Zell tells it like it is for newspapers

Sam Zell, the real estate tycoon who now runs the combined Times-Mirror/Tribune newspaper empire,  said some shocking statements today. 

Mr. Zell was on the CNBC “Squawk Box” show (June 27) when he said,
“I think that because newspapers have historically been monopolies, I think they’ve been insulated from reality. I, you know, am in the position where I’m going to have to, quote-unquote, deliver reality.

I think we can have terrific newspapers, but I think the newspapers have to respond to their customers. In many cases a lot of the things we’re doing right now were all identified in focus groups over the last eight years. And the focus groups were made, were taken, and nobody paid attention to them.”

You are right on Mr. Zell. Not only did the “editorial elite” ignore the research, they laughed about it.

It’s time you model newspapers after real businesses starting with demoting the “executive editors” to proof readers and replace them with real managers with MBAs.

Major newspapers have been monopolies, owned by absentee, wealthy families who let left wing editors with a life-long hate for business, run the show.  

 

 

 

The kings of oil increasing production to 10 million barrels a day

The Kingdom of Saudi Arabia, the world’s biggest oil exporter, is planning to increase its output next month by about a half-million barrels of oil a day of its light, sweet crude oil, according to analysts and oil traders who have been informed by Saudi officials. This announcement alone, plus the Republican party political movement called “Drill Here — Drill Now!” is making it into the media. 

The increase could bring Saudi output to a production level of 10 million barrels a day, which, if sustained, would be the kingdom’s highest performance level in history. The move was seen as a sign that the Saudis are becoming increasingly nervous about both the political and economic effect of high oil prices. In recent weeks, soaring fuel costs have incited demonstrations and protests from Italy to Indonesia.

Saudi Arabia is currently pumping 9.45 million barrels a day, which is an increase of about 300,000 barrels from last month.

The Saudis are concerned that today’s record prices might eventually damp economic growth and lead to lower oil demand, as is already happening in the United States and other developed countries. The current prices are also making alternative fuels more viable, threatening the long-term prospects of the oil-based economy. The high prices have also made it profitable to stimulate mature oil wells in Texas and California. 

President Bush visited Saudi Arabia twice this year, pleading with King Abdullah to step up production. While the Saudis resisted the calls then, arguing that the markets were well supplied, they seem to have since concluded that they needed to disrupt the momentum that has been building in commodity markets, sending prices higher. That creates panic. There seems to be no end in sight. 

The Saudi plans were disclosed in interviews with several oil traders and analysts who said that Saudi oil officials had privately conveyed their production plans recently to some traders and companies in the United States. The analysts declined to be identified so as not to be cut off from future information from the Saudis.

Last week, King Abdullah also took the unprecedented step of arranging on short notice a major gathering of oil producers and consumers to address the causes of the price rally. The meeting will be held on June 22 in the Red Sea town of Jeddah.

Oil prices have gained 40 percent this year, rising to nearly $140 a barrel in recent days and driving gasoline costs above $4 a gallon. Some analysts have predicted that prices could reach $200 a barrel this year as oil consumption continues to rise rapidly while supplies lag.

The growing volatility of the markets, including a record one-day gain of $10.75 a barrel last week, has persuaded the Saudis that they need to step in, analysts said. The Saudis and Republicans are the only groups trying to lower the price of crude. But you won’t read that in your mainstream newspaper on watch it on NBC. 

Did you know…

Until recently, only 35 percent of oil has been extracted from reservoirs. Oil resides in porous rock formations, it is not in the sate of underground pools as many consumers believe. Today, oil companies such as Chevron, Shell,  Halliburton and Schlumberger, have developed stimulation methods to revive mature wells. There are fracturing and perforating techniques, 3-D seismic methods to clearly see trapped reservers that have been missed by the original well. There are now, steerable drill bits that can capture those trapped oil reserves and pinpoint stimulation on targeted areas. 

–Mick Gregory

Newspaper editors believe they run the show

The Los Angeles Times news “executives” are in troubled waters. They believe they run the newspaper and Web site. A recent example — the publisher made plans to update its monthly magazine  — replacing the magazine’s deteriorating editorial staff with a new crew of pros experienced in real-world magazine publishing, fashion, creative and communications according to two executives at the newspaper.

The liberal editors fawning for Obama will not publish this candid AP photo of Obama and friends. Why not? Do you have to ask?

Good times. Obama, left, with fellow Muslims.

Back to the insider info. The new plan for the magazine goes well beyond the stale tradition of monopoly newspapers, which keep business operations, public relations, marketing and advertising, separate from the editorial department. An archaic system that has no other peers in the real world, except for organized religion. The Vatican comes to mind.

A casual reader of magazines such as Cosmopolitan, People, Vogue and Maxum can see that they are much more hip and marketing driven (not to mention, profitable) than big city newspapers’ thin, wordy, dull, 24-page poop wrappers. Look at the national newspaper magazines,  they too are marketing  driven. Do you ever read  Parade and USA Weekend.? They sell stuff.

A new magazine editor and staff have already been picked by Zell’s lieutenants without consulting the “editoriali.” Future issues have been planned, and mock-up covers were made — all without the knowledge of anyone in the newsroom.

How dare they not involve the editorial suite of cheap suits!

Why should the editors be in on enterprise/marketing decisions? Answer: because they always have been calling the shots at the LA Times, Chicago Tribune and SF Chronicle. They are all losing millions of dollars.

The LA Times top editor, Russ Stanton, especially had his tighty whities in a bunch.

They said that Mr. Stanton, after hearing about the move, asked the publisher of The Times, David D. Hiller, and the president of the newspaper, Jack D. Klunder, to change the name of the publication, which is now called Los Angeles Times Magazine. He argued that to keep the name would lend the newsroom’s credibility. It has not been blessed with the holy water from the high priests.

The Los Angeles Times is one of the large metropolitan dailies owned by the Tribune Company, which was bought a year ago or so by the real estate developer Samuel Zell. He has articulated an aggressive view of the newspaper business and its future, and recently announced plans to cut back news pages of AP stories and save the carbon footprint.

Both before and after Mr. Zell took control, there has been an unusual amount of turnover at the helm of The Times. Before Mr. Stanton took the top editorial job in February, his three predecessors had left in a semi-annual succession after refusing to make staff and budget cuts to stop the million dollars a week in losses at The Times.

It looks as if Mr. Stanton will be making a career move soon. Maybe the Santa Barbara News-Press will have a spot for him? Maybe he will go back home to the San Bernadino Sun?

The fate of The Times’s regular Sunday magazine has been grim for years when left to the editors to run it as they saw fit. Profit? Editors are not concerned with lowly issues like that. Cater to advertisers? No!

(The editors seem to be the only people in all of SoCal who don’t realize that retail, glitz and promotion are king in LaLa Land. The editors wanted to write hard-core stories, not glamour pieces with photo-shoots of skinny runway models.

The arrogant news staff asked publisher of The Times, David D. Hiller, and the president of the newspaper, Jack D. Klunder, to change the name of the magazine, which is now called Los Angeles Times Magazine. They argued that to keep the name would be a smear on the “good name” of the editorial department. Talk about the tale wagging the dog. Did they have an alternative name, like “adverising crap?” That’s what they think of the businesses that pay for their Men’s Warehouse suits.

Earlier this year, when it became public that Mr. Hiller was considering giving control of the magazine to the paper’s marketing and advertising managers, editors and reporters voiced fears that it would become less a work of journalism than a lightweight vehicle for currying favor with advertisers. Like Vanity Fair, Car and Driver, Cosmo,  GQ and Architectural Digest?

The issue is an especially sensitive one at The Los Angeles Times. In 1999, the paper published a special magazine section about a new sports arena, the Staples Center. Editors and reporters rebelled after learning that the paper shared the section’s profits with the arena and executives apologized for the arrangement. Soon after the “rebellion” the Times-Mirror family sold the troubled company to the Tribune Corp. The Chandler family didn’t like the slow motion, editor-centric management and soon after, forced the sale of the Tribune Co. They wanted their money. Mr. Zell bought it and took command of the empire in rot.

Now he is being fought tooth and nail by the stuffy “executive editors” of the old Times-Mirror empire.

The new editor, it is said, is Annie Gilbar is a former editor of InStylemagazine and has written or co-written a number of advice books, like “Wedding Sanity Savers.” Calls to Ms. Gilbar were not returned.

Nine magazine employees will have to find editorial work somewhere else in the building. Obits seem to be a good fit.

–Mick Gregory

The Star Tribune bankrupt

By Mick Gregory

We are observing the death throws of a star on its way to becoming a white dwarf. Gasses spewing, used matter is shredded and  thrown out. The size of the once bright, powerful force rapidly shrinks as it collapses on itself. These are the telltale signs of a dying star.

The Star Tribune, once among the Midwest’s largest newspapers, was purchased by the Sacramento-based McClatchy media company in 1998. The “executive editors”  paid $1.2 billion for it from a family who wanted out of the business.

In less than 10 years, the rapid growth of Google, Drudgereport, Craigslist, E-Bay, FaceBook and WordPress lured away much of the newspaper audience and built new readers/users that were not newspaper-friendly. So the advertising found new rising stars.

Last year, Avista, a New York-based private equity group, purchased the dying Star Tribune for less than half of what McClatchy paid only eight years earlier.

Since Avista’s purchase, the star has been shedding  reporters, editors, photographers, advertising sales staff and designers through two rounds of buyouts and the elimination of open positions. That was just a show for creditors.

Now, in January of 2008, the Star-Tribune filed for Chapter 11 bankruptcy. 

The Star Tribune’s long-term business slump has continued, with revenue declining by about 25 percent, from $400 million in 2000 to $300 million last year, according to a Star Tribune story in July. While major expenses such as newsprint and transportation  increased.  Even those adult newspaper carriers throwning papers out of the window of their pickups, need to be paid.

Several weeks ago, Avista announced that it was writing down the value of its $100 million equity investment in the Star Tribune to $25 million. That’s $75 million wiped out in one year. The Star shed more than $1.15 billion in value over nine years. The new owners are getting pennies on the dollar trying to restructure their debt.

The only candidates for buying into debt-ridden newspapers now are hedge funds, especially those that make a specialty of distressed debt investments, according to several industry observers. It’s called a loan-to-own strategy, they calculate that the owners like Avista will default on their new loans and the fund becomes the new owner for pennies on the dollar. What’s left may be some downtown real estate and a false store-front Web site. This is the white dwarf stage. And there are hundreds more flickering, spewing gas and spitting out  used up matter.