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It would be hard to imagine a media executive less likely to embrace the Internet than Mark H. Willes. With his buck-up manner and deliberate style, the 57-year old chairman of newspaper chain Times Mirror Corp. is at home in his trademark gray suit and striped tie. And Willes was blunt in his refusal to accept the lure of bits and bytes. "I simply can't figure out a way to make money from it," he said the last time we spoke, six months back.
His reasoning was sound enough: Folks don't like those little ad boxes that pop up on the computer screen, making advertising problematic. And if he charged for online news stories from his company's Los Angeles Times, Newsday, and other newspapers, then customers could find the same stories for free on the Net from the New York Times or another major paper.
Sound or not, Willes' basic miscalculation of the Net's lure is the reason he'll soon be out of a job. On Mar. 11, Times Mirror announced it would be sold in a $6.1 billion merger with Chicago-based Tribune Co., a deal negotiated without Willes' knowledge by the Times' founding Chandler family. And Willes has no one but himself to blame.
TECHNO-SKEPTIC.
In a mad dash to pare costs and lift Times Mirror's stock price, he sold off scores of companies that could have formed the cornerstone of an e-empire. He resisted the impulse that has rippled through the rest of the media world to "bulk up," as industry execs seemed to collectively sense that the Internet race would go to those with the most information to offer.
Willes' tale is a cautionary one to other media execs faced with similar choices. This world, perhaps unlike any other, is constantly being reinvented and reshaped by the technology that delivers its content. Skeptical of new technology, Willes focused more on cutting costs, preaching that the core newspaper business needed to be nurtured even at the expense of new ventures. While companies like Tribune spent heavily on Internet sites and built a stable of TV stations capable of delivering programming digitally, Willes sold off assets such as as the company's Mathew Bender legal publications and The Sporting News, which was snapped up by billionaire Paul Allen for his "wired world" of cable-TV stations and Internet sites.
Willes didn't do a bad job of cutting overhead and focusing the company. Last year, it earned a respectable $284.4 million on $3.03 billion in revenues, a 24.7% hike from the $246.5 million the company earned the year before. But along the way, Willes also exited some promising Internet ventures, selling off the Hollywood.com site as well as those that posted apartment and used-car listings. Instead, Willes kept the print version of the used-car publication.
UNDERMINED.
The Times CEO's biggest problem was going his own way when other media companies were going in a different direction. Worse yet for him, his own chief financial officer, Thomas Unterman, kept pointing it out to the four Chandler family members who served on the board. Unterman had worked with other media companies, including the Tribune, on joint Internet ventures such as a classified listing that also included the New York Times.
Unterman soon was briefing board members on the Tribune's stragegy, contrasting that with Willes' own less aggressive stance on new technology. "Tom saw the sea change, like the rest of us," Harry Chandler, a former Times executive and family member, told the Los Angeles Times recently. "I found Mark skeptical [about new media]."
So in the end, it boiled down to a CEO who operated the company well against an advocate of a new media world that's dynamic but unproven. Simply put, boring growth wasn't enough. Moreover, by relying so heavily on traditional media, the Times found itself at the mercy of reality. When newsprint prices jumped -- as they're still doing -- the newspaper's profits were put in jeopardy. On the other hand, new media is beckoning with promise that no one understands but few are willing to argue against.
WHO GETS IT?
Willes is certainly right on several fronts. No one has figured out how to create advertising that people will watch on the Net. And news being news, people want to click and read, and don't want to pay for the privilege. He shouldn't be embarrassed about the fact that he doesn't get it -- no one does, not even those who would tell you otherwise.
But Willes' undoing was turning his back on what he didn't understand, rather than positioning himself for the unknown future. It's a mistake that Hollywood made years ago, when it first fought (but later wisely embraced) the advent of home video. The music industry almost did the same thing by rejecting digital downloads -- and is currently racing to rebound from the deficit its initial stance put it in. And for the news business, change is fast overtaking it. As Mark Willes learned, either jump to the head of the parade, or get out of its way.
Grover is Los Angeles bureau chief for Business Week EDITED BY DOUGLAS HARBRECHT
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