FIFTH IN A SERIES

Tribune Papers to Adopt 50/50 Ad Ratios

Zell: Looking to 'Right-Size' Newspapers to Cut Costs

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CHICAGO (AdAge.com) -- In an interview last month, Tribune Co.'s innovation guru, Lee Abrams, said the publisher's new motto was "Actually Friggin' Doing It." Yesterday, the publisher said it was Actually Friggin' Shrinking It.
Sam Zell
Sam Zell Credit: Charles Rex Arbogast

During a conference call with analysts, Tribune announced it would be "right-sizing" its shrinking newspaper network -- which includes titles such as the Chicago Tribune, Los Angeles Times and Baltimore Sun -- so that papers included no less than 50% ads on any given day.

Rebalanced load would also be lighter
While still-thick Sunday editions tend to be two-thirds ads, the rest of the week tends to feature far fewer ads, throwing the papers out of balance with their mounting production costs, said the company's chief operating officer, Randy Michaels. At the company's largest title, the Los Angeles Times, that would mean a reduction of about 82 pages a week.

"The Chicago Tribune is typically an 80-page newspaper," explained Mr. Michaels. "The days that we're 80 pages, the Wall Street Journal is typically 48 pages. Nobody picks up The Wall Street Journal and says, 'Wow, what a lousy paper. I've been ripped off.'

What's the future for newspapers?
Fifth in a series
"If we take, for instance, the Los Angeles Times to a 50-50 ratio, we will be eliminating about 82 pages a week and we will still have -- the smallest paper would be Monday and Tuesday would be 56 pages. That would be substantially larger than that day's Wall Street Journal."

Memo sets goals
In a memo to Tribune employees that begins, "Partners," Chairman Sam Zell and Mr. Michaels warn that "we must ... strategically align the size of the paper we produce with what advertisers want. We will be assuming a 50/50 ad-to-editorial ratio base as a floor to right-size our papers. With that benchmark we can significantly scale back the size of the papers we print, and take significant costs out of our operating run rate. We must find the balance between producing excellent products and producing products we can afford. And, we will find it."

Smaller papers typically require fewer journalists to fill them. Mr. Michaels said Tribune began studying the productivity of its journalists the same way it studies the productivity of its sales people, although he acknowledged such measures don't account for more intensively reported stories that tend to take more time to produce.

He said Tribune found that the average Times reporter produces about 51 pages of content a year, while the average reporter in Baltimore or at the Hartford Courant contributes more than 300. "And then when you get into the individuals, you find out that you can eliminate a ... a fair number of people while eliminating not very much content. And so ... we believe that we can save a lot of money and not lose a lot of productivity."

Messrs. Michaels and Zell said the changes would be implemented quickly through newspaper redesigns, the first of which was scheduled to take effect at Florida's Orlando Sentinel on June 22.

Is 'right-sizing' the right solution?
While no one disputes the enormous pressures rising costs and declining revenues have placed on papers -- Tribune's publishing ad revenue fell 15% in the first quarter -- there is a real question as to whether publishers can cut their way out of their predicament.

"'Less is more' only works in architecture," veteran newspaper analyst John Morton told the Chicago Tribune in the paper's story about the cuts it would soon be subjected to. "Whenever I hear 'We can do more and better with less,' my feeling is you ought to run for the hills."

The company also plans to roll out a new platform for the websites of its TV stations and newspapers that will "enable us to take advantage of all the opportunities on the web -- from e-commerce to social networking to selling keywords and other activities," the memo reads. The news sites will be given budgets, "with the expectation that they will be fully leveraged to generate revenue." The new sites will roll out for the TV stations first, with all of the stations on board by end of August. Newspapers will transition to the new platforms within the next year. The first to make the change is KPLR-TV in St. Louis at cw11tv.com, according to the memo.
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