Business Update with Mark Lacter

Latest on Tribune Company's sale of the LA Times

There's been talk for some time now about the LA Times being up for sale by the Tribune Company.

Steve Julian: KPCC business analyst Mark Lacter, are they getting any closer to a deal?

Mark Lacter: Not as far as we know, Steve.  The Tribune Company, which owns the Times, had been expected to be further along in the sale process by now (Tribune said earlier this year that it would start shopping around all of its newspapers).  Some possible complications have cropped up over taxes and Tribune's stake in the website, Career Builder - both of which might gum up the asking price.  But setting all that aside, Tribune's newspapers are just not doing very well.  Ad revenues continued to slide in the first quarter, which wouldn't come as a big surprise to anyone who has seen the size of the LA Times as of late.  And, daily print circulation is just 423,000 - stunningly low.

Julian: Had been over a million, hadn't it?

Lacter: Back in 1990, the paper had a circulation of 1.2 million, and as recently as 2006, it was over 800,000.  So, that's quite a drop.  Then again, just think about the San Francisco plane crash over the weekend - all the information was readily available on television, radio, and the Internet way before the Sunday LA Times landed on your doorstep.  There's a Gallup poll that found 55 percent of those surveyed said TV was their main source for news; print newspapers were at 9 percent.

Julian: Most of what we've heard about this sale centers on one of the possible bidders, the Koch brothers - those are the conservative billionaire investors.

Lacter: Yeah, their interest has created a firestorm among some folks.  But, the real question is not so much who the buyer will turn out to be (assuming there is a sale), but what on earth they intend to do with the papers?  The LA Times still makes money, and the digital side of the operation is showing growth, but what kind of future does the business have?  And, might that future be significantly rejiggered to focus on, say, local news?  As for Tribune Co., its interest these days is in television stations; last week, the company said it was purchasing another 19 stations, which makes Tribune the nation's largest broadcaster (here in LA, it owns KTLA, Channel 5).

Julian: LA's new mayor, Eric Garcetti, is pushing for more movie and TV production in town - what's his plan?

Lacter: Well, the new mayor says that runaway production is an emergency situation, and that he wants to appoint a film czar to help remove many of the roadblocks to film in the city of LA.  But, what Garcetti really wants is to expand the tax giveaways for production companies interested in filming locally.  Other states - and even nations - have these incentive programs for movie and TV producers, and that's resulted in a loss of some filming activity in the LA area.  The state of California currently provides filmmakers with tax credits, but the subsidy is only good for $100 million a year, and that's not enough to cover everyone who wants to take advantage of this free money.

Julian: Is it fair to help one industry over another?

Lacter: That depends on how you view the role of government in stuff like this.  Another basic question: whether these tax breaks do any good for the economy (you know they've done like a zillion studies on this, and there's no easy answer because the numbers are sliced and diced so differently)?  But, what you really have to ask is whether incentives are needed.  Make no mistake, the entertainment industry is still centered right here.  No other location comes close in cranking out content - and last week came word that location shooting in LA was up sizably in the second quarter.

Julian: So, you're saying it's not an emergency situation...

Lacter: Not at all, but it is a changing situation.  You see it with the explosion of Web TV over the past year or so, you see it with the greater use of freelancers instead of staff people - the reality is that this business will never go back to the way it was structured 20 or 30 years ago.  It's just not going to happen because the global economy won't allow it to happen.  So, do you try to chase after the past or focus on the future?  At this point, it doesn't seem like tax credits are the answer.

Mark Lacter is a contributing writer for Los Angeles Magazine and writes the business blog at LA Observed.com.


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