Explaining Southern California's economy

How much traffic is the Los Angeles Times willing to lose on new paywall?

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David McNew/Getty Images

The Los Angeles Times building as seen on the evening of September 20, 2006 in Los Angeles, California.

It's finally happened. The Los Angeles Times has joined the New York Times and the Wall Street Journal in charging for online content. It's a paywall, but they're not calling it that. They're calling it a membership program. And the switch gets flipped March 5.

LA Observed sums it all up (and also included LAT President Kathy Thomson's memo):

Freeloaders get 15 stories for free in a month. Otherwise, it's $3.99 for a week of digital access, less if you take the Sunday paper in print, the Times story says. There's a cheaper introductory rate of 99 cents for four weeks of what the paper calls a membership program, to go into effect March 5. Print subscribers get the online paper for free.

You can compare this with the New York Times paywall, which we learned earlier this month has managed to convince 325,000 folks a month to to pay for access the online edition. The NYT also charges a 99-cent four-week intro rate, but thereafter it jumps to $15-35, depending on whether you want full online, mobile, and tablet access. For now, the LAT is keeping tablet and mobile access free — perhaps because it's reportedly pursuing a proprietary tablet that may affect how content for the device is bundled. 

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Why not just start newspapers from scratch?

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AP Photo/Sang Tan

A man views a news stand displaying national newspapers, some carrying the story on WikiLeaks' release of classified U.S. State Department documents, at a newsagent in central London, Monday, Nov. 29, 2010.

It's becoming abundantly apparent that even a robust online presence can't rescue newspapers as we know them. The problem is simple: online revenue, while growing, can't replace the print losses. This has seriously undermined the profits margins of big-city dailies, from the New York Times to the Los Angeles Times to the Washington Post. Small-market dailies are having an easier time of it, but that's because they have lower costs to support and don't need to become online powerhouses.

This is from the Wrap:

Web traffic for newspapers keeps growing, but not fast enough for Washington Post staffers, who on Wednesday learned there would be yet another round of voluntary buyouts at the paper. 

The buyouts - up to 48 news staffers at the Post, according to the paper's ombudsman - are the latest in a new round of cuts at major newspapers as online traffic grows and overall unemployment numbers fall nationwide.

The average number of daily visitors to Washington Post's site jumped by more than 3 million, or nearly 15 percent, during the last quarter of 2011, according to a study released last week by the Newspaper Association of America.

The number of unique visitors over that period increased nearly 6 percent, while the total minutes visitors spent on the site rose by 14 percent.

But all those eyeballs are not translating into real money, or at least not at enough of a clip to cushion circulation losses and declining print advertising revenue. 

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Aurelius Capital Management: The hedge fund that's keeping Tribune in bankruptcy

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Jeremyiah/flickr/cc

Tribune Company, which owns the Los Angeles Times, has been in bankruptcy for...well, years. And according to recent reports, it won't be coming out of Chapter 11 any time soon. So what's the holdup?

Basically, it's two very large lenders versus an incredibly tenacious hedge fund. On one side, we have Oaktree Capital Management and JPMorgan Chase. Oaktree invests heavily in "distressed debt" — it has close to $30 billion of it's more than $80 billion under management tied up in defaulted or defaulting securities. According to Bloomberg, Oaktree along with Tribune's other "senior creditors" hold around $3.4 billion on a total of $8 billion that Sam Zell borrowed to buy Tribune in 2007.

For the record, Zell's buyout took Tribune's total debt to a staggering $13 billion.

When Tribune finally exits bankruptcy, Oaktree will exchange its debt for equity — an ownership stake — in the new company. To do this, they want Tribune's bondholders to effectively take a $500 million payoff, then fight it out in court over whatever is left of the "bad" company while a "good" company can emerge from Chapter 11.

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The Trouble with Triblets: Why Tribune's proprietary tablet is a bad idea

I don't know how I missed this, but I did. One of the things I learned after Russ Stanton stepped down as editor of the Los Angeles Times is that the paper's parent company, Tribune Co., is developing its own tablet — not a new and special app for the tablet market, but an actual proprietary tablet — and, from what I gather, it intends to give it away to subscribers. Presumably, the glorious Tribune content on this tablet won't be paywalled, although to Web users the paper will. Who knows, there may even be be content that's exclusive to the tablet.

The Tribune tablet — the Triblet? — is not a good business idea. It's worse than New Coke. Worse that Qwikster. Worse the the DeLorean. Worse than the Edsel. I'd have to stretch to find a more foolhardy concept, far back beyond the meager parameters of my own lifetime. Napoleon's invasion of Russia leaps to mind...

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LA Times gets fourth editor since 2005

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David McNew/Getty Images

Los Angeles Times building in Downtown LA

I got in just in time today to discover that the Los Angeles Times continues to be a paper where top editors don't last very long anymore. Russ Stanton, who had been the paper's editor since 2007, "will step down," according to the LAT's own story. His successor is Davan Maharaj, currently the managing editor, who's been with the paper for 22 years. 

Maharaj is the LAT's 15th editor but its fourth since 2005. What's been abbreviating the tenure of the paper's top editors? Problems with Tribune Company management. In 2005, confronted with cost-cutting demands, former Baltimore Sun editor John Carroll left, later to resurface at Harvard's Kennedy School. 

Next up, former New York Timesman Dean Baquet — a Carroll hire — had a famous and by some accounts heroic standoff with Tribune over newsroom cuts. He went down and his by-then sympathetic publisher, Jeffrey Johnson, went with him. Baquet is now back at the New York Times. 

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