“We gave Norm an unlimited budget, and he exceeded it”. This is what the CEO of Dow Jones said about Norman Pearlstine, the managing editor of the Wall Street Journal. Well, those days, the eighties, are gone.The increasing antagonism between editors and publishers is a byproduct of the unending financial crisis of the newspaper industry. Journalists see management as a bunch of hopelessly thick beancounters, while CEOs consider editors as budgetary teen-agers, unable to cope with economic reality.
Problem is: they are both right. And for the sake of the industry, they need to make peace. Last week’s firing of the Los Angeles Times editor James O’Shea is a perfect illustration of this increasingly bitter discord. He is the second editor to leave the prestigious American newspaper in two years in a fight over budget cuts. Mr. O’Shea had a budget of $123m for his newsroom. That is approximately four to five times the budget of most European newspapers – where the cuts imposed are more like in the double-digit percentage territory.
Cost cutting vs. product developement
David Hiller, the publisher, wanted a 1% cut. He had some reasons to do so: the LA Times lost 10% of its advertising revenue last year and the entire Tribune Company (which also owns the Chicago Tribune, the Baltimore Sun, Newsday) is on the same track, with, among others things, a sharp decline in classified ads.
Predictably, Mr. O’Shea is arguing otherwise. Like many journalists, he believes that the permanent “shrinking mode” in the print media, will impoverish newspapers and accelerate the readership hemorrhage. On the supply and demand system, he is definitely on the supply side, a side where the facts support Mr. O’Shea. Under his
editorship, he launches several editorial initiatives, which, not only added to the bottom line, but also made the LA Times the only US newspaper to record an increase in its circulation in 2007.
Corollary, in an act of bravado, the editor asked for a $3m raise in his budget, invoking a particularly news-rich year (presidential race, Beijing Olympics). Even though he admitted that he could come up with the required $7m in cuts, Mr. O’Shea didn’t budge. He denounced the way Tribune Co. allocates its resources, not only at the Times but also at all the Tribune newspapers all around the country. In doing so, he escalated a war with its publisher – and was fired.
This dispute epitomizes the need for a cross-pollination between respective managements in the newsroom and the financial area. Most of the time, neither side has a clue on the needs and pressure the other is facing. This problem will grow further as our industry is brutally transforming itself in a J-curve like, where it will be worse before it gets better. This mutual understanding can be only be achieved through strong internal training programs in which executives gain genuin insights into each other’s circumstances. We can dream of a world in which there will be financial management classes in journalism schools. Some publishers envision even more radical approach like tying a part of editorial staff’s salary to the sales of the paper. As long as there is some reciprocity in involving the other side in the strategicchoices of newsgathering, why not.
> a summary of the LA Times dispute, in the Wall Street Journa
> editor James O’Shea’s farewell speech

A month ago, the entire Tribune Company was taken private in a $8.2bn buyout by real-estate magnate Sam Zell. He explains his views.
> story in Chicago Tribune

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