see how such coverage brings in any significant reader or advertising revenue in the next couple of years. The New York Times – well ahead of the L.A. Times in global brand appeal, breadth of international coverage and a five-year-established successful paywall – is just starting to monetize its global play, after many fits and starts, to take just one example of what the new Times strategy would have to compass before it is successful.
And revenue is what Tribune Publishing, a company living on borrowed financial time, needs. In its first-quarter results, it reported an ad loss that may lead the industry, most of which has yet to report. In the first quarter, it lost one of every eight dollars in ad revenue, or 12.4%, when comparing same properties to same properties (the performance of its spring, 2015 acquired San Diego Union-Tribune properly aside.) Overall revenues, on the same basis, were down 7.5%. Net income – when adjusted for severance and reorganization costs, the kinds of expenses that have become standard for many chains – showed a $6.6 million gain; without the adjustment, the company lost $6 million for the quarter.
There's also the uncomfortable truth that the LA Times isn't even Hollywood's first go-to source of entertainment news, so why would it be anybody else's. The Times covers Hollywood well, sure. So do others. There also has to be skepticism that the Times has tons of premium, pay-worthy content waiting to be sold to a global audience — and a too-easy joke that with that website and its dodgy search engine, who could find what they want anyway?
The Tribune call with analysts, and Doctor's reaction, was preceded by this parody view from Los Angeles Downtown News editor Jon Regardie. He calls it Inside Michael Ferro’s Secret Content Monetization Engine. Sample:
I have been revolutionizing content strategy for decades. Putting milk in boxes instead of bottles? That was me, even if it first occurred before I was born. Drip irrigation? I came up with that. In 1972 I revolutionized TV content strategically by inventing Home Box Office. Gogurt was my idea. After all, what’s more revolutionary than putting yogurt in a tube?
But I digress. You want to know the secret component of the CME or, as we call it in FERROvian, the module.
The primary component of the CME is dragon’s breath. Preposterous, you say — there is no such thing as dragons.
I understand your limited mindset, but I didn’t get to be the most powerful man in Tribune Publishing and get Oscar tickets by thinking small. There’s a good reason no one has ever seen a dragon: It’s because I own them all. Even the ones in “Game of Thrones.”
More coverage from Poynter:
As part of the initiative, Dearborn said, the Times and its expansion will be broken into a business unit separate from other Tribune Publishing newspapers. The point, he said, was to enable analysts and investors to track expected revenue growth as the initiative unfolds in future years.
Further details were not spelled out and analysts on the call did not ask about it.
A third business unit is being created Dearborn said, to be named Tronc — a British expression for pooling tip, or more generally, resources.
The idea, he said, will be to serve readers digital stories via "artificial intelligence," gather information about their reading preferences and then sell targeted advertising on a per click basis rather than the publishing norm of a cost per thousand impressions.