Posted by: Jon Fine on June 8, 2006
One of the weirdest spectacles of the media world circa right-now is the way Tribune is twisting, twisting in the wind, beset by terrible stock performance and board tumult.
It’s actually within the realm of possibility now that Tribune, long just about the steadiest media play around, will be broken up or shrink significantly, assuming the notion of spinning off broadcast wins traction. (In which case, by the way, Tribune becomes an almost pure-play newspaper company with properties concentrated in big markets. Knight Ridder could tell you how well that goes these days, or they could if there still was a Knight Ridder. UPDATE 6/9: Or they could just take the newspapers private.)
I wrote about some of this in this week’s BusinessWeek, but some additional points:
—Tribune’s long been perceived as being well-managed. But it’s not hard to find doubters, and the doubters have a point. They point to:
A. Tribune’s never having been good at inventing, only at managing in a very traditional, bottom-line way. (Not that they’re the only guys in the world like this.)
B. Tribune’s entire history with the New York Daily News. Tribune managed the feat of losing money with the largest-circulation newspaper in the country. It also made many strategic blunders while doing so. Among them: It stopped running classifieds for decades, allowing the Times to take a commanding lead; it made many ill-conceived attempts to go suburban or upscale; and, most disastrously, when the unions struck in 1990, it made the mistake of thinking they could print, distribute and sell a scab paper in the most heavily-unionized city in the US. (And the Daily News, by the way, was the outta-borough blue-collar read in New York City and thus had a heavily-unionized readership.) And, before that strike, Tribune managed to scare off at least two serious takers for the paper. (For this section, I am extremely indebted to Sheryl Fragin’s excellent article in the June 1991 issue of NewsInc., “Legacy Lost.”
—In retrospect, it was a bunch of TV acquisitions that vaulted them to darling status in the mid-Nineties. Those deals diversified revenues, and the deals worked. The purchase of Times Mirror in 2000 swung the company decisively towards newspapers. Tribune gets 73% of its revenue from newspapers—before the deal, it got around 55% from newspapers—and we all know how highly Wall Street thinks of newspapers these days.
—For what it’s worth, I remain convinced that assets like Los Angeles Times and Chicago Tribune have value that far exceeds what Wall Street says they’re worth. They are big, leading brands in big, vibrant markets. Someone has to figure out how to make them work. And someone needs to figure out how to stop the L.A. Times’ revenue sluggishness.
But these days, I’m not sure Tribune are the guys who will.