LA WATCHDOG - In June of 2018, Patrick Soon-Shiong purchased the Los Angeles Times and San Diego Union-Tribune for an exorbitant price of $500 million (plus $100 million in pension obligations), rescuing it from the owners of the Chicago Tribune. He also invested in The Times’ newsroom, hired a new publisher, and moved our paper of record to a modern headquarters in El Segundo.
It has been a rough road to travel, especially since the paper was damaged goods because of years of mismanagement by the Chicago based Tribune Company, an ill-conceived leveraged buyout that resulted in bankruptcy, and the sale of its iconic headquarters in DTLA by the asset stripping owners who emerged from the bankruptcy.
At the same time, the newspaper industry was undergoing fundamental change as advertisers migrated to the digital world; circulation, revenues and profits plummeted; newsrooms downsized; and the industry consolidated.
Since the 2018 purchase, average daily circulation has dropped 45%, from 275,000 to 152,000 according to the paper’s annual filing with the United States Post Office. Run-of-press retail advertising and the classified ad section have all but disappeared.
This has resulted in losses rumored to be more than $50 million a year.
It was no surprise that The Times announced in June that it was laying off 74 employees (13%) in the newsroom, that it sold the San Diego Union-Tribune in exchange for the buyer absorbing an estimated $85 million of pension liabilities, and that rumors surfaced the family was consider a merger or the sale of the paper. What was a surprise is that The Times eviscerated the Sports Section in sports crazy Southern California.
These recent actions indicate that Soon-Shiong is not overjoyed by having to finance a money losing operation despite his substantial wealth. This begs the question: How does The Times develop a sustainable business model?
In the past, newspapers relied on advertisers, willing to subsidize subscribers in the quest for readership. But that model is dead. Today, newspapers need to rely on subscriptions as the major source of revenue. This is the case with the New York Times and The Wall Street Journal, both of which have strong digital and print operations.
Today, a home delivered subscription for The Times costs about $500 a year while a digital subscription is around $200. But this appears to be a tough sell as circulation continues to drop, offset in part by 550,0000 digital subscriptions, a substantial increase from the 314,000 reported to the Post Office in October.
What is the value proposition for subscribers?
We need our newspaper of record to be our fiscal and ethical watchdog, making sure that the City, the County, Metro, DWP, LAUSD, and other government agencies have balanced budgets, are using our tax dollars efficiently, not giving away the store to the public sector unions, and exposing corruption.
For example, is the City using our money effectively to reduce homelessness? What about the cost of $600,000 for a unit permanent supportive housing? Is the recent labor agreement with the Police Protective League affordable? What is the City doing to fix our streets, sidewalks, and parks? Is Metro using the $3.2 billion in sales tax revenues efficiently? Or is the tripling of our power rates an efficient use of our money?
The Times has also alienated large segments of the population with its constant reference to identity politics and support of far-left politics rather than focusing on bread-and-butter issues that are important to Angelenos and their wallets.
There is the obvious question: How does the paper expand its coverage of our governmental entities when it is losing millions a year. One thought, for example, would be for the City to finance the full cost of one or two additional reporters to cover City Hall, its operations, and its budget. Under a multiyear evergreen contract, the Times and its reporters would be independent and not overseen by the City, like the arrangement that Eli Broad made with The Times to cover LAUSD.
While this may cost the City a million a year, it would increase accountability and transparency. At the same time, it would provide excellent content for the paper and encourage Angelenos to subscribe to the paper or its website. The same would apply to other governmental agencies.
The Los Angeles Times needs to earn our trust and confidence so that we feel comfortable supporting our paper of record that is on our side, protecting our interests from self-serving elected officials and the leaders of our public sector labor unions.
(Jack Humphreville writes LA Watchdog for CityWatch. He is the President of the DWP Advocacy Committee, the Budget and DWP representative for the Greater Wilshire Neighborhood Council, and a Neighborhood Council Budget Advocate. He can be reached at: [email protected].)