By: Lucia Moses and Steve Yahn
The forces of marketing unmistakably continue to prevail at the Los Angeles Times. Last week, in Times Mirror Co.’s latest executive suite turn, there was chairman and chief executive officer Mark H. Willes, still sometimes defensive about having entered the newspaper industry with no experience in the business, handing over the publisher reins of the flagship Los Angeles Times to somebody who has been president and CEO of the paper for all of 14 months.
Willes, 57, said during a press teleconference that he was handing over one of his two hats because he strongly believes that he finally has the right executive management team in place, starting with Kathryn M. Downing as his replacement in the publisher’s chair. (Downing remains president and CEO of the flagship paper, titles Willes assumed in 1997 after joining the parent company as chairman, president, and CEO in 1995).
“It’s a very open secret that we’ve had a number of people leave over the past few months,” Willes said. “Some people left because they didn’t agree with what we were doing or didn’t think they could do it. The infrastructure is put in place, and we should start to see the results come.
“Kathryn and I are completely aligned with the strategy that has been set, and we have a group of people that can carry it out.”
Willes said concerns that his marketing-minded strategy for heightening readership and increasing circulation would compromise editorial independence are largely behind him. He claimed, for example, that the very day of the teleconference a number of editorial people stopped him to thank him for what he’d done to improve the editorial product. “Those issues fundamentally have gone away because people realize I haven’t interfered,” he said.
However, The New York Times reported that editorial staff reaction to editor Michael Parks’ newsroom announcement of the Downing appointment was “very negative,” according to a senior reporter. There’s a very strong feeling among editorial staffers that there are just too many changes going on at the paper, the reporter said.
But the day belonged to Willes and Downing, and the business executives were upbeat. “In the 1999 second quarter, we expect to report an increase in operating profit after five quarters of year-over-year declines,” says Willes. “I am confident that these results will be the beginning of sustained earnings improvement.”
Notably, he adds, “We also are making significant progress in developing ways to grow circulation in more sustainable ways with the introduction of ‘Our Times’ editions; local newspaper alliances [with foreign-language papers]; and new products and contents.”
Downing cautions securities analysts and the press that circulation, which has increased steadily for the past five quarters, would be “soft” in the second quarter.
She says she expects that to be an aberration, confidently predicting that the Los Angeles Times will nearly double its current 1.1 million daily circulation (1.4 million for the Sunday edition) in some unspecified time period. Early on in his job at Times Mirror, Willes predicted the paper’s circulation could grow from about 1 million to around 1.5 million.
When he took the unusual step of making himself publisher at the Times in 1997 after two years at Times Mirror, the former General Mills cereal company executive announced he would break down the walls between news and marketing in an effort to restore circulation, a notion that rankled newsroom sensibilities. Two years later, he has achieved mixed success.
The Times, accounting for an estimated 40% of operating profits for the parent company, has eked out slight circulation gains over the past two years, and profits have been lackluster. Willes says while he attempted to change the paper at a radical pace, the size of the Times made it difficult. “While pleased with circulation gains,” he says, “we’ve not been comfortable with how sustainable they’ve been.”
In the teleconference, Willes worked hard to send a message of confidence and continuity about his prevailing strategies at the Times. He acknowledges that some ideas, such as telemarketing, failed to add long-term readers, but reaffirms his support for coordinating the editorial and marketing sides.
The marketing initiative aims to bolster editorial efforts, not undermine them, Willes says, offering two examples. One is expanded coverage of the Latino community. The effort has been praised, but new readers haven’t come “without knowing that we’re doing it,” he says. Another is the “Our Times” local news sections, which have drawn new advertisers to the paper, says Willes, noting that 90% of the advertisers are new to the paper. “It’s already made us a better paper, and it’s going to make us a better business,” he says of the marketing strategy.
Downing joined Times Mirror in 1995 as president and CEO of Mosby Mathew Bender, and was named president and CEO of the combined companies of Mathew Bender and Mosby Inc. in 1997. She was appointed Times Mirror vice president in 1996, senior vice president in 1997, and executive vice president in 1998.
Downing says she wished she’d discovered the exciting, challenging world of journalism earlier and that she plans to continue the Times’ leadership role. She expresses her confidence in its editor, Michael Parks, a former reporter and Pulitzer Prize winner.
Peter Appert, a San Francisco-based analyst for BT Alex. Brown, says Willes’ decision to quit running the Times day-to-day makes sense. He says it will allow the CEO to pay more attention to Times Mirror’s other segments: East Coast newspapers, magazines, and professional information.
“He acknowledged the fact that the [professional] training division is not performing as well as he’d like,” Appert says.
Earnings prospects look good for the second quarter, however, thanks to an improved advertising climate, effects of cost-cutting at the Times, and comparisons with the dismal past five quarters of earnings declines, Appert says.
All in all, says Credit Suisse First Boston analyst Steven N. Barlow: “I take the announcement at face value. It’s a big job he’s taken on, and he seems confident [Downing] is making progress with the programs he has set forth.”
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