The Tribune Company's Measure Of Success

By JCB on Friday, October 28, 2005
* * *
   On the way back to the party, Tina said: “Now I know why I love you.”
   Major Joppolo said: “Why?”
    “Because of what you want for Adano. That’s why everyone here loves you. There is no one here who will say a bad word about you, and that’s a rare thing in Adano.”
   The Major said: “And I know why I like you.”
    “Why?”
    “For a very selfish reason: because you make me feel as if I were almost important.”
    “Oh, you are,” Tina said, with just enough mockery in her voice.

-- John Hersey in Chapter 36 of A Bell For Adano , published in 1944.
* * *

I doubt that very many people caught Mike Comerford’s column in The Daily Herald, but in it he talks about the possibility that the Cubs could be sold at some point by the Tribune Company, who is suffering from stock prices in a tailspin. (alternate link here.) This would have come as a surprise to me had I not recently read an article called “Fault Line” by Ken Auletta in the Oct. 10, 2005 New Yorker (not available online). It’s about the Tribune Company’s ownership strategy with regard to the LA Times. Comerford’s source cites the LA Times as a core asset, and the Cubs as peripheral, so considering the cuts made with the Times’ budget, I think there is a lot regarding the Cubs to consider as a corollary. If they are willing to cut a core asset, what will they do with a peripheral asset? Right now, the Cubs are making money, having sold out the entire season before it began last year, but it’s not hard to play out the following scenario:
  • The White Sox win back to back World Series
  • The Cubs underachieve again next year
  • Wrigley Field has structural problems
  • Some sort of scandal happens indicting one of the players or Cub team officials for some serious wrongdoing

While it’s by no means likely, I also think it’s a rather conservative worst-case scenario. So, if something like that was to happen, what then? The Cubs bottom line would certainly suffer, like profits at the LA Times did for reasons I'll get to in a moment. Looking at the Tribune Company’s recent history with the Times is a worthwhile case study. It also raises some of the bigger questions about the dual nature of baseball teams concern: both turning a profit and winning matter, which are partially but not perfectly correlative. Just as in journalism, the question lingers: what is the measure of success?

Auletta’s story is about the departure of John S. Carroll, the LA Times editor for several years. The main point of contention was that Carroll resisted budget cuts from the Tribune Company. Auletta writes of Carroll:
As he later told me, he had grown weary of “incessant cost-cutting” by the Tribune Company. He believed that, on the contrary, investing in the newspaper would eventually produce higher profits, which was what the company eagerly sought, and that cutting costs, while it would temporarily improve the bottom line, would erode the paper and might someday destroy it. Carroll and the Tribune Company had been arguing about these issues for five years. The resolution would now be left to his successor.

The profile of Carroll depicts him as one of the old style of journalists. He believes that investigative reporting is worthwhile for its own sake, regardless of whether or not it sells extra papers. In other words, Pulitzer Prizes were more important in the long term than Profit Plans. Leo Wolinsky (now a managing editor) is quoted as saying, “He was an old-fashioned editor who did not want to engage his corporate bosses.” The problem is that this did not mesh with Jack Fuller, then the president of Tribune Publishing, and the Tribune Company’s C.E.O. Dennis FitzSimmons.

Now, this is not a perfect story of good vs. evil, or values vs. deterioration. The LA Times under Carroll clearly neglected local coverage, a major flaw. It is also true that 70 percent of the Tribune Company’s employees are shareholders, who own 11 percent of the company. So, it is not altogether unreasonable for FitzSimmons to emphasize stock price. FitzSimmons says, “Our premise is that we can improve.” Still, in many ways there is still that fundamental clash, and as Auletta puts it, “The question is: Improve the paper or the profits?” Ideally a company would like to succeed by both measures, but what about situations where that is not possible, at least in the short term?

On the one hand, there is FitzSimmons’ argument that “People at the papers need to understand how the business is changing.” This is also expressed by Richard A. Posner, a Chicago federal judge, cited from the New York Times Book Review:
Journalists express dismay that bottom-line pressures are reducing the quality of news coverage. What this actually means is that when competition is intense, providers of a service are forced to give the consumer what he or she wants, not what they, as proud professionals, think the consumer should want, or, more bluntly, what they want.

On the other hand, there is Carroll’s response to C.E.O. Dennis FitzSimmon’s argument that newsrooms need “to understand how the business is changing:”
“I would interpret it as ‘We don’t understand his problems.’ I think I actually do. He is in a position where he has got to hit profit targets regardless of revenues. If the company doesn’t do that, there will be consequences from Wall Street and from the board.” […] “On the surface, it’s about cuts. But it’s also about aspirations for the paper, and for journalism itself. I think this paper is important beyond Southern California. Among other things, it is test case No. 1 of whether a newspaper chain can produce a first-rate newspaper.” Carroll added, “It may be that it is simply structurally impossible.”

Rupert Murdoch explained in a speech from last April cited by Auletta what has shifted: “Too often, the question we ask is: ‘Do we have the story?’ Rather than ‘Does anyone want the story?’” Carroll’s managing editor, Dean Baquet, who he hired to be his right hand man and who has now replaced him, considers the issue differently.
And he does not, he said, share the populist vision of editors giving readers whatever they demand. “It’s not always our job to give readers what they want,” Baquet told [Auletta]. “What if they don’t want war coverage or foreign coverage or to see poverty in their communities? Southern newspapers are still hanging their heads because generations ago they gave readers what they wanted -- no coverage of segregation and the civil-rights movement.” The job of newspapers, Baquet added, was to help readers understand the world. “If we don’t do that, who will?”

(It’s worth mentioning that the LA Times is making money -- just not enough, according to some. It’s also true that newspaper sales are declining everywhere, which is why the Tribune puts out the Red Eye: the hope is that Red Eye readers will graduate to Tribune readers as they mature. Third, the article points out that all three of the most successful newspapers, the NY Times, the Washington Post and the Wall Street Journal are owned by families, not corporations, and up until now the owners have been generally more concerned with the quality of the papers than the profits. All of these side notes will be relevant later in the discussion about the Cubs.)

Here, then, is Auletta’s summation of the debate:
Clearly, the news side saw itself at war with people who had minimal interest in ambitious journalism, and the “suits” saw themselves in conflict with sanctimonious and unrealistic idealists.

My question: don’t we kind of want certain institutions to be -- if not sanctimonious -- holding themselves to a higher standard? Doesn’t the general public have a vested interest in the performance of these institutions outside of profits, regardless of whether one owns stock? And, since so many of us care about these institutions, shouldn’t they want to try to be morally superior so as to be examples, and preservers of something that has long been rather sacred and symbolic of what is best about our country?

It’s somewhat troubling to think about newspapers as part of corporate conglomerates in particular, because of the constitutional right to freedom of the press. The Bill of Rights -- and Amendment I in particular -- are at the core of an American ideology: freedom that is so fundamental as to supersede the free market or anything else. In other words, the press is protected because it is crucial to a democratic society, not because it is able to make money. This is why newspapers sort of feel like public property, or at least a public medium. It seems to me perfectly reasonable to expect the press to live up to its side of the bargain of being protected: to investigate corruption and whatever else is crucial to the general interest and well-being of our society.

Yet, these days, there's also a balancing act required. Since it is essential that the press be privately owned, its revenues are dependent on market forces. The matter is not black and white. It's about how much profit is enough for something so important when budget cuts will hinder its performance.

The fact that investigative reporters and other journalists speak to a dwindling audience does not make them any less significant or important. This is the whole reason why the concern for profits is troubling, because it casts them in that light where they seem inconsequential when people don’t buy papers. As far as I’m concerned, they could be speaking to an audience of only a few people and they would still be important because when the time comes that one of them happens across something important, then everyone else will take notice. Those few and utterly crucial occasions can only happen in a climate where the tradition of journalism is encouraged for its own sake -- or at least, it makes those occasions of journalistic triumph a lot more likely. Yet, recognizing that a newspaper cannot exist if it loses money, there must be that balancing act.

What I’m suggesting is that if a newspaper were to accept smaller profits and yet maintain its staff, this would be worth it if sometime over a period of maybe 50 years one of its staff broke a critical story. That visibility might even be worth it to the same people who are concerned with profits. The problem is that this requires long-term thinking in a short-term society, with no guarantees. It also requires a different way of gauging success. Moreover, that sort of success is not quantifiable.

Nowadays, the Cubs are a rather small part of the Tribune Company’s holdings. (It also holds 11 daily newspapers, 26 television stations, a quarter of the WB network, a regional sports network, a third of the Food Network, and a television entertainment division.) As a result, maybe some of the Tribune Company’s behavior with other divisions -- core assets -- is not completely relevant to the Cubs. I have no idea whether it makes more sense to trim core assets or peripheral assets.

It’s also true that the Cubs are something of a trophy for ownership. Baseball players are more recognizable than Pulitzer Prize winners, and I’m not even going to suggest that this is backwards, because this probably goes in cycles. Taking this ego and visibility factor into account, perhaps it would be easier for the owners to stomach the Cubs making a smaller percentage of profit than other parts of the company.

Still, while it’s not perfectly analogous to the Cubs, many of the issues are the same. There are the same struggles over how to gauge success: winning baseball games the right way, or turning a profit. There are also similarities to how both the press and baseball teams feel in some ways like public property, because so many of us care about them. I’m not suggesting that baseball is on a par with something protected by a constitutional amendment, but let’s just say that to me (and maybe some of you) it’s not all that far away, either.

To be fair, the Cubs have done a remarkably good job with their version of the balancing act -- at least lately. They have spent reasonably, tried to assemble winning teams (at least assembling a good deal of talent), promoted from within, stayed loyal to their own people, and tried to develop a long-range plan for success judged by winning. Yet, on the other hand, they have put in more seats, raised ticket prices, diverted tickets away from the public to another Tribune Company asset, and put in an advertising sign behind home plate. Whether or not these actions are bad is debatable (except in the case of diverting tickets), but what is not debatable is that these measures did not help them win a single baseball game. The money would have been there anyway, and will continue to be there, at least for now. The question here is the same: how much profit is enough, and what will you do when profits are down?

What might happen, then, if a scenario plays out where the team stops earning a large profit? As we've seen, discussion is already out there about the Tribune Company selling the team. Just like newspapers, there are a lot less families owning teams than conglomerates. Maybe the next ownership group will care less about winning baseball than profit margins. For that matter, it wasn’t all that long ago that the Cubs were not spending much at all. Those familiar with team payrolls might be interested to read that the Cubs have only spent $907 million since 1977 (link courtesy KJM). For as much revenue as they bring in compared to the teams spending less, that’s not all that high. While I'm not willing to go so far as to say that the Cubs should emulate the Yankees and spend huge amounts of money to bring in an entire team of free agents, I am concerned that they might decide not to reward a guy like Derrek Lee or someone else a few years down the road with the contract extension he's earned. (Think Greg Maddux after 1992.)

Moreover, what if the general public interest in baseball declines? What if there are fewer and fewer ownership groups (or families) who truly emphasize winning the right way, generally through a balance of scouting and development and quality (and long-term) free-agent signings? What if the entire climate of baseball shifts to the business side even further?

At the bottom is this: if the Tribune Company is not even concerned with supporting an institution such as the press through tough times, do we have any reason to expect them to be concerned with their participation in supporting the institution of baseball? If profits dwindle below corporate expectations like they have at the LA Times, will they cut and slash? Or sell to someone else who will? Let’s hope we never have to find out.

The leading passage was from a novel called A Bell For Adano by John Hersey, which won a Pulitzer Prize in 1945. It’s an extremely good book, and still excruciatingly relevant. It’s about an American Army Major who does his best to see the remote Italian city of Adano thrive and succeed on its own terms during American occupation. It’s clear that this would be good for Adano, for Italy, and for America. Yet, just as he is finally about to turn the corner, the larger bureaucracy steps in with its own definition of success. In the end, then, we’re left to contemplate a situation where no one wins. It seems that the structure has made the right sort of success impossible.

It’s a lesson important in many arenas, among which baseball is probably rather trivial, and I am not suggesting otherwise. Except, baseball is still sacred in some small way, at least to many of us, and if baseball were to swing too far towards concern with greater profits, what couldn't? That might be a question it’s better not to answer.
Posted Friday, October 28, 2005 by JCB
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4 Comments

My brother-in-law found Ken Auletta's New Yorker article online at http://www.referencetone.com/Auletta.pdf if anyone is interested in reading the full thing...

Is it your premise that a sale of the Cubs would be bad for Cub fans? It might not be the worst thing that could happen (that, I suppose, would be if the team moved, which seems unthinkable).

I think that advertising boards behind home plate are unequiviocally bad for baseball, because the decision to install one is predicated upon a mindset that is completely concerned with profits rather than the sacredness of the Game.

I won't say that a sale would be unequivocably bad; it's a percentage thing. Which is more likely: a new owner that I would crudely call "family style" or a new owner that is only concerned with winning to the extent that it can improve profits, and perhaps sees player loyalty as an instance of diminishing returns? Or somewhere in the middle, as the Tribune Co. has been for the most part? My fear (and perhaps my point) is that the odds lend themselves to a conglomerate / corporation type of company, since that seems to be a trend not just in baseball, but larger (ie newspapers).

Although there's rumors of Mark Cuban being interested in the Cubs...

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