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Memo to Sam Zell and Randy Michaels

Monday, June 23, 2008  |  posted by Hugh Hewitt
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Memo To: Sam Zell and Randy Michaels

Subject
: The Collapse of the Los Angeles Times

I heard the news today, oh boy. From your Manhattan competitor:

For newspapers, the news has swiftly gone from bad to worse. This year is taking shape as their worst on record, with a double-digit drop in advertising revenue, raising serious questions about the survival of some papers and the solvency of their parent companies.

Ad revenue, the primary source of newspaper income, began sliding two years ago, and as hiring freezes turned to buyouts and then to layoffs, the decline has only accelerated.

On top of long-term changes in the industry, the weak economy is also hurting ad sales, especially in Florida and California, where the severe contraction of the housing markets has cut deeply into real estate ads. Executives at the Hearst Corporation say that one of their biggest papers, The San Francisco Chronicle, is losing $1 million a week.

Over all, ad revenue fell almost 8 percent last year. This year, it is running about 12 percent below that dismal performance, and company reports issued last week suggested a 14 percent to 15 percent decline in May.

“Never in my most bearish dreams six months ago did I think we’d be talking about negative 15 percent numbers against weak comps,” said Peter S. Appert, an analyst at Goldman Sachs. “I think the probability is very high that there will be a number of examples of individual newspapers and newspaper companies that fall into a loss position. And I think it’s inevitable that there will be closures in this industry, and maybe bankruptcies.”

Word is the numbers are sinking fast around Spring Street as advertisers figure out the subscription rate no longer reflects the touch rate at all. The Sports and the Calendar sections gets read by a significantly higher percentage that the front and California sections, right? Nobody even seems to get mad at the paper anymore. Nobody cares. It is a near-dead enterprize.

How can what is essentially a monopoly have hit bottom like this? You already know about the productivity problem among the staff, and you suspect what critics on the right have long argued: The paper is a club for elite lefties talking to each other. There aren’t enough of them to support the advertisers, and even they are bored with the paper. The Huffington Post has replaced you as the must read among the city’s lefties.

What to do? To start with, recognize this is a crisis, not a bad couple of quarters or back-to-back years. You aren’t Detroit. People don’t need your paper the way they need cars, and you don’t second and third chances. Arrest the slide now or dump the enterprize on some lefty do-gooder who will pay you a decent amount fore the vanity pop of running a once significant institution.

If you keep it, do some bold things to make it interesting.

The obvious thing is to begin to let the readers who remain have some input, at least by noting via visitor counters on every story showing how many readers are pausing on every bylined article and by allowing comment boards on each of them.

Why not show the public what is and isn’t being read across the board? The “most viewed” and “most e-mailed” features are a start, but how many views and e-mails, exactly? And if that bit of information is useful to the reader, how about the reverse: What isn’t getting read?

Score-keeping among stories would give readers extra information and a reason to check back. Your online traffic will rise. That’s the point, isn’t it?

Comments are more problematic until you decide you don’t care what goes up after you get rid of the profanity. Tell your reporters and columnists not to bother reading them, but count the hits for the purpose of selling ads. Reporters will complain that the comments are mean, even abusive. Welcome to new media. The public barks back.

Award a daily bonus to the most visited story. Sure, it is American Idol meets the newsroom, but the point is readership, isn’t it? (Not for many of your staff, I know. But for you and shareholders it is.) I am not proposing you violate the sacred trust a reporter has to tell his or her story as his or her professionalism obliges it be told. I am just suggesting that the feedback be instant and public. Does it make sense to spend thousands of dollars researching and writing a story that very few people read? If you want to engage the audience, recognize that they are the audience, that their choices matter, and give them a voice.

And how about a bit of Survivor thrown in? List your columnists. Ask your readers which one gets to stay. Vote someone off the island. Repeat process. Then fill up on funny, smart writers like Mark Steyn, Christopher Hitchens, Mickey Kaus and other folks who will cost you but who actually attract readers, not drive them away.

Start a daily column on the paper itself –what is going on, the changes, the finances. Put the inside on the outside.

Finally, every newsroom is a reality show waiting for the cameras to roll. The combination of creative talent and enormous idiosyncrasies, the ambition and the paranoia, the old-timers mailing it in and the J-school bright-eyed hunting for the Pulitzer is too good to pass up. Time to install the cameras and sound booms and start editing out the mass of dull drudgery from the interesting moments. The prima donnas will complain until they see themselves as future stars. If Hulk Hogan and family can generate an audience, imagine what “Spring Street: Season One” could do for the bottom line.

Call me. I’m here to help.

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