The <i>L.A. Times</i>' Baffling Economics
Yet another staff petition is circulating at the Los Angeles Times
concerning publisher Kathryn Downing's idiotic decision to share advertising
revenue from the special issue of the Times Sunday magazine about Los
Angeles' new Staples Center arena with ... the Staples Center. (This novel
arrangement was made known a couple of weeks ago by New Times L.A. ) An earlier staff petition protested the
arrangement as a violation of journalistic ethics, and last week prompted from
Downing 1) a bizarre apology in which she admitted she didn't know much about
how newspapers work; and 2) a refusal to resign.
The new petition, dated Nov. 2 and addressed to L.A. Times editor
Michael Parks (who has said he didn't know of the financial relationship and
does not approve of it), urges Parks to publish a lengthy investigation in the
paper of how the Staples fiasco occurred:
One of the most important steps the Times can take is to publish
in its own pages a thorough examination of the events that led to the Staples
deal. The Times owes nothing less to its readers and to its
staff.
Others have written about the Staples controversy and will continue to do
so. We need to do the definitive piece and do it first--not have it dribble out
in other places.
The petition cites as the main precedent for such an investigation Donald
Barlett and James Steele's Philadelphia Inquirer investigation of Laura
Foreman in the late 1970s. (Foreman was a political writer at the
Inquirer who had an affair with a local pol while covering local
politics for the paper.) The Times petition is signed by many important
people at the paper, including city editor Bill Boyarsky, Washington bureau
chief Doyle McManus, and such prominent L.A. Times writers and reporters
as Kenneth Turan, Howard Rosenberg, Bob Drogin, and Sam Fulwood. (Chatterbox
suspects other names have been added to the list since he acquired a copy.)
The petitioners have a good idea, and not just because it might cost Downing
(and maybe even Mark "Captain Crunch" Willes, the Times Mirror chief whose talk
of more cooperation between the business and news departments of the newspaper
probably led to this fiasco) their jobs. There remain many unanswered questions
about the Staples deal, of which the "journalism ethics" question is only
one--and perhaps the least interesting. Why did the L.A. Times think its
Staples deal was smart from a business perspective? According to the
sketchy information available (some of it from the L.A. Times ' own
limited coverage; click here for the best piece), the deal was as follows: The L.A.
Times , which for all practical purposes enjoys monopoly status in Los
Angeles, is paying the Staples Center, which desperately needs publicity from
the L.A. Times , somewhere between $2 million and $3 million annually.
(The ad revenue from the special issue of the L.A. Times magazine that
the Times handed over to the Staples Center apparently was a down
payment on these dues.) In exchange, the L.A. Times is getting a bunch
of ad signs posted inside and outside the Staples Center; the right to sell
copies of its newspaper inside the arena; and its own "luxury suite" (i.e.,
skybox). The right to sell copies of the L.A. Times in the Staples
Center is surely of negligible value. Chatterbox suspects the same is true of
the ad signs; but even if there's stupendous value in the TV exposure that
results, it's hard to see how the ads could be worth more than $500,000. (In
Philadelphia's Veterans Stadium, a 48-foot ad over the center-field seats
currently costs at most $300,000 per season.) The skybox is probably necessary
to pamper advertisers; but if the Times had simply rented its own like
most corporations, the annual cost would apparently have been at most $300,000
a year, according to the L.A. Times ' Roy
Rivenburg. This suggests that, instead of paying $2 million to $3 million
per year to the Staples Center, Downing should be paying something under $1
million.
An irony in all this is that the real way to make money off the
Staples Center would have been to pander to advertisers with a special issue of
the L.A. Times magazine (which the Times did) and not
share the stupendous proceeds--reportedly $2 million--with the Staples Center,
but rather, to keep it all. Chatterbox doesn't expect Captain Crunch and
his minions to understand journalism; but don't they understand how to make a
buck?
