Two Theories About Why L.A. Just Became a Three-Newspaper Town
Today, the number of daily newspapers (news-pay-per, n: a publication issued at regular and usually close intervals, especially daily or weekly, and commonly containing news, comment, features and advertising) increased by exactly 50 percent, as the Los Angeles Register hit newsstands
everywhere in certain places.
The Los Angeles Times is for sale, and its parent firm is being restructured and loaded with debt. Perennial second fiddle The Daily News is arguably worse off — newspaper economist extraordinaire Ken Doctor predicts that its parent company, Digital First Media, will start selling off its papers this year.
Enter Aaron Kushner, the former greeting-card magnate, whom O.C. Weekly has called the Pied Piper of print media:
Today's issue comes with a column by a little-known writer named Kareem Abdul-Jabbar, who sounds off on his favorite LA movies. Spoiler alert: Point Break makes the cut. And he quotes Baudelaire in the lede.
Kushner heads 2100 Trust, a private equity group with an unknown number of unknown investors, which now owns the Orange County Register, Long Beach Register, the Press-Enterprise of Riverside, the longtime South Bay weekly The Easy Reader and the brand-new Los Angeles Register.
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Before long, Kushner announced that he was expanding to the very heart of Southern California: Journalism watchers and the region's laid-off reporters, whose industry has contracted and never recovered, went from scratching their heads in bewilderment to licking their lips in bewilderment.
Just what was Kushner up to? Was he the messiah of journalism? Some free-market revolutionary?
What's the point? Doctor says there are two ways of looking at Kushner's big play.
Theory #1: Pirates!
"These guys are kind of like pirates of the newspaper trade," Doctor says. That is, the L.A. Register is simply trying to bite off readers and advertisers from the other two flagging papers. "Can he take business from the other two papers? A little."
The problem with this theory is that the size of the pie the Register is competing over is shrinking. Print ad revenue has been steadily declining 8 percent every single year — and print ad revenue is still by far the largest part of a newspaper's revenue stream.
Theory #2: The Long Game
Kushner has said publicly that he still wants to buy the L.A. Times. So why start a new paper then? Well, Kushner can't afford to buy the L.A. Times — he's rich, but not David Geffen rich. He'll need investors to pony up the dough, and he'll need to convince them that he can stop the bleeding over at the Times, which has remained profitable only by cutting staff year after year.
The L.A. Register, then, could be seen as an elaborate audition for buying the L.A. Times. If Kushner can make the synergy of his four Southern California papers work, he can turn around to investors and say that he can get more out of owning the Times than anyone else.
"You go to people and say, 'Look what we did here,'" Doctor explains. "We have the Registers. 'We got that footprint. Now if we combine that with the L.A. Times, we got the whole thing!' He can make an argument that he'll be dominating newspaper presence in Southern California."
Los Angeles Register Opinion aims to infuse a new perspective into the political and public policy debate in our community and lead the charge for a new generation of liberty-minded, free-market intellectuals.
To do so, we deliberately try to ignore party affiliation, focusing instead on principles and ideas with a very simple bright line: What can be done to increase economic and social liberty?
We favor free-market economic and fiscal policy and believe government — at all levels — should exercise budgetary prudence and restraint.
But Kushner isn't Rupert Murdoch, who owns money-losing papers for fun.
Kushner has investors who (presumably) expect to see a return. The proverbial kimono was opened just a bit when it was revealed that the new Los Angeles Register would include a staff of around 40 writers and editors — all of them transferred from the OC Register. Kushner wasn't investing in journalism so much as he was expanding the reach of his own empire.
The L.A. Register is a relatively low-risk endeavor. It won't be delivered to any homes (at least not yet). Any papers it sells will be single-copy on newsstands and racks ($1.50 on weekdays and $2 on Sundays, according to itself).
Much of the paper's content (50-60 pages on weekdays, 80-90 on Sundays) will likely come from Orange County — all the L.A. office does is add local news and sports coverage. Such are the synergies of running a newspaper chain.
In other words, the new paper won't have many readers, but it also won't cost Kushner much.
"It's a high-profile launch, but it's not gonna have a huge marketplace impact," Doctor says. "This is not gonna be a big business changer in L.A., for the Times especially."
Even if Kushner can't afford the Times, he could also end up buying the Los Angeles News Group, which includes the Daily News, and merge that into his own collection. (Doctor asked Kushner if he would buy LANG if and when it goes up for sale; Kushner told him that he would definitely consider it if and when the papers go up for sale.)
What sort of papers might Kushner create?
Kushner's approach to newspapership has been simple and rather iconoclastic: Treat the print product and the digital product as one and the same, charging the same amount of money for both.
The OC Register's paywall (the thing that pops up and prevents you from reading an article unless you have a print or digital subscription) is as impermeable as many others. Unlike, say, The New York Times, you get exactly zero free articles per month from the Register. No money, no honey.
His purchase of the Register was followed by a slew of hires - 90 new positions, many of them reporters, editors and columnists, including biggish names like T.J. Simers, formerly of the L.A. Times.
But for now, Los Angeles can enjoy its nearly unique status of being, like New York, a three-newspaper town.
The great L.A. newspaper war of 2014 starts tomorrow with the @LARegisterNews launch. I shall crush our rivals with clicks and gimmicks.
- Matt Pearce (@mattdpearce) April 16, 2014
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