Monday, September 18, 2006

Don't Hold Your Breath: Why You Shouldn't Expect The Los Angeles Times To Be Sold Anytime Soon

Today's Wall Street Journal led with a roundup on the latest dustup at The Los Angeles Times, and the supposed pressure on Tribune to sell its largest and best paper.
But I doubt that's in the cards. Here's why:

---Ship Without A Rudder -- The Times, even in its diminished state caused by years of budget and staff cuts, is still a great newspaper, routinely winning Pulitzer prizes and the grudging admiration of its rivals. It still stirs the drink when it comes to entertainment coverage, while its vaunted foreign bureaus will now also service most of the other Tribune properties who lost their own bureaus thanks to the beancounters in Chicago. Take them away and most foreign news in those papers will come from the wires, which could include the LA Times via a syndicate, in what would be quite an ironic and sad turn of events.
---Still A Cash Cow--Unless you're a greedy institutional investor who waxes nostalgic about the oceans of black ink flowing from newspapers' bottom lines during the dot-com boom, then a 20 percent profit margin like the one generated by the Times is mighty respectable. The Times is responsible for about a quarter of Tribune's publishing revenue, according to the Journal. Take that away, and the company is much-diminshed, more damaged goods than nimble.
---Economies of Scale--The likes of Ron Burkle and David Geffen have been sniffing around the Times sensing an opportunity, not to mention the lofty goal of making the Times locally owned again (we all know how well that's worked out in Santa Barbara, after all). But when these billionaire wannabe publishers have to negotiate their own deals for such mundane items as newsprint and health insurance, they're on their own. No corporate rates spread over many properties. Then they have to justify the price they paid. That means making a buck. That means cutting jobs. That spells disaster.

It's still possible for Tribune to fold in on itself and be broken into pieces a la Knight Ridder if Wall Street is truly ravenous. But it's doubtful Tribune will facilitate that by getting rid of the Times. At least not yet.

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