On The Way To Profitability? p.9

By: Tony Case New York Newsday insiders insist that the tabloid was about
to become a viable enterprise and that its sudden closure had
more to do with saving face than with staving off losses sp.

TIMES MIRROR CO. president and chief executive Mark H. Willes pulled the plug on New York Newsday because, he maintained, the tabloid wasn't expected to make enough money to justify its existence.
Indeed, it's been estimated that the daily lost in the neighborhood of $100 million during its 10-year stint in New York City's rough-and-tumble newspaper business, and that the hemorrhaging wasn't going to be stanched even this year.
But while the paper was never profitable, insiders insist that it was well on the way to becoming a viable enterprise and that its sudden closure had more to do with saving face than with staving off losses.
New York Newsday "was about to bear fruit," argues Jim Dwyer, the Pulitzer Prize-winning columnist who made an ambitious but futile 11th-hour appeal to Willes to keep the tab alive.
"It is one of the scandals of American journalism that Times Mirror shut down this paper, not because of its bottom line, but because others outside the corporation believed the bottom line to be terribly out of whack," a still-steamed Dwyer said in an interview two weeks after the newspaper went under.
"In a ritual, symbolic slaughter, they killed off the paper, drove up the stock price and presumably made a sweet killing for the board members, who own most of the stock."
In fact, on Friday, July 14, the day the shutdown was announced, Times Mirror's stock closed at 233/4. The following Monday, it closed at 265/8.
Newsweek said the stock market "roared its approval" of Willes, noting that $650 million was added to Times Mirror's value following the New York Newsday action, a major stock repurchase and reported plans for additional money-saving moves ? including massive layoffs at the flagship Los Angeles Times.
"All that was missing," the magazine observed, "was a ticker-tape parade down Wall Street in Willes' honor."
The CEO apparently is viewed somewhat less favorably by subordinates at Times Mirror's holdings. They've given the former General Mills executive such nicknames as "cereal killer" and "Cap'n Crunch."
Willes couldn't be reached to discuss New York Newsday's demise.
Los Angeles-based Times Mirror plunked down roots in Gotham despite the contention of analysts and other media watchers that the city's diminishing newspaper market couldn't provide a comfortable home for three daily tabloids and a broadsheet. The corporation nonetheless spent truckloads to build the edition, expecting either the New York Daily News or New York Post ? both perennially riddled with problems ? to bite the dust.
Over a decade, the news staff was strengthened, the paper was promoted and critical praise was heaped on this tabloid that, for the most part, put the emphasis on the news of the day rather than the sensational.
Still, every year, said losses continued to mount, and the bean counters and Times Mirror shareholders ? most notably, the Chandler family, which has controlling interest ? became more anxious. Enter Willes.
But as Dwyer tells it, New York Newsday's financial picture began to be blurred in the late 1980s and early 1990s as the recession hit.
"It became convenient to move certain expenses from Long Island Newsday to New York Newsday," he explained. "If you have a paper operating during a recession and showing at least a decent profit ? as Long Island Newsday did ? you can disguise losses to a certain extent."
Dwyer alleges that some corporate types on the West Coast saw New York Newsday as a "blank check."
According to his sources, the tab lost about $3.5 million in 1994 ? considerably less than was rumored ? and this year was expected to lose only $600,000, hardly a mind-boggling amount considering the paper gushed anywhere from $7 million to $29 million annually. And, as reported in the national press, the publication was likely to break even by next year.
"With about half a million dollars lost, on a revenue base of approximately $100 million, we're talking about one-half of 1% of the revenue ? without a single labor concession among 880 or so people," the columnist said.
Dwyer says his proposal to save the paper ? faxed to Willes the weekend the final issue was being prepared ? was based on figures he obtained from officials at Newsday Inc., publishers of Long Island Newsday and the defunct city edition.
It was after Dwyer first heard that Times Mirror was considering shutting New York Newsday, and discovered that the numbers were favorable, that he chose to intercede.
Newsday brass declined to be interviewed for this piece, but spokeswoman Chiarra Coletti agrees with Dwyer that the newspaper was about to turn the corner.
"We believed, and expressed the belief to Times Mirror, that the losses would have been relatively small in the coming year and that we would have been profitable in 1996," said Coletti, who has put in her resignation since New York Newsday folded. "We think we stated our case the best we could, but Times Mirror didn't agree with our point of view."
Dwyer remains confident that had the paper's employees been allowed to run the property under a contractual agreement with the Long Island daily, he and his colleagues would still have their jobs.
"We would have paid Long Island for the privilege and would have absorbed any losses ourselves," he said.
But the journalist charges that Times Mirror had no interest in whether New York Newsday could be profitable, or whether it was possible for anybody else to make money with the tab.
"The company, having spent $100 million to set up this paper and get it to the point where it would make a couple of percentage points in profit annually, now has decided that a couple of percentage points were not worth it," he lamented. "So, it's spending another $50 million or so to shut it down, and it gets zero return on its
investment."
Times Mirror spokeswoman Martha Goldstein confirmed that the tabloid wasn't for sale, to its employees or to anybody else. Goldstein said she was aware of Dwyer's proposal but had nothing to say about it.
"When any newspaper ceases circulation, it's always a very, very difficult and tough choice," Goldstein stated. "On the other hand, the decision was reached after very careful analysis, and was done with a lot of forethought."
Newsweek's Allan Sloan, who used to work for New York Newsday, quoted Willes as saying he arrived in New York last month with a "predisposition" to closing the paper.
While nobody expected New York Newsday to operate at a loss indefinitely, "there was a business logic to this paper that was ignored at the expense of a very good newspaper, and at the expense of a lot of people's lives," Dwyer said.
Things may not be so grim for all news staffers. Recruiters from dailies everywhere ? including the Washington Post, Philadelphia Inquirer and Orange County Register ? descended upon Manhattan in search of journalists for hire.
Most in the newsroom are likely to find positions at other papers, predicts Dwyer, who wouldn't reveal his own plans. But he fears that other employees ? those clerks and mailroom workers who put as much into the Newsday venture as the reporters and ad salespeople and top managers ? might not be so lucky.
"If these people were real to the people at Times Mirror, they would have explored alternatives that they basically ignored," the self-described "columnist without a paper" says, frustrated. "We are not real people to them."
?(It is one of the scandals of American Journalism that Times Mirror shut down this paper, not because of its botton line, but because others outside the corporation believed the bottom line to be terrible out of whack.") [Caption]
?(Jim Dwyer, Pulitzer Prize-winning New York Newsday Consultant) [Photo & Caption]