Sam Zell To "Right-Size" Tribune Papers

By Margaret Lyons in News on Jun 5, 2008 8:57PM

Sam Zell and Randy Michaels sent out an e-mail today detailing their ideas for the "changing business model for publishing." By September, Trib-company newspapers will be a lot smaller, and they'll all have a new "customer-centric" design and new websites. All the TV station websites will look like this.

Full missive after the jump.

From: Talk to Sam [mailto:talktoSam@Tribune.com]

Sent: Thursday, June 05, 2008 3:32 PM

Subject: Recap of first quarter 2008 earnings call

Partners,

Instead of recapping our first quarter numbers, which you can see in our news release online, we want to get to the heart of what we’re sure all of you are focused on after our earnings call today – our discussion around the changing business model for publishing.

What has become clear as we have gotten intimately familiar with the business is that the model for newspapers no longer works. Supply and demand are not in balance, and that manifests itself in two ways:

1. We are not giving readers what they want, and

2. We are printing bigger papers than we can afford to print

First, our publishing business – and to reiterate, it IS a business – needs to retool itself to a customer-centric model. We have now reviewed dozens of reader studies done by Tribune over the years, and they present clear and consistent findings. Readers want:

- Unbiased, honest journalism
- LOCAL consumer and community news
- Maps, graphics, lists, ranking and stats

Some of our papers do some of these things well, and some of our papers do them better than others. But, ALL of our papers need to improve in this area. We’re in the business of satisfying customers, and we WILL respond to what they say they want.

The first paper to embrace this new customer-centric design will be the Orlando Sentinel, and it will debut on June 22. You’ll see all of our papers incorporate some level of redesign by the end of September.

Second, we must also strategically align the size of the paper we produce with what advertisers want. We will be assuming a 50/50 ad-to-editorial ratio base as a floor to right-size our papers. With that benchmark we can significantly scale back the size of the papers we print, and take significant costs out of our operating run rate.

We must find the balance between producing excellent products and producing products we can afford. And, we will find it.

We’d also like to mention interactive, which will be a primary source of revenue in our future. We are in the final stage of developing a platform for our websites that will enable us to take advantage of all the opportunities on the web – from e-commerce to social networking to selling key words and other activities.

This new product will come to each of the business units fully loaded and ready for prime time. It will be a simple tool kit that is pre-populated, but you’ll be able to customize and design it for your market, and your individual audiences. But the new sites will come with a budget, and with the expectation that they will be fully leveraged to generate revenue.

The new websites will roll out to the TV stations first, and we expect this phase to be completed by the end of August. Within the coming year, our papers will have transitioned to the new sites as well. You can preview a sample of this product line at KPLR-TV in St. Louis at cw11tv.com.

We started this year by rattling the cages, and since then we’ve continued to reinforce the urgency for change. We expect by now you understand the ‘do-or-die’ challenge that has been placed in front of us. We now have a roadmap to turn that challenge into opportunity.

Sam & Randy