June 06, 2014

The LA newspaper scene, especially the Aaron Kushner part, is imploding

And, imploding big-time, in the case of Kushner, owner of the remnants of Freedom Communications and his flagship paper, the Orange County Register.

Earlier this year, Kushner expanded into L.A. with his Los Angeles Register, first of all. He also bought the Riverside Times out in Riverside County, and announced a stand-alone Long Beach Register. The first and third decisions being despite L.A. already having both the Times and Daily News and Long Beach also already having a daily.

Problem? It's become more and more apparent that the emperor has no clothes, and, despite some ethically dubious attempts to rake for cash, also has no money, for all of this.

Ken Doctor notes how the Kushner yellow flags have now become red. The Long Beach rollout cut back to weekly. Community sections cut back in the OC Register. And, the biggies? Mandatory two-week furloughs, plus late vendor payments.  

Near the end of that piece, Doctor speculates how wide-open this could leave the LA newspaper field:
Finally, the wider area  — the Register's playbox of southern California — emerges as ground zero in whatever comes next for metro newspapering. Tribune is about to spin off Tribune Publishing and its L.A. Times; its eventual fate and ownership is unknown. The Los Angeles News Group, soon to be up for sale by Digital First Media, faces its own uncertainties. And now we have to wonder what the next turn of the Register will be.
As I Tweeted Doctor, I wouldn't be surprised if, in five years, L.A. is without a daily newspaper, just like it's without NFL teams.

Here's why.

First, large chunks of the area don't seem to miss either the NFL or print newspapers.

Second, in LA itself, the major "industry" is entertainment. Perez Hilton, TMZ, etc., have been cuting into that for years, hurting the Times. The Daily News was always more of a "poaching" operation, and since it's heyday, the Southland's primary growth has been to the east, not the northwest.

As for the parents? The Times' parent's parent, "digital first" media company Digital First Media has apparently hit the end of the road.

Not only has it killed off a centralized "content" production hub (I refuse to call it a syndicated news bureau), but it is reportedly looking to sell off its entire set of newspaper holdings. Despite the naive love for print by the likes of Warren Buffett, I don't doubt that post-Great Recession newspaper prices have peaked for anybody buying them as a media business, rather than a rich man's playtoy.

It looks like DFM is swinging the ax hard, a possible pre-sale slashing, if it's ending the "Faith" section of the paper in the capital of Mormonism. And, doing a giveaway renegotiation of the JOA agreement in Salt Lake City.

So, like when Freedom was broken up a couple of years ago, there will probably be some regional sales.

The L.A. Times is part of the Tribune Company, which is splitting into print and non-print divisions. Doctor questions the debt level that's being dumped on the print division. Now, it's a split, not a sale, but most of that debt will be owned to the non-print half of the split, and a fair chunk will be due immediately. In addition, the non-print division will keep key office space and charge newspapers rent. Obviously, one way to make sure that debt gets serviced and other things get paid is ... cut staff.

Given that the Trib Co cut 1,500 print division jobs, total, in the previous two years, there's not slack in the system right now. Many more cuts, and the L.A. Times will look like ... the L.A. Daily News.

Sounded like dominoes all lining up for Kushner, right? I'm sure that, even discounting the PR smiley faces his privately owned company puts out, he thought so a few months ago.

Meanwhile, yet other news could make him greedier yet. Per Doctor's piece, blatantly and thuggishly conservative and boosterish rah-rah San Diego businessman Doug Manchester, owner of the old Union-Tribune, also wants to sell.

But, whatever Kushner thought, let alone told the public, a few months ago, the truth was already a bit different then, though not as bad as now.

Earlier this year, Doctor noted Kushner's lack of consistency in hiring and firing, and despite all his self-ballyhooing, the seeming lack of a consistent vision. He also noted that, despite trends being trends, and continuing for a decade-plus now, he was continuing to invest in print to the neglect of digital.

And, now, those money woes. On those, I'm willing to go even further than Doctor. Rather than a vision of print newspaper expansion, or just that, I wonder if Kushner's been running something that, if not a Ponzi scheme, is at least the financial equivalent of a three-rail bank shot. Deaden one rail, or pull one domino out of the string, and he's in trouble with his whole bigger picture. (Update, June 11: Ryan Chittum of CJR has more on Kushner's current woes.)

Picture L.A. with three roughly equal papers, all in a war and fighting over diminishing scraps of print ad money. Picture Kushner also overextending with a San Diego edition. Picture him thinking about expanding Riverside into San Bernardino. (Per that link above, all of this is quite possible, with yet another zig, then another zag. This long profile of Kushner from the alt-weekly OCWeekly at the time he took over the Register ads more detail.)

Then picture him facing a debt call in 3-4 years and his own bankruptcy, then getting reverse-vultured. Soon enough, one of the three L.A. papers will go Daily Mail in a bid for cheap webclicks. Or the Kochs, as feared more than reputably rumored, will buy the Times on a fire sale. Or, a nutjob with media experience, Phil Anschutz, will do that.

So depending on what gets sold (or spun off) when, for how much, and with how much debt load to the new owners, the print media world in the Southland could see a new race to the bottom.

And, that race to the bottom, in 10 years if not 5, ending with no print daily paper in L.A.

The big issue is that, as Michael Wolff notes, we still haven't figured out how (with select exceptions) to make the online model pay. I've blogged before that the Net is exactly the opposite of print in this way. Because space for stories was limited, it made the "information" of ads pricey, to quote the second paragraph of Stewart Brand's famous saying — one that Gnu Media gurus routinely ignore. Wolff adds elsewhere that advertisers have figured out that Net traffic numbers aren't real, either, which is why click-per-impression rates continue to drop. (Yet more from Wolff here.)

On the Net? Because story/photo/video/space is limited only by server size, and every daily paper with a website, plus top blogs and news aggregators, post wire service stories, ad "information" is almost free, even if it doesn't "want" to be so.

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