L.A. Times faulted for arena ad deal

By: Lucia Moses PUBLISHER'S MEA CULPA CITES 'FUNDAMENTAL MISUNDERSTANDING' OF NEWSPAPER ETHICS

The Los Angeles Times was loudly booed after disclosing an unusual deal to share profits with an advertiser. The Times split the profits from an Oct. 10 special issue of its magazine devoted entirely to a new sports arena with the arena itself. The Times is a founding partner, akin to a corporate sponsor, of the Staples Center arena.
A red-faced Publisher Kathryn M. Downing apologized for entering into the agreement, chalking it up to her "fundamental misunderstanding" of newspaper ethics. She pledged to devise policies and train business staff to prevent a repeat of the event. Downing, who joined the Times as president last year and became publisher in June, is new to newspapers, having last run parent Times Mirror's legal publishing division.
"I think any time a news organization enters into ? an agreement with an entity it's going to continue to cover, it's a big mistake," said David Shaw, Times media critic.
Bill Babcock,a University of Minnesota media ethicist, said even if the deal was disclosed from the start, it would've been improper. "You don't cover the source and then say, 'By the way, we're going to share the profits with you,'" he said. "It's akin to a kickback."
The Times has been haunted by concerns about journalistic integrity since Times Mirror CEO Mark H. Willes, also a nonjournalist, began having the news and business sides work together more closely. The appointment of Downing, with her lack of news experience, also made staffers nervous.
"He's all but removed the wall, and this seems to be another step in that direction," Babcock said of Willes, adding he hoped the outcry would send a message to other publishers.
It's become commonplace, if not accepted, for newspaper companies to invest in local sports teams and get involved in other causes they cover. Babcock said the Times situation is different because it's the newspaper, not the arena, generating the profits.
Under the sports arena deal, the Times and other arena partners pay roughly 3 million dollars a year in exchange for advertising rights and other perks.
Jeff Klein, former Times marketing chief, said the Oct. 10 special issue wasn't one of the marketing ideas imagined when the deal was signed under his oversight. He said it was vaguely worded, and the Times had such ideas in mind as advertorials clearly labeled as advertising to avoid "obvious conflicts."
"I agree with what Kathryn Downing said about it, that it reflected a misunderstanding about the roles," Klein said. "It was not contemplated in the original agreement."
Times Editor Michael Parks was quoted in his paper as saying he didn't know about the profit split until after the issue was printed and didn't think the Times' integrity was harmed, but saw the relationship as improper.
Downing met with staff Oct. 28 after some 300 news staffers signed a petition complaining about the profit-sharing deal.
Larry Pryor, a University of Southern California journalism professor, said Downing's excuse was more troublesome than her lack of journalism savvy because she could have consulted any number of people in the building about the deal's ethical considerations. "This is a very unsettling set of circumstances, because I think more and more editors are going to come from the business side," he said.
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