The L.A. Times’ Baffling Economics

Yet another staff petition is circulating at the Los Angeles Times concerning publisher Kathryn Downing’s idiotic decision to share advertising revenue from the special issue of the Times Sunday magazine about Los Angeles’ new Staples Center arena with … the Staples Center. (This novel arrangement was made known a couple of weeks ago by New Times L.A.) An earlier staff petition protested the arrangement as a violation of journalistic ethics, and last week prompted from Downing 1) a bizarre apology in which she admitted she didn’t know much about how newspapers work; and 2) a refusal to resign.

The new petition, dated Nov. 2 and addressed to L.A. Times editor Michael Parks (who has said he didn’t know of the financial relationship and does not approve of it), urges Parks to publish a lengthy investigation in the paper of how the Staples fiasco occurred:

One of the most important steps the Times can take is to publish in its own pages a thorough examination of the events that led to the Staples deal. The Times owes nothing less to its readers and to its staff.Others have written about the Staples controversy and will continue to do so. We need to do the definitive piece and do it first–not have it dribble out in other places.

The petition cites as the main precedent for such an investigation Donald Barlett and James Steele’s Philadelphia Inquirer investigation of Laura Foreman in the late 1970s. (Foreman was a political writer at the Inquirer who had an affair with a local pol while covering local politics for the paper.) The Times petition is signed by many important people at the paper, including city editor Bill Boyarsky, Washington bureau chief Doyle McManus, and such prominent L.A. Times writers and reporters as Kenneth Turan, Howard Rosenberg, Bob Drogin, and Sam Fulwood. (Chatterbox suspects other names have been added to the list since he acquired a copy.)

The petitioners have a good idea, and not just because it might cost Downing (and maybe even Mark “Captain Crunch” Willes, the Times Mirror chief whose talk of more cooperation between the business and news departments of the newspaper probably led to this fiasco) their jobs. There remain many unanswered questions about the Staples deal, of which the “journalism ethics” question is only one–and perhaps the least interesting. Why did the L.A. Times think its Staples deal was smart from a business perspective? According to the sketchy information available (some of it from the L.A. Times’ own limited coverage; click here for the best piece), the deal was as follows: The L.A. Times, which for all practical purposes enjoys monopoly status in Los Angeles, is paying the Staples Center, which desperately needs publicity from the L.A. Times, somewhere between $2 million and $3 million annually. (The ad revenue from the special issue of the L.A. Times magazine that the Times handed over to the Staples Center apparently was a down payment on these dues.) In exchange, the L.A. Times is getting a bunch of ad signs posted inside and outside the Staples Center; the right to sell copies of its newspaper inside the arena; and its own “luxury suite” (i.e., skybox). The right to sell copies of the L.A. Times in the Staples Center is surely of negligible value. Chatterbox suspects the same is true of the ad signs; but even if there’s stupendous value in the TV exposure that results, it’s hard to see how the ads could be worth more than $500,000. (In Philadelphia’s Veterans Stadium, a 48-foot ad over the center-field seats currently costs at most $300,000 per season.) The skybox is probably necessary to pamper advertisers; but if the Times had simply rented its own like most corporations, the annual cost would apparently have been at most $300,000 a year, according to the L.A. TimesRoy Rivenburg. This suggests that, instead of paying $2 million to $3 million per year to the Staples Center, Downing should be paying something under $1 million.

An irony in all this is that the real way to make money off the Staples Center would have been to pander to advertisers with a special issue of the L.A. Times magazine (which the Times did) and not share the stupendous proceeds–reportedly $2 million–with the Staples Center, but rather, to keep it all. Chatterbox doesn’t expect Captain Crunch and his minions to understand journalism; but don’t they understand how to make a buck?