Situation

TEACHING TIPS Include several staff members and/or executives from the business side in the discussion of this case. Have everyone write down what they see as essential journalism values and essential business values for your paper’s success. Discuss where and why you have differences and how you can address them.

The Los Angeles Times Sunday magazine on Oct. 10, 1999, was devoted entirely to the opening of the Staples Center, a $400 million sports and entertainment arena in downtown Los Angeles. The Times did not disclose, until it was reported elsewhere, that the newspaper had a financial deal with the Staples Center that included splitting the advertising revenue from that issue of the magazine.

The newspaper and its executives were strongly criticized for a conflict of interest and failure to protect the paper’s journalistic independence.

The criticism came from professionals across the country and from journalists within the Times newsroom. As David Shaw, the Times’ media reporter would later write in the paper’s self-examination, “The newsroom at the Los Angeles Times was in turmoil — in open revolt.”

The Times’ special report criticized then Times Mirror Company Chief Executive Officer Mark Willes for creating the culture that led to a breakdown of the traditional lines between editorial and advertising departments; then Publisher Kathryn Downing for approving the arrangement; and then Editor Michael Parks for not stopping publication of the magazine or informing readers once he knew of the deal.

All three executives acknowledged their failures. Willes admitted the profit-sharing agreement was a mistake. Downing apologized, saying her own “fundamental misunderstanding” of editorial principles created the ill-fated business agreement. Parks said, “I underestimated the impact of the Staples arrangement on our credibility, on the journalistic ethos that we foster, on our standing in the community and the profession, and for all those things I have profound regret.”

Discussion questions

• What lessons emerge from this case? What do these lessons mean to our paper?
• A self-examination by David Shaw published by the Times begins with this paragraph from Shaw: “The newsroom at the Los Angeles Times was in turmoil — in open revolt. For several years, pressures for higher profits had reduced the size of the news staff and the space available for news in the paper. Increasingly, business concerns seemed to be influencing editorial decisions in ways long forbidden at the Times and at all respectable big-city newspapers.”
• Is our paper vulnerable to the kinds of strategic and management mistakes made by the Times in the Staples case? Would our business side and editorial leaders have the capacity, confidence and courage to raise the red flag before we get into such an ethics minefield?
• In publishing its exhaustive self-analysis of this case, the Times said it was putting “into writing our principles of editorial integrity” and “extensively reviewing our policies, practices and business arrangements.”
• How well does our paper measure up in these areas? Do we have such principles? Do we articulate them to our readers? Do we champion them in our daily work? Are our policies and practices strong and functional? Do we have any problematic business practices that endanger our editorial credibility? If so, what must we do to address this concern?
• In his essay “How Do we Protect Integrity in an Increasingly Complex World?” former Times reporter, editor and business side executive Robert Magnuson said, “Making good decisions is getting harder by the day as lines blur between news and what I call ‘paid’ information.” How do we stack up at our paper when we shine the light of scrutiny on ourselves? Do we keep the lines sharp and clear to protect our paper’s integrity? Where are we vulnerable?
• In his essay, Magnuson asked, “How do news organizations succeed journalistically in an increasingly competitive business climate where the pressure to grow and steadily improve profitability is relentless?”
• In a New York Times Magazine essay “The Wall, Vindicated,” Max Frankel argued that “a wall is needed to insulate the gathering of news, which should be a selfless public service, from the pursuit of profit, which is needed to guarantee the independence of the business.”

How can we, at our paper, have purposeful, constructive conversations about these issues? How can we meaningfully discuss and debate the issue of “The Wall”? Who should be involved in these conversations? How can we better understand the business and journalistic values that are in tension?

HOW DO WE PROTECT INTEGRITY IN AN INCREASINGLY COMPLEX WORLD?

By Robert G. Magnuson, president and CEO of InfoWorld Media Group, San Mateo, Calif.

Shortly after the Staples Center debacle, the publisher of one of the Los Angeles Times’ community dailies told me he was astonished that such a highly professional newspaper organization could commit such a sophomoric blunder. Avoiding the profit-sharing pitfall was a “no-brainer,” he said, even at the community newspaper level, with all its pressure from small-time advertisers and Chamber of Commerce boosters. “We would never try to pull something like this,” he groaned.

Too bad he wasn’t hanging around the publisher’s suite when the deal was being hatched. After much sober analysis, hand wringing and too many gleeful “I told you so’s,” the questions remain, certainly not just for the Los Angeles Times, or even for newspapers, but for all media companies and the society at large. How do we protect the integrity of the news and information we consume in an increasingly integrated, competitive and technological world?

The Times may have committed a most egregious breach, but it certainly is not alone in trying to find its way through a changing ethical landscape. In the aftermath of Staples, much also was written about the lessons it held for the media business as a whole, as well as all the gray-area examples of various business deals. I continue to be puzzled, for example, that more questions aren’t raised about Tribune Co.’s ownership of the Chicago Cubs. And recently we saw the example of the Miami Herald’s decision to abandon a $12 million deal to put its name on a convention center in Fort Lauderdale. It must be noted that the Herald’s decision was far from proactive and was taken only after mounting public pressure (although corporate officials denied acting in response to the outcry).

In my experience, major sponsorships create big ethical headaches. Purchasing advertising space or negotiating to sell newspapers at a stadium are necessary business tactics in today’s world. Becoming a naming sponsor elevates the relationship to what in nearly all cases is an unacceptable level.

Ethical issues for print, broadcast and cable are one thing. The entire landscape becomes much more complex, and much murkier, as we venture deeper into the Internet and broadband delivery of all kinds of “content”— including what certainly will be a diminishing proportion of easily defined traditional news as we know it.

As someone who has spent years as a reporter, editor and business side executive, I can tell you that the great majority of media professionals — journalists as well as business managers — make sound decisions each day that serve well their news organizations and their communities. I can also tell you that making good decisions is getting harder by the day as lines blur between news and what I call “paid” information.

When I was on the news side I hated “advertorial” content. I still think it cheapens the quality of the product and therefore is less valuable from a business perspective. Ironically perhaps, many advertisers agree because, guess what, advertorial content is not very good and often fails to deliver customers. But advertising special section departments at newspapers are getting savvier about replicating the typeface and layout design of the news pages. It’s getting harder to adequately label advertising supplements, and ad departments like to keep the typeface of such labels nice and small, hoping readers will think the copy is the real thing.

All of this has upped the ante for a true ethical compass to guide media decision-makers, whether they be in print, television or online. But keep in mind there are few easy answers or formulae to follow. That’s a myth. The biggest myth has to do with “The Wall.” Such an edifice, while comforting to some editors and a convenient public relations construct, in reality has never existed as such.

Before The Wall became a moral obsession at the Los Angeles Times, communication between the news and business side was by and large continuous. The system worked so long as the communication was open, informal and characterized by mutual respect and a clear understanding that editorial ultimately must call the shots.

When the Los Angeles Times was imploding over Staples, a senior business executive at a competing newspaper shared with me the modus operandi for getting things done at his company. He said he met each week with the paper’s editor, shared his planned initiatives with him, and the editor would go down the list — “That’s fine, sure, no problem, not that one, no, that doesn’t work for me.” End of process. No wall necessary in the presence of a clear understanding of roles and sound leadership.

As business editor of the Los Angeles Times in the early ‘90s, I launched a new technology section. One of the first things I did was sit down with the VP of advertising, show our plan and challenge the ad department to sell technology advertising into the paper, which was noticeably absent at the time. Now the newspaper has extensive technology coverage and a healthy share of technology advertising. And so do most major metro newspapers.

When Mark Willes took on The Wall, his real aim was to change a complacent, caretaker culture. Unfortunately, he chose the wrong tool and miscalculated how deeply embedded that culture was. His alleged obsession with blowing up “The Wall” not only backfired, it created new hostility and a new sense of segregation within the paper.

Willes’ weapon was to create a cadre of “general managers,” patterned after the product managers in consumer product companies like Proctor & Gamble, who would create innovative marketing plans and bring editorial and advertising together to generate new revenue streams. But it turns out marketing a newspaper is not at all similar to marketing detergent. However well intentioned, the system broke down when overzealous GMs, intent on strutting their stuff and showing off their P&L prowess, waltzed into the newsroom barking orders to editors and reporters.

Willes’ motives may have been honorable. There is deep mistrust and misunderstanding between the editorial and business sides. Both are guilty of living up to their stereotypes. Journalists in general are naive about business and thickheaded when the subject turns to economics. I still run into business reporters who don’t know the difference between revenue and profit. And they mistakenly believe that running the business of the newspaper is a piece of cake. Such attitudes aren’t just arrogant and misguided. They are a liability in today’s complex and hyper-competitive environment.

Advertising, marketing and circulation managers, meanwhile, often lack a basic understanding about how news drives the business and how, in the absence of accurate, balanced reporting, you don’t stand a chance of selling ads for very long. As a group, they do tend to be unworldly, casual students of global events. I remember being shocked when I went to the business side at the number of executives, even senior people, who did not regularly, let alone thoroughly, read our newspaper. And they didn’t have a clue about what our competition was up to journalistically.

How do news organizations succeed journalistically in an increasingly competitive business climate where the pressure to grow and steadily improve profitability is relentless?

First and most critical is understanding the role of the editor. The editor must be a leader. He or she must have the chops for the job, which in part means staying connected to the newsroom and not becoming overly enamored of life in the executive suite. But the institution must help in this process, in at least three crucial ways. The editor must:

• Have final say on how all content is used or appears in the product
• Be fully informed of all significant business initiatives
• Have veto power over anything that makes his or her gut uncomfortable

Pick a strong leader, follow these three rules and you stand a good chance at protecting the sanctity of the journalistic enterprise.

Other devices help — codes of conduct, rules of engagement. But ultimately you can’t codify vigilance. The real world, of course, is inherently unpredictable, unreliable and messy. Rule 64B, paragraph H. Does that work in this situation? Well, not exactly. Oh, so what do we do?

This is the same problem with workshops and hypothetical case studies. They are useful, they raise consciousness a few pegs, but they do not instill the depth of understanding and intuitive sense that are only acquired through on-the-job experience.

The real answer is not easy and it is counter-intuitive for news organizations. The real answer is a serious investment in time, staff and money in comprehensive and continuous training. As unorthodox as it might feel to the editorial side, new hires on the business side need to be exposed to the newsroom and newsgathering process. They need to understand how it all comes together and how and why decisions are made.

Similarly, new editorial hires should receive an intensive orientation to the business operation. They should understand the company’s budget, including editorial’s share. They should understand ad rates and circulation economics.

Continuous updates on new developments, as well as refresher courses every couple of years, would raise the level of sophistication and encourage career development on both sides.

But the media’s attitude here is similar to its way of approaching career development generally: Close to utter ignorance. It lags far behind the rest of American business when it comes to training and development. We all know the reasons. No time. No money. A paper to get out tonight. Let’s make that reporter an editor, then let’s promote him until he runs the place. Forget that he or she knows nothing about managing people, let alone understanding the complexity of the enterprise or the world in which we compete. Hey, he was pretty good with copy. Must be able to lead a massive institution, right? A staff of several hundred people? Annual budget in the tens of millions? Competition from the likes of Yahoo and Microsoft?

Do you see a problem? I do.

From Embracing Journalism’s Real Value: Building the Business, Protecting the Principles, The Poynter Institute, January 2001

Guide 17 --- Advertising Asks for Help

Use this scenario to discuss: Independence (Chapter IV)

Situation

TEACHING TIPS Work through this case without using the last discussion question. If that “reversal” doesn’t come up, raise it and re-ignite the discussion.

The advertising manager at our newspaper wants to sell the feature section better. She asks the features editor to give her a list — on a regular basis — of specific topics that will be covered in upcoming stories.

Discussion questions

• What are the journalism values at play in this situation?
• What are the business values?
• Is there a point of tension? If so, what is it?
• How do you address that tension?
• Who should be involved in the discussion?
• What questions should be asked?
• What alternatives might be considered that will not damage journalism values or business values?
• How would this issue play out if the case were reversed? What if the news department, wanting to report trends or to better cover businesses, asked the advertising (or circulation) department for a regular report on what their demographic research was revealing?