Hiller to LAT: Recession, baby

In one of his occasional long messages to the staff, Los Angeles Times Publisher David Hiller says "we are smack in the middle of a recession on top of the dramatic changes the newspaper business is going through."

For the whole first quarter, advertising revenue was down double-digits from last year, and our cash flow is down even more. The results for March alone were even more severe, with revenue and cash flow declines dropping to levels not seen for decades."

Emphasis mine. So the Times continues to do worse financially than the other big papers in the country, and is the only big paper known to be planning to smack its readers with a reinvention of what it covers. (See LAT editors on retreat.) But there will be merit raises, and a big meeting on April 30 to discuss changes. I didn't realize the Times now delivers the Daily News.

Whole memo after the jump:

From: Hiller, David

Sent: Tue 4/8/2008 5:38 PM

Subject: Times Ahead

Folks,

It is hard to believe that we are three months into 2008 already.

I wanted to bring you up to date on developments, and also get the next all-employee Town Hall meeting on your calendars. It will be Wednesday, April 30 at 10 a.m. in the Chandler Auditorium with live video viewing at other locations. So save the date, and more details will follow.

Business-wise, as you've read in the news, we are smack in the middle of a recession on top of the dramatic changes the newspaper business is going through. For the whole first quarter, advertising revenue was down double-digits from last year, and our cash flow is down even more. The results for March alone were even more severe, with revenue and cash flow declines dropping to levels not seen for decades.

The recession will let up in time, but the fundamental changes to our business will continue and be permanent.

Our job is to create a sustainable, successful news and information business that will be able to serve our Los Angeles and SoCal customers for years to come. We can do that, but we have to be ready to re-think and re-imagine everything we do, from bottom to top-all focused on what will make us indispensable every day for readers, users and advertisers. And keep us financially viable.

So what's been happening to accomplish this?

We re-aligned our management team to better focus on our customers in three main lines of business - newspaper, interactive, and targeted media - led by Jack Klunder, Bob Bellack, and John O'Loughlin.
We have a new editor in Russ Stanton, who is actively getting a team in place, and working to create the truly multimedia newsroom of the future.

We're building a business vision and financial model that goes several years out, not just a month or two, so we can make decisions that fit our longer term strategies.

We're actively working to improve the revenue picture:

*We've brought in a new head of recruitment advertising overseeing both print and online sales (Laurence Sotsky)
* We've launched a great collaborative effort using the circulation telesales team to sell recruitment ads in down time
* Ken Nail, who has led the best performing cars.com sales team in the country, will now lead all auto dealer sales both print and online
* With Tribune Media Net, just sold a multi-million dollar weekly Chevy Showroom package (first one ran on Sunday)
* Launched a new real estate product for "bank owned" homes (we're finding opportunities in the downturn)
* Latimes.com audience up 31% in the quarter (hit 100 million pageviews two months running); blog traffic up 90%
* Non-classified online revenue up 32% (driven by product improvements)
* Launching the guide.com hyper local entertainment product (what to do, by neighborhood)
* Setting records for sponsorship sales for Travel Show and upcoming Festival of Books
* Launched new print MetroMix (reversed published from web) with 100K circ (and new boxes and locations)
* Expanded Hoy Fin de Semana weekend package from 300,000 to 500,000 circ
* Named a new publisher for Hoy (Roaldo Moran) who joins us from LA Univision radio
* Trib Direct LA (our direct mail unit) just inked a number of new million dollar plus deals
* Expanding our commercial delivery business, delivering LA Daily News and Chinese Daily News for almost $1M in revenue
* Regional advertising added almost 400 new accounts totaling $2M in first quarter

And we're just getting started

We're also taking actions in the near term to offset the sharp decline we have seen in business in the first quarter. The job eliminations (around 125) we did in the EVSP were part of this.

I want to make a point about how to think about what we are doing. I think it is very important to feel and believe we are building something new and exciting, and not just cutting from or propping up something old. Because we are building something new. And it will make all the difference in the world to how our customers see us and experience us, how we feel about our mission, and how successful we are. Give some thought to how you think, feel and talk about ourselves. We'll talk more about this at our Town Hall meeting.

A couple other things for now:

First on compensation, we are going to do merit pay increases this year that will be effective at the end of June (rather than March as has been traditional). Especially in these challenging times we want to recognize the strong performance and contributions so many are making. The deferred timing will also help with some savings.

And speaking of recognition, we are planning to go forward with employee recognition events, and this year each department will be planning and hosting its own celebration (I hope to be invited to all of them J). You will be hearing from your department about these plans soon.

Remember to mark your calendar for the April 30 Town Hall, and email me or call with any questions or comments in the meanwhile.

David