More dysfunction at Tribune newspapers*

According to the New York Times, when Tribune Publishing told Wall Street last month that the Los Angeles Times and its sister San Diego paper were dragging down the company — justifying the abrupt firing of publisher Austin Beutner — the claims of financial under-performance were not true. Executives at both the San Diego Union-Tribune and the LAT say they were told by Chicago to make the financials look worse than the executives believe they actually were. From the NYT story:

No rigorous financial review had been conducted by employees of the two papers to support the revisions, and little of significance had changed in the papers’ financial performance, according to an email exchange the executives had with corporate headquarters and interviews with five current and former employees of Tribune Publishing with knowledge of the papers’ finances. The people spoke on the condition of anonymity.

The confusion expressed by executives at the two papers, The San Diego Union-Tribune and The Los Angeles Times, followed a directive from Sandra J. Martin, Tribune Publishing’s chief financial officer, on Sept. 17. In the email exchange, seen by The New York Times, she wrote that the company had “reviewed the forecast reports and believe there is risk in the San Diego numbers. Please take ad revenue in San Diego down $3.5 million, and rerun numbers.” The Los Angeles Times was, separately, also asked to reassess.

The next day, Tribune Publishing issued lower financial guidance, based on what it described as a rigorous review, saying it reflected “lower forecasted revenue estimates for the year, concentrated in Southern California.” The company’s shares dropped sharply, wiping tens of millions off its market capitalization, and have only slightly recovered.

In an email to headquarters in the days that followed, Russ Newton, the president and chief operating officer of The San Diego Union-Tribune, expressed surprise at the instructions to revise the forecast. “The projection does not seem realistic in my experience,” he wrote. “No one on my team appears to be the source of that decision.” Los Angeles Times executives privately also expressed confusion at the new guidance, according to the people with knowledge of the financial discussions.

The story leaves unclear why this over-stating of bad financial news would happen. Might just be ineptness caused by tensions between LA and the papers' Chicago overlords, the story seems to suggest.

Meanwhile, at the Los Angeles Times, senior newsroom staffers have begun taking to social media to announce they have put in the paperwork for the buyout now on the table. My approach is probably going to be to wait until we see which staffers apply and are accepted, then report the names of those who are especially newsworthy or who take some act to make their departure known.

In the online discussion groups where Times staffers are exploring their options, there is surprise being voiced about the requirement of Tribune Publishing that anyone who takes a buyout agree contractually not to "disparage" the Los Angeles Times in any way in the future. That may be a standard clause in such buyouts, but it is really disturbing to some people who wonder if they would be precluded from writing a book or taking to other media about the Times.

* Morning update: Tribune Publishing responds.

While we do not disclose specific segment performance, we told the market on September 22nd that financial performance at the Los Angeles Times Media Group underperformed our expectations in the year since our spin-off.

The September 18th guidance revision was issued consistent with our effort to update the market on our business outlook. This revision was the result of a review encompassing relevant financial inputs and forecasts from across the company, and reports and conversations with each of the business unit finance directors, including two from the California News Group.

Speculation by unnamed sources about the guidance revision has no basis in fact. Tribune Publishing is in a quiet period, and we look forward to updating investors with our third quarter earnings announcement.