Cooperation Within Times Viewed With Trepidation

Steve Wasserman gripped the speaker’s lectern with both hands and peered out at the audience of Los Angeles Times advertising and marketing personnel.

“You,” he said, “are my people.”

But Wasserman is not a member of The Times’ advertising or marketing departments. He is the editor of the paper’s Sunday Book Review.

That’s what made his message so remarkable--and in about 90 seconds, it would become even more remarkable.

It was Dec. 3, 1997, four months before The Times would sponsor its third annual Festival of Books, and The Times’ advertising and marketing staffs were gathered for a pep rally. For almost an hour, speakers had been exhorting them to sell corporate co-sponsorships at $15,000 to $200,000 apiece to help defray the costs of the admission-free festival--and to lure advertisers into the Book Review. Now it was Wasserman’s turn, and he began by linking the festival--a huge success in its first two years--to the historically ad-poor Book Review.

After a dramatic pause, Wasserman said he was prepared to do something that would surprise his staff--not to mention the advertising director, the editors and the publisher of the Los Angeles Times.

“I will write a check for $1,000 from my personal checkbook to the person who sells the [next] $200,000 festival sponsorship,” he said.

It was an extraordinary gesture, all the more so because it came at a time of great uneasiness at The Times. Mark Willes, chairman and CEO of The Times’ parent company, Times Mirror, had taken over as publisher of the paper less than three months earlier, and Editor Shelby Coffey III had quit shortly thereafter amid industrywide speculation over Willes’ announced intent to “use a bazooka, if necessary, to blow up the wall” that had traditionally separated the news department from the advertising, marketing and other business departments.

Outside the cloistered world of journalism, cooperation between different departments in a company is commonplace. But most reporters and editors have long felt that only by being completely separated (and insulated) from the business side of their newspapers would they have the freedom they need to provide readers with honest and complete coverage of critical issues, even when that coverage might adversely affect the financial well-being of the newspaper and its advertisers.

Thus, many journalists at The Times and elsewhere worry that the paper’s editorial integrity will be eroded by Willes’ unprecedented assault on “The Wall” with initiatives ranging from the call for profit and loss statements for each section of the paper to the appointment of “general managers” from the business side to serve as “partners” for the editors of each section. Yet here was Wasserman courting ad salespeople, offering them cash incentives from his own bank account.

As it turned out, the ad department hasn’t sold another $200,000 sponsorship and Wasserman hasn’t had to part with his $1,000. But if he can take an active role in advertising and marketing campaigns, won’t ad salespeople and marketing executives feel free to take an active role in the newsroom? Wouldn’t that compromise the editorial independence of the paper?

Willes says no. He insists that greater interdepartmental cooperation--and a more focused, aggressive approach to marketing, promoting and selling advertising for the paper--will yield significantly greater revenues that can then be used to hire more reporters and editors, add more space and new sections and enable the paper to produce even better journalism, all with no loss of editorial independence.

“It would be a travesty and a tragedy and a personal embarrassment to me,” he says, “if we ever did anything that in any way harmed or diminished the paper in terms of reputation or impact or quality.”

Restructuring and Reassurances

It’s too early to analyze the impact of Willes’ initiatives. Many aren’t in place yet. The paper has only four of the anticipated six to eight general managers who will work with section editors to devise marketing, advertising and editorial strategies. But it’s worth noting that while Times operating profits increased 31% last year--the third-most profitable year in the paper’s history in sheer dollars--The Times’ editorial expenses for 1998 increased less than 3% over 1997. Although Willes has repeatedly said that a superior editorial product is the most important component in his plan for The Times’ improved financial performance, section editors were actually asked last October to cut their 1998 budgets by 1% from 1997, exclusive of new initiatives.

Michael Parks, who succeeded Coffey as editor, says new budgets are now being drafted that will call for a more varied spending pattern, with outlays reduced for some sections and increased for others, in part to reflect additional spending that has already been authorized. Last month, for example, Willes approved a request from the editor of the paper’s Business section for a 20% increase in staff size and a 15% increase in the space allotted to general business news each week. These new resources are intended to help offset the heavier workload and space consumption required by several new subsections that were introduced last year and contributed significantly to the section’s 16% increase in advertising revenue.

But even if the new hires approved for the Business section are made immediately, the paper will still have increased its editorial budget for this year by less than $5 million, compared with the estimated $8 million to $10 million that it plans to spend exclusively on new circulation initiatives.

Skeptics at the Los Angeles Times and throughout the industry--and most journalists are, by temperament as well as occupation, professional skeptics--aren’t convinced that Willes can ultimately avoid an erosion of editorial independence, no matter how well-intentioned he may be. They worry that the structure and the atmosphere he’s creating will inevitably lead some mid- and lower-level editors to compromise principles, even if only in misguided attempts to achieve the profit objectives that Willes wants.

Bill Kovach, a former editor at the New York Times and Atlanta Constitution and now curator of the Neiman Foundation at Harvard University, says that while editors shouldn’t be ignorant about the business side of their papers, he fears that under Willes’ restructuring, “an advertising concern could negate a journalistic decision or even trump it.”

Because Willes has called for integration between the news and business sides of the paper that goes much further than that implemented at any other big-city daily, journalists everywhere are watching what happens at The Times carefully.

Parks steadfastly maintains that there is nothing to worry about. Journalists at The Times and elsewhere make ethical judgments every day on matters far more sensitive and complex than relations with their own advertising and marketing departments, Parks says. “If an editor at the Los Angeles Times does not know right from wrong and doesn’t have the courage to do the right thing, then he or she is in the wrong job and at the wrong paper.”

Before he became an editor, Parks was a Pulitzer Prize-winning foreign correspondent--widely admired for his intelligence, tenacity and productivity--and many in the journalistic community regard him as an insurance policy against any compromise of editorial independence at The Times.

But Parks, 54, is new to editing--and to the corporate infighting that is inevitable in a large conglomerate like Times Mirror, especially in a time of great upheaval. He’s been a reporter for 31 of his 36 years in journalism and, for 25 of those years, he was a foreign correspondent, based thousands of miles from the rapidly changing economic conditions and internecine struggles that buffeted company headquarters. He returned to this country to become deputy foreign editor less than three years ago, became managing editor a year later and assumed the editorship 17 months after that--a lightning ascent in a profession generally known for incremental, through-the-ranks grooming of top editors.

Willes, 56, is new to newspapers altogether. He has spent most of his career in business (15 years at General Mills, where he rose to vice chairman) and in government (11 years with the Federal Reserve System, where he was president of one district bank and first vice president of another). Many in the newspaper industry question whether Willes can really devise new strategies that have eluded people who have spent their lives running big newspaper companies. More important, reporters and editors at The Times and elsewhere wonder if, in his gut, he realizes that newspapers are a public trust, not just another moneymaking enterprise.

Willes’ ideas come from a background of “putting yellow boxes on a shelf in a grocery store,” Kovach says, “and mine come from a belief in our importance to people who govern themselves.”

Profitability Vs. Quality

A journalist’s objective is to put out the best newspaper possible. Profits provide the necessary resources for that job, but they are a means to an end, not an end in itself. A businessperson’s primary objective is to make money. Good journalism is one means to that end, but it’s not the easiest one.

Most of the most profitable newspapers in this country are highly profitable in large part because they are not very good. Their owners don’t reinvest enough of their profits in the editorial product--in increased news space, more bureaus, more and better reporters, editors, photographers and artists.

“If you’re going to own a newspaper or magazine, you have to understand what it is you own,” says Kurt Andersen, formerly the editor of New York magazine and now a columnist at the New Yorker. “Families that are longtime owners get it. People who buy a newspaper at 53 after a lifetime in shopping centers might not get it.”

It’s no coincidence that the New York Times and the Washington Post, long owned and run by the Sulzberger and Graham families, respectively, continue to win the kind of respect that eludes those newspapers that have lost--or never had--the protective umbrella of owners willing to sacrifice short-term profits for long-term success.

Of course, many family-owned newspapers never had that respect either; they were dedicated primarily to advancing the financial, political and/or social interests of their owners. The Los Angeles Times has been both kinds of family-owned newspaper--a journalistically derided but financially successful political tool of the Chandler family for most of its history and a journalistically respected (and even more financially successful) newspaper after Otis Chandler became publisher in 1960.

Today, many newspaper owners insist on high quarterly dividends from their papers, thus depriving the papers of money that could be invested in improving quality; there is little question that the shift from individual and family ownership to public ownership has increased the demand for higher short-term profits. In order to make their stock attractive to investors, newspaper companies promise higher profits every year (if not every quarter). That sets up unrealistic expectations. No business can expand indefinitely, and when revenues inevitably decline, even temporarily--because of a recession, higher newsprint costs or other factors--most publicly held newspapers feel they must still increase profits. So they cut costs--and, ultimately, quality.

“When I look at big newspaper companies across the board, the question that occurs to me is, ‘Are they all too intent on taking profit now and not intent enough on investing in content for the future?’ ” says Maxwell King, who announced his resignation as executive editor of the Philadelphia Inquirer the same day that Coffey left the Los Angeles Times.

Willes says that he agrees with the philosophy of investing for the future. “We tend,” he says, “to under-invest in the things that are required to grow newspapers . . . and the things that are going to grow the paper are, first and foremost, editorial content which is significantly better than anything else available to our readers.”

Willes resents the accusation that, as a businessman, he doesn’t have a visceral appreciation of--or commitment to--the independence of the daily newspaper. He says the years he spent in the Federal Reserve System “taught me firsthand the value of independence from internal and external pressures.

“It’s the journalism that I’m fundamentally interested in,” Willes says. “That’s genuinely exciting to me. . . . This business stuff is just stuff we have to get through to be able to afford to do what I want to do on the journalistic side.” That’s why, he says, he’s trying to “evolve a whole new way of thinking about” newspaper finances.

“The mental set in newspapers in general has tended to be, ‘Well, we’re going to have to shrink in order to get our [profit] margins up,’ and we certainly did our share of that,” he says. But to increase profits significantly, newspapers must improve editorially and find better ways to “connect the paper” to their readers. This, he says, will produce more circulation, which will lead to more advertising revenue.

Thus, the push for more circulation is critical to Willes’ plan.

The Battle to Boost Circulation

When daily circulation of The Times fell to 1,012,189 by late 1995--a drop of 230,000 from its 1991 all-time high--Times executives were deeply worried about the financial and symbolic implications of a further decline, below the magic 1-million mark. In an effort to avoid that, they cut the newsstand price of the paper in half--to 25 cents--and launched a $7-million advertising and promotion campaign.

Those moves stopped the paper’s circulation slide. Barely. By September 1996, circulation had inched upward by 16,884 subscribers--a 1.7% increase. That was the paper’s first year-to-year circulation gain in five years, though, and it was the largest gain of any metropolitan daily paper in the country--at a time when most major papers were losing circulation. The Times hired a small brass band to parade through offices at the corporate headquarters in downtown Los Angeles to celebrate the news.

Times circulation increased slightly again last year--up an additional 21,103 (2.1%). But there was no brass band this time. Willes isn’t satisfied with modest gains. Shortly after he became publisher, he promised to increase the paper’s daily circulation by 50,000 this year en route to a long-term increase of 500,000--almost 50% over the current total. (He’s already more than halfway toward his first goal: Circulation was up 30,000 during the first 11 weeks of the year.)

One key to the new circulation push is data developed by The Times’ marketing research department, which has identified and classified by interests and habits those people most likely to be receptive to the paper. Armed with that research, a newly trained subscription sales force has begun emphasizing the paper’s content, rather than its discount pricing (in part because people often quit when the discount ends, at which point The Times’ subscription becomes the most expensive of local dailies.)

Some other papers have long emphasized content over price, but in most of Willes’ other initiatives--the appointment of section general managers, the call for profit and loss statements for each section of the paper, the effort to increase profits by substantially increasing revenue--he has embarked on nothing less than a revolution.

Revolution is not, however, unprecedented at the Los Angeles Times.

For the first almost 80 years of its existence, the Los Angeles Times was a journalistic laughingstock of such well-known proportions that S.J. Perelman, the humorist, once wrote that while traveling through the western United States by train, he asked a porter to bring him a newspaper and “unfortunately, the poor man, hard of hearing, brought me the Los Angeles Times.”

Enter Otis Chandler.

A Newspaper’s Transformation

Chandler worked in virtually every department of the paper before he became publisher in 1960 and he was painfully aware of its shortcomings. Determined to overcome them, he spent money, opened news bureaus and hired top reporters and editors from other news organizations. Within four years, The Times had made Time magazine’s periodic list of the nation’s 10 best newspapers. Soon, journalists and other opinion makers began routinely mentioning The Times along with the New York Times and the Washington Post as one of the three best papers in the country.

“No publisher in America improved a paper so quickly on so grand a scale . . . as Otis Chandler did,” David Halberstam wrote in “The Powers That Be,” his 1979 book about the media.

Under Chandler, The Times almost tripled its circulation to more than 1 million daily and began publishing more news--and more advertising--than any other paper in the United States. The skyrocketing Southern California economy and burgeoning population fed what seemed to be an endless cycle of growth and prosperity.

The growth and prosperity continued for almost a decade after Chandler left the publisher’s office in 1980. Then came the end of the Cold War, the collapse of the aerospace industry and the Southern California real estate market--and the recession. Many of The Times’ biggest advertisers--department stores, grocery stores, financial institutions--folded or merged or turned to direct mail and other vehicles for their advertising.

The syndrome was similar for newspapers throughout the country, but it hit harder and lasted longer at The Times, in part because of demographic and economic conditions unique to the Los Angeles market and in part because the paper and Times Mirror were so accustomed to prosperity that they were unprepared for adversity.

By 1993, The Times’ annual profit margin had fallen from a 1986 high of almost 22% to 6.5%, far below the industry average; by 1995, the price for Times Mirror stock had tumbled from a split-adjusted $42 a share in 1987 to $18--and Times circulation had plunged almost 20%.

Much of the circulation loss was “voluntary”; The Times reduced the number of papers it sent to outlying areas because that circulation was costly to distribute and of little value to advertisers. But that was only part of the retrenchment that began at The Times in 1991.

Largely through “voluntary terminations”--cash buyouts--the paper’s news and editorial staff was reduced by 16.4%, from an all-time high of 1,347 full-time employees in 1990 to 1,126 in 1995. In the same period, the total “news hole” of the paper--the space available for stories, photos, headlines and everything but advertising--was reduced by more than 18%.

Times Mirror directors were so disheartened by the paper’s financial performance--and so worried about its future--that when Robert F. Erburu, Chandler’s successor as CEO and chairman of the board, retired in the spring of 1995, they reached outside the company for the first time to select his successor.

Moves to ‘Stop the Hemorrhaging’

They chose Willes, and he immediately embarked on a draconian budget-cutting campaign that left him with the nickname the “Cereal Killer.”

He slashed 700 jobs at The Times--150 of them in the editorial department--and eliminated 2,300 more at other Times Mirror properties, among them the Baltimore Sun, the Hartford Courant and Newsday in New York. He closed the money-losing Manhattan edition of Newsday altogether, closed the Baltimore Evening Sun, shut down several sections at the Los Angeles Times--World Report, Nuestro Tiempo and several regional zone sections among them--and imposed rigid cost-containment measures throughout Times Mirror.

Willes concedes that these cuts were damaging “in the short run,” but he says they were essential to “stop the hemorrhaging.”

He achieved that objective.

The Times’ operating profit last year was about 18%--more than double the level when Willes took over. That’s slightly more than what stock analysts say the Washington Post had and perhaps one-third more than what analysts say the New York Times had. Although still slightly below the industry average of 20%, Los Angeles Times profit margins are now “clearly within the realm of respectability,” Willes says. Times Mirror stock is now selling at about $63 a share, more than triple its selling price on the day Willes’ appointment was announced.

These improvements have made Willes a favorite on Wall Street, where--as John Morton, a respected media stock analyst puts it--”he clearly gets an A.”

His marks are somewhat lower among those reporters and editors who regard him as just another businessman more committed to profit margins than journalistic standards. The headlines on the major media stories examining Willes’ takeover and overhaul sounded a common theme: “Demolition Man.” “Blowing Up the Wall.” “Cap’n Crunch at the Helm.” “A Growing Clash of Visions at the Los Angeles Times.”

Willes acknowledges that he contributed to this anxiety, not only by the cutbacks he made as CEO but also by several comments he made.

Shortly after joining Times Mirror, Willes gave interviews in which he compared newspapers to breakfast cereals and Hamburger Helper--products with which he was most familiar from his General Mills days. Two years later, newly installed as publisher, Willes was explaining to a group of Times reporters and editors why he wanted a section designed specifically for Latinos. “My wife is very small,” he said, “and she got frustrated and stopped shopping in department stores because she couldn’t find her size--until they started having a ‘petite’ section.”

So: Have a “petite” section, and small women will shop in your department store; have a “Latino” section, and Latinos will read your newspaper. To many journalists who heard (or heard about) his remarks, the message seemed clear: Willes regards a newspaper as just another consumer product, no different from a box of Cheerios or a woman’s dress.

“That’s not how I think,” Willes says now. “I obviously shouldn’t have used that language.”

Two other events exacerbated apprehension about the new publisher among journalists at The Times and elsewhere.

Six days after Willes announced Coffey’s departure and his plan for section general managers, Debora Vrana, a business reporter at The Times, received a copy of a press release from an advertiser, along with a note from The Times’ ad department. The note said: “We received this announcement from one of our advertisers. Would like to run it on Page 2 or 3.”

Word of the request spread quickly through The Times. The journalists’ worst fears had been confirmed: The advertising department was asking reporters to give special treatment to advertisers.

Vrana protested to Willes. Bill Sing, the paper’s Business editor, said the information in the press release was not newsworthy and would not be published, and he, too, protested the intrusion by the ad department.

Willes and Parks dismissed the incident as “a naive mistake” by someone who had misunderstood the publisher’s intent--”a human error” of the sort that periodically happens, and is ignored, at every newspaper. Only the timing made it noteworthy at The Times, they said, and they sought to reassure everyone that the paper’s integrity would remain intact.

But three months later, Willes said he wanted portions of the Times Mirror annual report written and edited by top Times Mirror journalists, instead of the corporate public relations specialists who customarily write annual reports. Reporters and editors at The Times and elsewhere criticized this as a breach of legitimate barriers between the news and business departments. Journalists, they said, shouldn’t be writing corporate public relations.

Willes was stunned by the reaction. “We are fundamentally a journalistic institution,” he said, “and it would be nice to try to put out an annual report that gave a more balanced view” instead of the traditional “corporate spin.”

The report, published last Friday, mentioned the controversy surrounding Willes but was not critical of him or his initiatives, even though he gave complete freedom in choosing the writers and editing the material to David Laventhol, a longtime editor at newspapers in New York and Washington, a former publisher of The Times and now editor-at-large at Times Mirror. Both men say Willes didn’t read the material until after it was published.

“If you’re willing to allow complete journalistic independence in your annual report,” Willes says, “it seems obvious you’ll allow independence in your newspapers themselves.” (In keeping with that policy, Willes said he would not read any of this series of stories before they were published either.)

Indeed, Willes has repeatedly rejected suggestions that he will undermine the paper’s editorial independence. But announcing his radical restructuring and Coffey’s departure on the same day made it seem that Coffey was leaving because of what Willes was doing.

Both men deny that. Willes would have been Coffey’s fourth publisher in nine years, and Coffey, then just 11 days shy of his 51st birthday, says he thought it was time to leave so that Willes could “start with . . . his own editor.”

But Coffey did seem, at the very least, uneasy about Willes--about the prospect of his hands-on involvement in several new editorial ventures, about the whole general manager concept, about the idea of profit and loss statements for each section, about the possibility of further cutbacks in news department resources and, most of all, about the potential for a blurring of the lines between the business and editorial objectives of the paper.

Appearances notwithstanding, Willes says that he had to move quickly and forcefully on the restructuring, both because he believes the only opportunity a new leader has to make a major impact on his institution and its employees is when he first takes over and because The Times faces “urgent problems” that require “dramatic changes.”

Despite its seeming monopoly position as the only daily newspaper circulated throughout Los Angeles and Orange counties, The Times is vulnerable. It serves a highly mobile population, with larger concentrations of immigrants from many Latin American and Asian countries than are found anywhere outside those countries, all spread over a geographic area so huge that it dwarfs the combined area of the counties in which New York, Boston, Detroit, San Francisco, Pittsburgh, Milwaukee, St. Louis, Cleveland and Minneapolis are located.

In this sprawling, polyglot basin, The Times competes against 10 other local dailies--seven of which sell more papers than The Times in their market areas. Thus, The Times reaches only 22.8% of the homes in the Los Angeles-Orange County area, one of the lowest “penetration rates” of any big-city newspaper. (The New York Times’ penetration rate is even lower--9.4%--but it has almost twice as many homes in its primary designated market as the Los Angeles Times, and, unlike the Los Angeles Times, it is a national newspaper, drawing more than a third of its circulation from outside that local market. The Washington Post’s penetration rate is 49%, the Cleveland Plain Dealer’s 34.6%, the Houston Chronicle’s 31.4%.)

The Times has about 800,000 home delivery subscribers, more than any other daily in the country, and almost 500,000 of these have taken the paper for at least two years. But only 16 of every 100 new subscribers stay with the paper for even 12 months; thus, there are about 700,000 subscription cancellations every year, with some people subscribing, canceling, then subscribing and canceling again, all within a year’s time. The resultant turnover or “churn rate” is more than one-third higher than the industry average.

“You have to run like crazy just to stay in place,” Willes says.

Wooing Readers With New Sections

Newspaper circulation has been declining nationwide relative to the population for more than 30 years. In 1964, 81% of the American public read a newspaper on a typical weekday; last year, it was 58%. But newspapers have continually increased their advertising rates, and Willes says, “I guarantee you that’s a recipe for disaster.”

The erosion has already begun. Twenty years ago, 57% of all local advertising dollars went to newspapers; today, that figure is 47%. Total newspaper advertising revenue did increase an estimated 8.3% last year nationwide, but most of that increase was a result of higher rates, not increased ad volume.

Although most newspaper executives scoff at Willes’ promise to increase Times circulation by 500,000, Parks says that’s actually not ambitious enough. Parks thinks The Times must add 1 million new subscribers--in effect, double its current circulation. “I believe very strongly that the success of civil society in the 21st century is going to require greater participation by citizens in their society and in their government, and they need information to do that,” Parks says. “We’re a premier provider of information for the engaged citizen.”

But to be a premier provider, The Times will have to grow, not shrink.

Willes and Parks say that with the help of the section general managers, that’s exactly what they plan to do.

The buildup began last year, under Coffey and Publisher Richard T. Schlosberg III, when The Times added a weekly health section and several Business subsections, invested about $2 million to relaunch the Sunday magazine and spent $1 million on Thursday’s Calendar Weekend. Willes has since announced that The Times will begin publishing a special edition later this year to serve Northern California and perhaps Las Vegas and other areas as well. It will be patterned after the paper’s Washington edition, which has a limited East Coast circulation but gives the paper a daily presence in the nation’s capital; the new edition is largely an effort to reestablish and enhance the statewide presence The Times had before the retrenchment of the early 1990s.

The Times’ editorial staff was cut less severely than other departments at the paper during that retrenchment, and last year--after six consecutive years of cutbacks--the full-time staff actually increased slightly, from 1,054 to 1,114 (5.7%). The news hole also increased last year--by 6.2%--and total editorial expenses increased 2.7%. The editorial staff and budget are scheduled to increase again--albeit modestly--in 1998, when The Times’ total editorial budget will be about $109 million, a distant second to the New York Times’ $155 million.

None of these increases even approach the paper’s 31% increase in profits last year, though, and all the new and renovated sections and subsections offer what city magazines call “service journalism,” rather than the traditional newspaper diet of hard news, analysis and commentary on the major issues of the day.

Times Weaknesses in Staffing, Coverage

The Times has, among other shortcomings, weak Sacramento coverage, no full-time labor reporter (although Parks has recently approved hiring one and a search is now underway), and limited coverage of the federal regulatory agencies.

“Except for the really big stories, we seem to lose track of what government is doing for or to us,” says Frank Clifford, who writes about the environment for The Times.

Times coverage is also deficient in many local suburbs--in the South Bay, the San Gabriel Valley, the Westside and other areas once covered by zoned sections that were eliminated in the cutbacks of 1995.

(In an effort to improve that coverage, The Times last week launched the first of several Our Times sections--in Santa Monica. Eleven more are planned this year to report on communities on the Westside and in Ventura County and the Santa Clarita Valley. Some will appear weekly, others Monday through Friday. Although the sections will be inserted in The Times, they will be written and produced by Times Community Newspapers, a subsidiary of Times Mirror.)

The feature sections of The Times--Calendar, Book Review, Food and the Sunday magazine among them--have historically been understaffed when compared with the New York Times, the paper the Los Angeles Times has long measured itself against. One reason for this and other staffing disparities between the two papers: Although they have about the same size news and editorial staffs--approximately 1,100 people each--almost 300 members of the Los Angeles Times staff (about 25% of the total) are assigned to separate editions in Orange and Ventura counties and the San Fernando Valley; fewer than 30 New York Times editors and reporters are involved in suburban coverage.

Editors of the Los Angeles Times feature sections say they’ve been even more short-handed since the recession-era cutbacks, and editors throughout the paper also complain about a severe shortage of researchers, artists and copy and assignment editors. The news hole--especially for national and foreign stories--also remains well below what it was before the cutbacks. (Space in the main news section fell almost 16% from 1991 to 1997.)

In recent months, however, several important local reporting jobs have been filled, and the metro staff is now nearer its peak strength than it has been in several years. The Washington bureau has also returned to its peak strength, and resources for the Business and Sports sections have both been increased. Other section editors and their general managers are expected to ask for more staff and space when they present their 1998 business plans to Willes in the coming weeks. But many Times reporters remain skeptical about the likelihood of significant long-term increases in editorial resources, all the more so after several reporters were told they couldn’t take planned reporting trips late last year because of budget constraints.

Even in a year of near-record profits, Parks says, “we have to manage our budget.”

Willes wants 5% more profits this year, but he says he wants them to come from increased revenue, not reduced costs.

The Times’ new Health section--which was launched in September, shortly before Willes became publisher--is an example of the approach he wants.

A combined task force of editorial, advertising and other business department staffers met every Tuesday for the first nine months of 1997 to study the editorial and financial feasibility of such a section. But focus groups who saw early prototypes “raised credibility questions,” says Maria Kretschmer, general manager of the Health section until she left The Times this month.

Focus group readers thought the sections looked too much like vehicles for advertising.

After the prototypes were retooled, the section was launched; it brought in $1.4 million in advertising last year and turned a profit within three months, well ahead of schedule.

“Readers have been real responsive” to the section’s mix of health tips, advice columns, big graphics and “How I Did It” fitness profiles, says Michelle Williams, its editor.

Williams says she makes no attempt to please advertisers with her story selection or placement--”We’re not kissing their butts”--but the section isn’t likely to displease advertisers either. It doesn’t feature in-depth stories on drug recalls or managed care screw-ups or government investigations of pharmaceutical monopolies. It lacks the harder edge of the Washington Post’s weekly Health section.

“That’s not the purpose of Health--to be an investigative tool,” Williams says. “That’s Page 1.”

But many reporters at The Times worry that if their section editors are meeting regularly with general managers and becoming more aware of the identity of big advertisers, of marketing and promotion initiatives, of profit and loss positions, there will inevitably be a greater likelihood of self-censorship, even if only subconsciously. Over time, they fear, stories likely to be unpopular with advertisers--and likely to reduce revenue and profits--won’t appear as often on Page 1, or anywhere else in the paper.

Willes and Parks say this won’t happen, and while skepticism at The Times remains high in many quarters, a wait-and-see attitude is increasingly evident.

“It all depends on the quality of the people we have,” says John P. Lindsay, Times managing editor for features, who also oversees the Health section.

Some Times editors and reporters welcome Willes’ innovative spirit and his enthusiasm for newspapers in general after many years of hearing industry leaders publicly express their anxiety about the future of newspapers in the digital/electronic age.

“Anything that alters the lethargy that this paper--and this industry--has long suffered from is good,” says Steve Wasserman, the Book Review editor.

Laurie Ochoa, food editor of The Times, feels she’s been battling decline rather than lethargy. Because so many supermarkets have merged or folded in recent years, food advertising in The Times has plummeted--and editorial space in the Food section has plunged along with it, down almost 30% from 1990 to 1996.

“When you see that,” Ochoa says, “you want to see if you can work together with the ad department to come up with ideas that will give you more ads, more space and more resources to do your job better, without compromising your independence.”

Toward that end, Willes has asked his general managers to come up with specific business plans--including readership goals and financial statements for each section. He realizes that with most of a big-city paper’s advertising revenue coming from just two sections--classified and main news--most sections can’t be profitable. “But progress is made at the margins,” he says. If a section loses $6 million one year but “only” $5 million the next year, “that’s real progress--especially if the section has 40,000 more readers.”

Willes is determined to monitor and reward progress--to devise, for example, a system of bonuses for section editors based on the profitability and/or readership of those sections. As part of that effort, he wants to evaluate readership of the paper more vigilantly than in the past. In January, The Times began “continuous readership tracking,” interviewing 50 people at random every night, five nights a week, by telephone.

Through the course of the year, The Times will also conduct other readership surveys, including several on individual sections of the paper. The surveys are expected to cost about $1 million--at least twice as much as the paper spent on reader research last year.

“Newspapers can’t attract the increased readership they need to both survive financially and serve the public simply by our own hermetic notions of what good journalism is,” says Doyle McManus, chief of the Washington bureau of The Times. “It makes very good sense for journalists to look at what market research can tell us. But it doesn’t make sense for journalists to ask or to allow market researchers to tell us what should be on the front page.”

A Desire to Be Relevant

Troubled by the example of local TV news programs, most of which emphasize violence, car chases, celebrities and sex because that’s what their consultants tell them their viewers want, many journalists have long feared that readership surveys can lead newspapers to similarly pander--to give readers only what they say they want, rather than what they need to be enlightened citizens.

But because the daily newspaper’s hold on its readers has become “ever more tenuous,” Willes says papers must publish more stories that are “so compelling and so relevant that readers choose to make time for the newspaper.” Surveys may help shape ideas on the “packaging and presentation” of stories to help bring that about.

Toward that end, a redesign of The Times has been under study for several months, initiated by Coffey and Parks when Schlosberg was publisher. The redesign is intended to build circulation, and in today’s media climate, that almost inevitably means a lighter look--more Page 1 “teasers” to pull people into the paper, more pictures and other graphic elements and, perhaps, fewer stories on Page 1. But in showing prototypes of the proposed new design to focus groups, Ed Batson, director of marketing research for The Times, says it’s clear that readers see The Times as a source of “serious, comprehensive journalism . . . and any redesign must have fidelity with that.” When elements in the prototypes have looked too frothy or garish, focus groups have objected.

The redesign is expected to be completed in June and implemented in September, and Batson says that whatever is decided, it’s obvious that “if we abandoned foreign and other substantive news, not only would it be abandoning our journalistic obligation but it would be bad marketing strategy.”

Marketing strategy plays a major role in Willes’ plans for The Times. He says research shows that most people come to the paper primarily because they are interested in specific subjects or sections but that, once into the newspaper, “they read across the paper.” If the editor and general manager of each section can devise plans to attract even more--and more committed--readers to their sections, readership of the entire paper will increase.

But some suggestions for promoting individual sections involve partnerships with institutions The Times covers--a “Times Sports Club,” for example, that would involve joint efforts with various professional sports teams. Although such plans are “purely hypothetical” at this stage, says Jeffrey S. Klein, senior vice president and general manager for news at The Times, they are typical of the kind of thinking that Willes is encouraging.

Willes is triggering other kinds of thinking--and other concerns--as well. Many reporters at The Times and elsewhere ask if it’s appropriate for The Times to enter into business partnerships with sports teams and cultural and financial institutions that it covers. Such activities, they say, can create the potential for--or at least the appearance of--a conflict of interest.

Willes’ oft-stated view that the news media are too negative in their coverage also makes many journalists uneasy. They worry that he wants a more superficial approach to the news, a suspension of traditional journalistic skepticism and softer coverage of governmental and corporate wrongdoing. Similarly, his statements that newspapers must “do more than just report and comment” on serious social problems, that “it’s not enough to be accurate and complete . . . balanced . . . insightful” has triggered concerns that he favors journalistic crusades over impartial reporting and that he might encourage a blurring of the lines between the two.

Willes says that all such concerns are groundless. To adopt any of these attitudes or practices would be both bad journalism and bad business, he says, because they would diminish the paper’s credibility, “our single greatest asset.”

Nevertheless, apprehension among many reporters at The Times over Willes’ intentions was exacerbated anew by reports early this year that he had telephoned Mayor Richard Riordan to offer support while Riordan was pondering a run for governor.

Riordan decided not to run, and Willes says that he said nothing inappropriate to him. But Willes does say that he thinks Riordan would have made a good governor, and he does argue that newspapers must work harder to “make a significant difference in their communities” as part of their effort to identify with and serve their readers.

That can be a difficult task--a narrow line to walk--as journalists found in an earlier era, when many papers were the political pawns of their owners. Since The Times was once such a paper, journalists familiar with its history--both its early, sorry history and its later, lustrous history--worry that Willes’ desire for more readers, advertisers and profits may lead the paper back to the days when it was as journalistically reviled as it was financially profitable.

To be fair, some uneasiness about journalistic compromise at The Times preceded Willes’ assumption of the publisher’s job; they accelerated rapidly with the massive cutbacks of the early to mid-1990s.

That’s a major reason that more than 25 Times reporters and editors--many of them among the paper’s top talent--left the paper to go to work for the New York Times in the years immediately preceding (and following) Willes’ arrival as CEO.

Some of those who participated in this unprecedented exodus left for personal reasons. But many left because the cutbacks persuaded them that with Otis Chandler gone, the remaining members of the Chandler family--still the largest shareholders in Times Mirror--were increasingly committed to corporate profits rather than journalistic excellence at a time when the New York Times--long regarded as the nation’s best and most influential newspaper--was continuing to expand, improve and adhere to traditional values.

Otis Chandler, who has been withdrawing from Times Mirror in stages ever since he left the publisher’s office in 1980, will sever his formal ties when he retires from the board of directors in May. Several other longtime board members will also retire then, among them Laventhol, who was publisher of The Times from 1989 to 1993, and Erburu, who succeeded Chandler as chairman of the board in 1986 and served until Willes took over. That will leave the new regime--Willes and his supporters on the board--clearly in charge.

What direction will they choose for the company and the newspaper? Will Willes be able to stop the exodus from the Los Angeles Times? Will his initiatives lure more readers and more advertisers and generate more revenue to make the paper even better, without compromising its journalistic integrity? Or will the bazookas he’s using to demolish The Wall also demolish the editorial independence and high standards of the newspaper that Chandler once said would ultimately “knock the New York Times off its perch”?

Willes moves quickly. He expects to have most of his initiatives in place by year’s end. The answers should not be long in coming.

“Conceptually, what he is doing offers huge possibilities and huge dangers,” says Paul Steiger, managing editor of the Wall Street Journal and a former Business editor at the Los Angeles Times. “Whether it’s a success or a failure depends on how it’s managed, how it’s carried out.”

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Jacci Cenacveira of The Times’ editorial library assisted with the research for this series.

About This Series

The Times today presents the second in a three-part series examining the controversy and implications involved in the rapidly changing relationships between newspapers’ editorial and business departments.

* SUNDAY: In an effort to increase revenue in a time of growing competition and diminished readership, many newspapers are taking the risky step of breaking down “the Wall” that has long separated (and insulated) their news departments from their advertising, circulation and other business departments. Many reporters and editors worry that this could compromise their editorial independence.

* TODAY: When Mark Willes took over as publisher of the Los Angeles Times last fall and announced several radical changes in traditional newspaper structure and operations, The Times immediately became a controversial case study on an issue confronting newspapers everywhere: Will lowering jurisdictional barriers inevitably lead to lower journalistic standards?

* TUESDAY: The “Mohonk group” forged cooperative ties to replace “guerrilla warfare” and “a dialogue of the deaf” between the news and business departments at the New York Times, where reporters and editors have historically protected their turf with missionary zeal. Also: Magazine editors, long more vulnerable to business pressures than their newspaper counterparts, feel the heat more than ever these days.

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L.A. Times Stat Sheet

The Los Angeles Times is the dominate paper in the area, but it has vigorous competitors in several key communities.

Los Angeles Times: 50%

Orange County Register: 20%

Daily News: 10%

Long Beach Press-Telegram: 5%

Other: 15%

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Los Angeles Times Circulation

Circulation of the Los Angeles Times declined from 1991 to 1996, then began to climb again.

Source: ABC Publisher’s Statement

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The Cost-Control Battle

Employee salaries and raw newsprint are the two biggest expenses for most newspapers. As part of a companywide effort to cut costs from 1990 to 1996, The Times reduced its staff and its “news hole”--the space available for stories, photos and everything but advertising. With profits significantly up in 1997, both the editorial staff and the news hole increased slightly.

Total Columns Daily and Sunday*

1990: 154,542

1991: 119,191

1992: 136,363

1993: 131,936

1994: 133,206

1995: 126,040

1996: 121,845

1997: 129,390

* There are six “columns” on a newspaper page, each representing about 21 column inches of space for editorial material or advertising.

*

Barriers Fall, Questions Arise

Other major news organizations took a hard look at the Los Angeles Times when Mark Willes became publisher, Shelby Coffey III quit as Editor and Willes announced several initiatives that would break down “The Wall” that had traditionally separated and insulated the news department from the advertising, circulation and other business departments.

ON THE WEB: This series will be available Tuesday on The Times web site at:

http://161.35.110.226/thewall