Friday, July 27, 2007

NYTimes Business Skill, Tribune Ineptitude

Written from Ashland, Ore.--

There's no getting away from the fact that these are difficult times in the newspaper business. But some companies are doing better at coping with their problems than others.

This is clear from two articles in the New York Times Business section that ran yesterday. One showed how the managers of the New York Times Co. are quite skillful, while the managers of the Tribune Co. are the numbskulls that we have gotten to know so well.

Advertising is down in both companies, but despite this the New York Times Co. has managed to cut its debts substantially -- to $965 million at the end of the first quarter of the year, from $1.4 billion earlier -- while Tribune debt is soaring to such a point that the Times article on Tribune, this one taken from the Reuters press agency, speculates that the deal under which real estate magnate Sam Zell is supposed to take over Tribune may not actually go through.

The Reuters article quotes one analyst as saying the chances the Zell deal will be consummated are only 50-50, since a major gap of 21% has opened between the $34 stock price Zell is offering and the $28 level at which the stock has been selling. Generally, according to the article, such a gap should not exceed 5%, and the fact Tribune stock has fallen sharply since Zell began to climb onboard means that shareholders doubt the deal will go through.

As at Tribune, both revenue and overall returns slipped at the New York Times in the last reporting period, but the slip was larger at Tribune.

And why not, since one of the least skillful businessmen in the country, Dennis FitzSimons, is the CEO of Tribune, and he steps from one mud puddle into the next.

There are two sides, however, to the continued Tribune failures. They may not bode well for the Zell deal, for instance, but if it falls apart, then Tribune might well have to be liquidated and at that point the L.A. Times could well be sold to the Eli Broad-Ron Burkle group or to David Geffen, restoring the Times to local ownership and going far to assure its future.

The Chicago toadies, L.A. Times publisher David Hiller, and editor James O'Shea, would last about 48 hours, if that, under new ownership.

So, as the articles published in the NY Times show, Tribune continues to reel from one disaster to the next, but there might be a bright lining to the dark clouds that envelop the company and its staff.

Both of the newspaper companies are shedding certain assets this year. The New York Times Co. has sold nine television companies, and Tribune has announced plans to sell its ownership of the Chicago Cubs baseball team. But, of course, in the long run, the fortune of the companies depends on how their newspapers do. The New York Times is pressing for a goal of getting 10% of its income from its Web site, while the L.A. Times, despite all the talk from Hiller about improving its Web site, is lagging in this area too.

Meanwhile, I imagine, the New York Times managers continue to enhance their brain power by eating in New York's great restaurants, while the Tribune management continues to patronize the lousy restaurants of Chicago, a city known for putting potatoes in its enchiladas.



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