A billionaire, a fired publisher, and a spectacle at the LA Times

AP Photo/Richard Vogel

The signs of peril had long been visible at the Los Angeles Times. But it was a letter, of all things, that caused matters to detonate.

The September correspondence was unusual not only because of the people who sent it, but because of the events that led to it. In August, Angeleno billionaire Eli Broad began preliminary talks with the board of Tribune Publishing about buying the Times from the national chain. The board eventually rejected the overture, right around the time it voted to fire the Times’ publisher and chief executive, Austin Beutner. He was just one year at the helm.

Broad and Beutner have a shared history of trying to take control of the Times. For the past decade, Broad has expressed interest in getting the Chicago-based parent company to sell him the paper. And two years ago, Beutner joined him in that effort, just a year before Beutner would be named publisher. The connection led some Times staffers to wonder whether Beutner’s ouster had come in response to what they characterized as a “hostile takeover” attempt of the newspaper.

Beutner, at odds with the Chicago mothership throughout his short tenure, tells CJR that “I was aware but not involved” in Broad’s offer. Broad did not respond to multiple requests to be interviewed for this article. A Tribune Publishing spokesman declined to comment on the circumstances of Beutner’s termination.

Regardless of whether the two events were related, they’ve been linked by the letter—sent to Tribune Publishing’s board days after Beutner’s September 8 departure. More than 50 local influentials, including business leaders, philanthropists, and two former mayors, protested Beutner’s  firing. “As you move ahead,” it reads, “we strongly urge you to continue with leadership that knows and loves Los Angeles and shares our commitment to its future.” Broad’s name sat inconspicuously midway down the list. Left unmentioned were continuing discussions in local circles about possibly buying the Times. Those circles, it should be noted, often radiate from Broad.

 

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Austin Beutner, former publisher and chief executive of the Los Angeles Times (Getty Images / Bob Chamberlin)

 

The public drama was perhaps unprecedented among the nation’s top newspapers: a national chain firing a publisher whose billionaire associate made an unwanted attempt to buy the chain’s flagship property. The sequence of events made for a bizarre, high-stakes circus that shows few signs of abating.

“There’s still very serious interest in trying to buy the LA Times to maintain its local connection and coverage,” says Mickey Kantor, a former US Secretary of Commerce who signed the letter and has become a sort of informal spokesman for the cause. “There is great disappointment in what Tribune did, not only in removing Austin Beutner, but also not assuring the Times would maintain its stance as the leading outlet in Southern California.”

The correspondence also touched off an unusual lobbying campaign among the upper crust of the local political class, aiming to pressure Tribune Publishing to sell. Within days, a dozen city council members sent a similar letter, while the county board of supervisors unanimously passed a resolution calling for local ownership. Members of the state legislature and civic leaders from the San Fernando Valley added their own respective letters in the following weeks.

It was a peculiar confederation to be sure, especially given that the Times’ civic mission relies on vigilance and skepticism toward such powerful interests. But uncertainty lays fertile ground for the seeds of desperation, and the Times newsroom has repeatedly found itself a struggling protagonist in the more than decade-long tragedy of American newspapers. After Tribune Publishing announced in October yet another round of staff cuts—like déjà vu all over again—the newsroom, too, joined the chorus.

“Tribune [ownership] has been a nightmare in many ways,” says one veteran staffer, who like others was granted anonymity to speak freely. “Everyone is deeply skeptical of anything they’re involved in. So yeah, people are definitely talking about the possibility that we’re going to be sold.”

Tribune Publishing, for its part, has publicly maintained its commitment to the Times, the largest of the conglomerate’s 11 major daily newspapers. “Our California News Group, which includes the Los Angeles Times and The San Diego Union-Tribune, is a cornerstone of our Company’s portfolio and a key component to our success in the future,” it said in a Sept. 17 statement.

Interviews with a dozen current and former Times staffers illustrate a newsroom that’s deeply distrustful of its parent company’s motives. The memory of Sam Zell, the billionaire who bought Tribune Company in 2007 only to let it barrel uncontrollably through bankruptcy, still colors the relationship between Los Angeles and Chicago. Nearly all the Times employees reached by CJR shared a sense of despair. As one staffer’s voice rises during a long rant on the newspaper’s future, he wonders, “Is there any scenario where things will change for the better?”

 

A billionaire with such vested interests taking over the place would create huge questions for us … for those of us who’ve been around for a while, it’s kind of like, be careful what you wish for.

 

Angeleno elites say the answer is clear: a return to local ownership. And even if a sale is not imminent, some see it as inevitable with print revenue continuing to decline.

A buyer rescuing the Times from the clutches of quarterly earnings reports may indeed seem like an appealing concept. The decades-long rise of corporate media saw financial independence enshrine editorial independence, though that commercial shield has long since evaporated. Digital growth over the past decade has proven woefully inadequate in sustaining newsrooms. That failure, coupled with the positive results seen at some newspapers recently bought by well-heeled businessmen-cum-civic leaders, have led many to argue that such ownership is the best way to preserve the journalism chops of today’s newsrooms as they adapt to tomorrow’s publishing realities. Think The Washington Post and The Boston Globe.

In LA, such discussions nearly always revolve around Broad. Times staffers know of the billionaire well, and not just because he’s voiced interest in buying their newspaper. “He’s basically involved in anything that goes on in Los Angeles,” says one longtime reporter. His philanthropic ventures and political contributions extend throughout California and beyond, while his eponymous foundation recently outlined a plan to put half of LA public school students into charters. Such reach has made Broad a polarizing figure among various local interest groups, depending on which side of an argument his billions prop up. He’s also known for a brash, overbearing style that has alienated a number of partners and ground some initiatives to a standstill.

Local owners pose inherent questions for the news properties they buy, ranging from the possibility of direct influence on storylines to the perception of bias among readers. A Broad ownership, given his community involvement, would raise the intensity of such questions to a level that this generation of journalists is unaccustomed to addressing. His cash may indeed help stem the losses in the Times newsroom. But it would also bring complications. Namely: With Times ownership so enmeshed in local political culture, could Times journalism keep up the barrier between those interests and its own coverage? This strikes at the heart of the media’s relationship with the community it covers. With local ownership comes local baggage.

Such tradeoffs, however far off, aren’t purely academic. Beutner, as the letter from civic leaders shows, provided a sort of trial run for what a Broad ownership might entail. A former investment banker, Beutner was named Times publisher just three years after serving as deputy mayor of LA and two years after a short-lived mayoral bid of his own. He proclaimed devotion to community journalism during his short stint atop the masthead—the Times won two Pulitzers this year—though staffers in some corners of the newsroom worried that his web of political connections, coupled with his perceived involvement in some newsroom decisions, toed long-established lines.

In an interview, Beutner spoke proudly of his editorial initiatives, predicting they would eventually bring in more locally sourced revenue had he been left in charge. “I can’t imagine a vibrant LA without the LA Times,” he says. “And I can’t imagine a vibrant LA Times without a community that embraces it.” He’s also the first to admit a more active role than his predecessors: “You’ve got to be prepared to lead out front,” he adds.

Beutner’s tenure was cut short before the long-term impact of his leadership could be measured. So it remains unclear whether the benefits of a Broad ownership would outweigh its complications. Two things, however, are clear: Far-off corporations have few good answers for how to make metro news organizations sustainable; and a shift to local hands requires its own careful examination. Local media has long professed to hold power accountable to independent local ideals. The ultimate fear, of course, is that news organizations will eventually become complicit in that power’s own concept of community. The question for the Times and so many other metro outlets is whether the juice is worth the potential squeeze.

“There’s always ambivalence in the newsroom when it comes to rumors about [Broad] buying the paper,” another Times staffer says.A billionaire with such vested interests taking over the place would create huge questions for us … for those of us who’ve been around for a while, it’s kind of like, be careful what you wish for.”

 

Broad’s soft voice and silver hair project an avuncular figure in television interviews. But his public face conceals an ambitious, goal-oriented drive that helped him found two Fortune 500 companies, the first in homebuilding and the second in insurance. “This is a man who has a mission and purpose and plan in his own mind,” a friend says. The 82-year-old Broad (rhymes with road) is valued by Forbes at more than $7 billion, putting him at No. 65 on its annual list of the nation’s wealthiest individuals—56 spots before Donald Trump. Though he’s since left the business world behind, his checkbook has helped him remain among LA’s premier power players.

“He’s probably the most substantial business and philanthropic figure in town right now,” says Charles Crumpley, editor of the Los Angeles Business Journal. “He has the reputation of being decisive … like any business leader.”

Others framed Broad’s disposition in less friendly terms: impatient, overbearing, and exceptionally frugal. He’s famously clashed with renowned architect Frank Gehry on the design of multiple projects, including his Brentwood estate and later the Walt Disney Concert Hall downtown. “He’s a bit of a curmudgeon,” the friend concedes.

That’s not an altogether surprising description of a self-made billionaire, and it’s a critique of which Broad himself is aware. “I am unreasonable,” he writes in his 2012 autobiography. “But I believe that being unreasonable has been the key to my success.”

Over decades, the billionaire has become perhaps the preeminent arts patron in Southern California. He’s amassed a huge private collection and provided massive sums to local museums, including the honeycombed Broad museum, opened in September. As visitors have begun flocking through the attraction’s doors, Broad and one of his subcontractors have already entered the second round of a legal spat on construction overruns.

 

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Eli Broad and the newly opened Broad museum in Los Angeles (AP Photo / Jae C. Hong)

 

Besides the arts, Broad has fueled education and research ventures across the country, many of them carrying the benefactor’s name: the Broad Center for Asperger Research at UC-Santa Barbara; the Broad Stem Cell Research Center at UCLA; the Broad College of Business at Michigan State; the Broad Institute of MIT and Harvard; and still more elsewhere.

“We don’t simply write checks to charities,” the Broad Foundation explains on its website. “Instead we practice ‘venture philanthropy.’ And we expect a return on our investment.”

But whereas science or academics produce more easily quantifiable results—benchmarks against which Broad can evaluate his investments—success in the arts is more difficult to define. And by many accounts, this has led him to micromanage that philanthropic realm. 

“What’s a successful museum?” says Times art critic Christopher Knight, who’s known Broad for more than 30 years. “What’s a successful exhibition? He almost always goes to the hard numbers: What’s the attendance of the museum? So he will agitate and agitate for museums to do populist exhibitions, regardless of anything else.”

For that matter, what’s a successful newspaper? It can be gauged by any number of metrics: profitability, popular reach, ability to set the civic agenda—the list goes on. In an interview with The New York Times in 2006, Broad described his hometown newspaper as the glue of the community.

“A newspaper can provide a power base,” he said then. “If a publisher wants to get things done, they can get 30 of the most important people in the room. It’s even more important in Los Angeles because of the diverse geography. I would see owning the paper as a way to get people more engaged from all parts of the city.”

A noble goal. But it’s unclear how to measure it, or how long a leash Broad would give his publisher to reach it. The billionaire has previously argued that newspapers should be operated with little expectation of financial return, which would theoretically provide a newsroom with more leeway to find its civic niche. But his philosophy of “venture philanthropy” raises the question of what he’d expect from the Times after buying it. Prominent Angelenos in favor of local ownership said in interviews that Broad would be decidedly uninterested in the newspaper’s day-to-day operations, despite his reputation for heavy-handedness elsewhere.

“I think you have to take a lot of him at face value,” adds James Rainey, a Variety writer who left the Times this year after nearly three decades covering media, politics, and other topics. “I think he’s a guy who takes LA interests to heart.”

 

I just don’t believe a guy like Eli Broad buys the LA Times out of the goodness of his heart.

 

Still, Broad’s general approach to his projects, and his seeming omnipotence about town, gives others a reason for concern. “He has many alliances with powerful people whom we cover,” one veteran reporter warns. When Mayor Eric Garcetti last year began pushing for a minimum wage increase, for instance, Broad threw his weight behind the proposal by writing a Times op-ed, sitting alongside Garcetti for a local TV interview, and attending a kickoff rally for the plan. Broad-backed development along a stretch of Grand Avenue, meanwhile, has been seen as a first step toward transforming the thoroughfare into the cultural heart of the metropolis.

Journalists reporting on the events would be left grappling with the near-daily issue of how to address Broad’s ownership in their work. A Lexis-Nexis search found that Broad or his wife were mentioned in 52 pieces of Times content between August and October, including 12 front-page stories.

To Broad’s credit, he’s previously framed his interest in the Times in altruistic terms. In a 2009 interview in Manhattan, he said that society “can’t afford to lose all the investigative reporting and other things that sometimes we like and sometimes we don’t. It’s part of our democracy.” After Broad added that wealthy families or foundations should operate newspapers as civic trusts, his interviewer asked about how such owners would safeguard editorial freedom.

“It depends which [foundations],” Broad replied. “It depends which families.”

He didn’t elaborate. It’s unclear what such a firewall between Broad and the newsroom would require in practice, to say nothing of how a Broad-owned Times would combat the mere perception of a Broad-friendly slant.

Broad has donated more than $1 million to various federal campaigns over the years, according to Federal Election Commission records, including $375,000 to Democrat-aligned “Super PACs” last year alone. He’s given millions more to various state and local campaigns. Among the largest contributions was $1 million in support of a former charter school executive’s bid for state school superintendent last year. Such affiliations may be problematic in affecting the Times’ public image, especially if a Broad-financed newsroom were to increasingly focus its resources on state and local coverage.

Broad’s support for charter schools has made him one of the pro-charter movement’s most  devoted backers. And the Broad Foundation is among the leading players in the contentious, national fight over education reform. It and other similarly aligned organizations have outlined a $490 million plan to put half of LA public school students into charter schools over the next eight years. This has encountered stiff resistance from LA’s 35,000-member teachers union, which—like many liberal groups—already believes mainstream media like the Times give more weight to pro-charter arguments.

“I don’t want the LA Times to die,” says Jeff Good, executive director of United Teachers Los Angeles. “If Eli Broad only produced the sports page, yes, I’d like to see him keep it alive. Other than that, I don’t think that I’d read it. I simply don’t trust his vision of a community. And I don’t trust his belief in objectivity. I just don’t believe a guy like Eli Broad buys the LA Times out of the goodness of his heart.”

 

Wealthy individuals have an established tradition of purchasing their local paper, a phenomena dating back to the 19th century. They’ve reaped both profits and political influence. But most of these ownerships occurred in monopolized media markets and a much friendlier financial climate. As the more recent trend toward private control has shown, a change in ownership marks just the beginning of rebuilding metro news organizations—not the end.

Over the past five years, rich men have bought The Washington Post, The Boston Globe, The San Diego Union-Tribune, and the Orange County Register, among others. Their fates have since diverged widely according to the new owners’ intentions and strategies. Political meddling and overly ambitious expansion plans in San Diego and Orange County, respectively, led both experiments to flop. Boston and Washington, on the other hand, have benefitted from what media analyst Ken Doctor has termed “50/50 men,” owners who bought into the industry for altruistic as well as business reasons. 

 

Newspapers Go for Big Bucks
Purchase price of major newspapers 2011-2014.

  • San Diego Union-Tribune, 2011. Doug Manchester-$110 million.
  • Orange County Register, 2012. Aaron Kushner-$50 million to $60 million.
  • The Washington Post, 2013. Jeff Bezos-$250 million.
  • The Boston Globe (and sister newspaper), 2013. John Henry-$70 million.
  • Minneapolis Star-Tribune, 2014. Glen Taylor-about $100 million.

Source: Voice of San Diego; Los Angeles Times; The Washington Post; The Boston Globe; Minneapolis Star Tribune

 

The Globe, a regional newspaper with a strong national presence on certain coverage areas, may provide the best analog to the Times. Boston Red Sox owner John Henry bought the paper for $70 million in 2013, explaining in a note to readers that “great institutions, public and private, have stewards, not owners.” The move sparked grave concern among some staff that his ownership would pose an inherent conflict of interest for Red Sox coverage. But there have been few questionable incidents so far. Then again, sports coverage can’t be equated to that of politics or urban development.

Since Henry’s purchase, the Globe has started free, single-subject sites on tech, religion, and health sciences. Such ventures not only bring the newsroom’s expertise to audiences outside of Massachusetts, but also tie it more closely to Boston institutions, such as universities, hospitals, and the Catholic Church. Paid digital circulation to the Globe itself has grown to more than 90,000, according to the Alliance for Audited Media, more than offsetting declines in weekday print readership since 2012.

“When an owner comes in with enormous amounts of money, it really does bring a sense of stability and an ability to do expansion and do good work,” says Dan Kennedy, a Northeastern University professor writing a book on the new breed of newspaper owners.

Nevertheless, the Globe trimmed its newsroom by dozens in October through a combination of buyouts and layoffs. It was the second wave of staff cuts to the newspaper since Henry purchased it; the Globe’s free companion site, Boston.com, also saw a dozen layoffs in September. An outsider’s millions don’t trump industry realities.

 

When an owner comes in with enormous amounts of money, it really does bring a sense of stability and an ability to do expansion and do good work.

 

San Diego had its own struggle with local ownership after being acquired by developer Doug Manchester four years ago. He temporarily turned the Union-Tribune into a political mouthpiece, editorializing for his pet interests on the front page. (The Times purchased the Union-Tribune for $85 million this year, creating the California News Group.)

“Everybody knows that you can’t run a credible newspaper if people feel that you’re shilling for somebody, because they have a lot of opportunities to go elsewhere,” says Gabriel Kahn, a University of Southern California professor who jointly runs its Media, Economics and Entrepreneurship program. “Anything that erodes the credibility of a brand, then readers go out the door.”

The Los Angeles Times had a mixed history on that score. A member of the Chandler family sat in the publisher’s office between 1917 and 1980. And for much of that span, the paper was widely criticized as a rightwing tool for the family’s conservative agenda.

Otis Chandler, publisher for the final 20 years of that span, would be lionized in his 2006 Times obituary for creating a culture of objective reporting that took “a newspaper that had been mocked as partisan, parochial and inferior and turn[ed] it into a publication that could no longer be sneered at.” Almost any discussion of local ownership of the Times tacitly harkens back to this ideal.

“You’d want a local owner who understands that the city needs a sophisticated, well-heeled newspaper, but who wouldn’t use the paper to suit his or her civic interests,” says Jim Newton, a former Times editorial page editor who knows Broad “better than most of the others swirling around” the Times. “Does such a person exists? I don’t really know. We haven’t really gotten a chance to test that.”

 

When Tribune Publishing holds its quarterly earnings call on Thursday, its stock price will likely have plummeted more than 50 percent since the beginning of the year. Tribune Publishing’s largest shareholder, Oaktree Capital Management, signaled it currently supports the company’s strategy, according to a Chicago Tribune interview with a top official. But the same source also opened the door for an eventual change in mindset. “There isn’t any particular time frame on our holding period for Tribune Publishing,” the source said.

That’s a potential window for the small group of Angeleno investors who continue to circle the paper. But such an offer—by an individual or group—would likely take time to put together. In the meantime, Tribune Publishing will continue pursuing a reported $10 million in cuts to the Times’ budget through buyouts, and potentially layoffs. Fifty or more positions are expected to be slashed from the the roughly 500-strong newsroom.

“Everyone was counting heads: If they want 50, I only know 25 or 30 who will take a buyout,” a veteran staffer says of watercooler conversations over the past few weeks. If we’re taken down to 450 or 420 [staffers in the newsroom], what are we? Do we have a chance to succeed?”

The newsroom has mixed views about the leadership of Beutner, the Times publisher fired in September. Staffers liked that he wasn’t afraid to openly skirt their parent company, always pushing to focus on local issues rather than Tribune Publishing’s national strategy. His yearlong tenure can be seen as a proxy for what local ownership might look like should the Times ever be sold. 

Beutner is a man who speaks in complete sentences, and often complete paragraphs. Under his leadership, the Times relaunched its California section, started several  community-centric email newsletters, and took steps to more fully represent the region’s demographic makeup. He also leveraged personal relationships to engage California elites in ways that previous publishers had not—evident by the spate of letters sent to Tribune Publishing following his dismissal. 

 

“If I had to vote for one of the two, the Tribune corporate muppets vs. these guys who really care—who might be dangerous, if not evil—I’d go with the latter.

 

But Beutner’s political connections—he’s only a few years out from his time in the mayor’s office—conjure similar questions that a Broad ownership would. “He was more active in the editorial pages [than previous publishers], but I don’t say that negatively,” adds Newton, who ended his long Times career last year as columnist who sat on the editorial board. “Publishers have every right to be active in the editorial pages.”

For those in the newsroom, more concerns had surfaced. While current and former Times staffers spoke in support of Beutner’s local-first sales pitch, several expressed consternation that the former publisher’s influence was also seeping into the news pages. But they declined to go on the record with specific examples.

“He didn’t want a newspaper that was edited from Chicago,” Newton says. “All of that was good on paper. In practice, it’s difficult to have a publisher who’s so immersed in the politics of the place. It’s difficult to say whether some of these initiatives were made for the good of the region or a manifestation of the publisher’s politics. Inevitably, with pluses come complications.”

Take Beutner’s August launch of a single-subject education verticle, an effort backed by pro-charter nonprofits including the Broad Foundation. “We didn’t have a revenue model to support education coverage,” Beutner says. “I said [to the foundations], You guys spend a ton of money on advocacy to help inform people, but if you give us money, we can help you reach those people who aren’t informed.” Broad’s money, in addition to other foundation funding, allowed the Times to hire two full-time K-12-focused education reporters for at least two years.

There have been inconsistencies with disclosing the relationship in subsequent Broad- or charter-related education coverage. What’s more, multiple staffers said the newsroom was not informed of the vertical’s financial backing until Beutner’s note to readers publicizing its launch. A Times spokeswoman pegged the lack of an internal announcement to a miscommunication, not a coverup.

Still, one staffer says, “this might have crossed the line because Broad is such a player. There’s the perception issue, which is just as important as whether he’s involved in dictating storylines.”

Another example came in June, when Beutner sat down with Gov. Jerry Brown to discuss the California drought in front of a blue backdrop peppered with “Los Angeles Times” and “San Diego Union-Tribune” logos. Throughout the discussion, Beutner made no mention of more than $85,000 in campaign contributions he’d made to Brown over the past two election cycles—before he was publisher. “I was not there as a journalist trying to get another notch on my belt,” Beutner says. “I’m sure there are some journalists who thought it was them who should have been up there.”

The event was covered by Times reporters, streamed online, and broadcast by various local channels to an audience estimated at 1 million. “We had a simple choice,” Beutner adds, “either do the event this way or don’t do it at all. So we did it. That’s a success.”

It was a Times event, but in Beutner’s eyes it wasn’t a piece of Times journalism. And perhaps he has a point. “The LA Times had a lost decade with Sam Zell,” Beutner says. “After that, the place had no pulse … . If you have a publisher willing to put his or herself out in the community, it feeds that virtuous cycle.”

If Beutner’s stint provided a window into the tradeoffs of local ownership, the obvious question is where this cycle will end. Journalists prize their independence—and especially perception thereof. They also prize their institutions’ relevance within the community. These two ideas weren’t mutually exclusive in past generations. But desperate times are forcing many, in Los Angeles and elsewhere, to reevaluate.

“If I had to vote for one of the two, the Tribune corporate muppets vs. these guys who really care—who might be dangerous, if not evil—I’d go with the latter,” one Times veteran says. “They live here and they want this thing to succeed. If you work as a reporter, you’ve been beaten up for years, and it’s flattering to have someone at the top who seems like they actually give a shit.”

It’s yet another quandary in an industry full of them, a choice between the devil we know and the devil we don’t.

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David Uberti is a CJR staff writer and senior Delacorte fellow. Follow him on Twitter @DavidUberti.