Sam Zell overpaid when he purchased the Tribune Company in 2007, and the company was bankrupt one year later. I worked hard to get a private equity (PE) firm to back me in the acquisition of Tribune.
But overpaying is neither in my DNA nor the PE firm with which I was working. Tribune had substantial assets, but their existing management didn’t know how to maximize the value of those assets. Prior to 2007 at Universal, we took advantage of that inability by launching successful shows, such as Hercules and Xena, on Tribune stations and controlling certain nights.
The PE firm and I had a straightforward plan to maximize value of the broadcast stations, the superstation and MLB’s Chicago Cubs, as well as monetize or grow their attractive Internet investments. The PE firm didn’t question the ability to do those things.
We had the most difficultly with my contrarian approach to the newspaper business; I wanted to invest in real talent. I wanted in-depth pieces on city and state government every day, on every important decision, and to ferret out and shine the light on government activities.
I sought critical thinking and was willing to pay to get the best and the most fearless reporters. A true third rail if you will. I wanted to go big on reporters so that our papers were THE authority on all things city and state. Our papers would be the curator of important governmental matters. This would translate to the Internet as a must-have and thus a paid for and profitable resource.
That said, I felt sports would be an important driver of value too. I will use the Tribune-owned L.A. Times as a model I would implement across the Tribune Empire of newspapers. My plan was to run stories on the Lakers and Dodgers, the two biggest brands in L.A., every day, 365 days of the year. My thesis was that people, especially men, read the sport page first. They want stories about their teams.
Then they would read the business section, where the Times have excellent writers, then on to the front page and so on. I have friends who only buy the Times for the sports page, and with the dwindling size of the sport section the Times is losing (and will continue to lose) those types of consumers.
The one place the Times is truly an authority or at least should be is with respect to L.A. sports. The business section should be too, but while operations are in L.A., much of the business end of L.A. takes place in New York. Only a few entertainment/media or major companies are headquartered in L.A.
The L.A. Times should beef up the sports section for the aforementioned team coverage and keep that coverage behind a pay wall so those stories can’t be accessed online without getting the paper.
Sports are the one place local newspapers have a competitive advantage. The rest of the paper, especially as configured now, can be found elsewhere with more in-depth coverage. Sports in cities where there are strong brands such as the Lakers and Dodgers are the one area local newspapers online and offline can dominate and drive value and construct new and profitable business models.
Brian Mulligan is currently the CEO of Brooknol Advisors, a Media, Entertainment and Sports Advisory Company. Mr. Mulligan has held CEO, Chairman, COO or CFO position of virtually every media/entertainment vertical for majors over a 30 year career, from Co-Chairman of Universal Pictures, CEO of Universal Television, Chairman of FOX Broadcasting and Cable, EVP/CFO of a Fortune 50 Company, SVP of MCA INC, EVP of Strategic Planning and Corporate Development Universal, Senior Executive Advisor Boston Consulting, Vice Chairman of Media/Telecom of a Money Center Bank, and worked extensively in/with private equity. Instrumental in over $175 billion of media and entertainment transactions.