Welcome, Voice of San Diego readers!
This is an expanded version of my article on the historic sale of the Union-Tribune, announced Wednesday.
Correction: The Union-Tribune does have a Tijuana bureau, according to a comment left by staffer Onell Soto. More at the end of the story.
Update: Don Bauder of the San Diego Reader says the Union-Tribune’s new owners will soon perform a major staff-ectomy.
By Bradley J. Fikes, C.O.R.
What does it mean to a city when the family that has owned your newspaper since God was a babe sells out?
We know what it meant to the Los Angeles Times when the Chandlers sold out — and the results were not encouraging. Now my city (and county) of San Diego is about to find out if there can be a happier ending.
For longer than nearly anyone has been alive, the Copley family has been synonymous with the San Diego Union-Tribune. But that epoch, which began in 1928, is at an end with Wednesday’s announcement that the Copley Press is selling the Union-Tribune to a private equity firm, Beverly Hills-based Platinum Equity.
Copley Press in practice means its owner, which has always been one of the Copleys. The current and last is David C. Copley, who inherited the paper in 2004. In retrospect, it was only a matter of time before he sold the paper. David Copley has never taken the interest in journalism shown by his late mother, Helen K. Copley, or the others.
The Copleys were extremely influential in San Diego politics, and acquired many friends and some enemies along the way. Most notably, former San Diego Mayor Roger Hedgecock feuded with the Union-Tribune, and more recently, the paper has sparred with former City Attorney Mike Aguirre.
The San Diego Reader is one of the few institutions in town to regularly challenge the Copleys. The Reader’s owner, Jim Holman, regularly prints unflattering exposes on Copley activities, such as David Copley’s course through the Mediterranean on his yacht, along with allusions to Copley’s party-hearty lifestyle, which included drunk driving convictions, and the reported attendance of serial killer Andrew Cunanan at some of Copley’s parties.
The Reader published an epic retrospective, “The Rise and Fall of the Copley Press,” in February, 2008.
Throughout it all, since the Union-Tribune was such a huge vehicle of influence, along with a huge money-maker, the Copleys had no reason to sell.
Until now. Newspaper advertising revenues are plummeting amid recession and a shift of customers to the Internet. The Union-Tribune has endured round after round of job cuts, a huge shock to lifers who thought their jobs were permanent.
“The Copleys helped drive San Diego, and now they’re out. That’s a huge shift for this community,” said Dean Nelson, a professor of journalism at Point Loma Nazarene University.
“An announcement like this raises as many questions as it answers. But it sounds like at least for the short term, we’re still going to have a newspaper in San Diego.”
The deal is expected to be completed during the second quarter.
The first Copley owner of the Union-Tribune, Col. Ira Copley, bought the paper in 1928. When Ira Copley died in 1947, he passed it on to James Copley, his son. James Copley in turn bequeathed the Union Tribune to his widow, Helen K. Copley, when he died in 1973.
La Jolla resident David C. Copley, the end of the family line, inherited the Union-Tribune from Helen Copley, his mother, when she died in 2004. Up until last year, David Copley denied any interest in selling the newspaper. He did sell off the Copley Press’ chain of papers in Illinois and Ohio in 2007 for $380 million. That left the Union Tribune as the only major newspaper under Copley Press ownership.
David Copley has also suffered from poor health. Notably obese for much of his life, he had a heart transplant in 2005. He’s unmarried and has no children, so there was no next generation waiting in the wings. After the heart transplant, speculation abounded about whether Copley would sell the paper.
With the end of Copley family ownership, Nelson said it’s difficult to predict what the new Union-Tribune will be like.
New in town
One potential clue, Nelson said, is the involvement of newspaper owner David H. Black in the purchase. Platinum Equity’s announcement. Black is part of the “Platinum team” that will run the Union-Tribune, according to the firm. He owns the Akron Beacon Journal in Ohio, the Honolulu Star-Bulletin, and a number of community newspapers in the Pacific Northwest and Canada.
David Black reportedly leads a low-key lifestyle without the conspicuous consumption or notoriety of Conrad Black, an unrelated media mogul now in prison. David Black was profiled by the Seattle Weekly in 2007.
Platinum has not specified what role Black will play.
Nelson said Platinum Equity’s description of itself on its Web site, is “strategically vague in what they do,” a point also made by Tom Rosenstiel, director of the Project for Excellence in Journalism. Rosenstiel pointed to the equity firm’s description of itself as a specialist in “acquiring businesses facing complex operational challenges in declining or transitioning markets.”
The key to what Platinum Equity will do, Rosenstiel said, is whether the firm sees newspapers as a declining market, or a transitioning one.
“If they see them as declining, what private equity firms typically do is cut costs and they might operate this business for the cash flow,” Rosenstiel said. “There’s still a lot of cash in newspapers.”
“But if they see it as a transitioning business, then that might suggest they’re interested in building up the operation, strengthening its market share, and experimenting with new revenue models,” Rosenstiel said.
“We don’t know what’s their time horizon for return on investment, and how much debt they’re taking on,” he said.
Debt matters
Heavy debt has been the bane of recent newspaper acquisitions, such as the 2007 purchase of the Minneapolis Star-Tribune by the private equity firm Avista Capital Partners, for $100 million. In January of this year, the Star-Tribune filed for Chapter 11 bankruptcy.
Private equity firms in general concentrate on cutting costs, and tend not to be good at innovation, said Marc Cooper, a faculty member of the USC Annenberg School for Communication. If that’s the case with Platinum Equity, Cooper said, the outlook is not good for the Union-Tribune.
Even a strong commitment to building a new model for journalism may not work, Cooper said, because newspapers are struggling with a nasty recession in addition to the “revolutionary” technological shift to the Internet. That makes the viability of any newspaper, even with good management, “a very iffy proposition,” Cooper said.
“I don’t purport to know that there is a way to turn around any of these newspapers,” Cooper said. “It would seem that when you are purchased by a private equity group, the chances that your owners are any more interested in the product than they are in the bottom line seems remote.”
Cooper recounted how he had freelanced for the Union-Tribune in the 1980s, reporting on the war in El Salvador. This was in addition to regular coverage, Cooper stressed, not to substitute for paid staffers.
Today, Cooper said, the Union-Tribune and other papers wouldn’t do such a thing, pointing out that the Union-Tribune no longer even maintains a bureau in Tijuana, right across the Mexican border from San Diego.
* * * * * * * * * *
CORRECTION: According to a comment by Onell Soto of the U-T, the paper does have a Tijuana bureau. I called the paper twice to check on that information. The first time, the operator transferred me to someone in the Mission Valley office, and I got voice mail. The second time I asked the operator for the number of the U-T’s Tijuana bureau. After being put on hold for a few minutes, the operator told me the paper did not have a bureau in Tijuana.
Like all else I write here, the opinions I express in this article are my own, and not necessarily the opinions of my employer, the North County Times.
Private equity firms in general concentrate on cutting costs, and tend not to be good at innovation, said Marc Cooper…
If his statement is limited to the journalism industry, I have no idea if that is true or false. But in the larger picture that does not match my experience of seeing private capital delving into innovative commercial projects long before the ‘public’ money follows their lead. I mean just what is the venture part of venture capital? What private equity does is focus on results that drop to the bottom line sooner or later. Public corporations, as the world has discovered recently, focus on results that drop to the executive bank account. Usually emphasis on the sooner over the later.
My guess is that Platinum intends to strip away every ounce, stash the cash, and wait out the near future to see which way the wind blows. They likely got a bargain price, if they are any good at what they do. But you never know with private funds. This one is still doing business, so that’s a clue.
Nice write up. I just scan the T-A, er, NC Times when I get up to Escondido on Sundays. Suggestion…change the name again to the SD County Times and give Platinum some competition. I know they would kill them on science reporting…
Hi allan,
I very much would like to give the North County Times a better name. When I buy the paper, I promise to do so!
Thanks for the perspective on private equity. I do think Cooper was mainly thinking of newspapers in his comments. Bottom-line thinking is not enough in journalism; one must also know the industry. That’s what distinguishes folks like Rupert Murdoch from the clueless Sam Zells.
Part of it is knowing what business you are in, a quality that Murdoch has shown repeatedly. The other thing is my question why one of the big newspapers, or a consortium of them, doesn’t buy Craig’s List. I saw someone else write that the other day. I suppose they could try to start a local version but I think it would be a way to deal with the ad revenue thing.
The obvious answer is that Craigslist isn’t for sale, a point that has eluded several journosaurs who should have known better.
And it is highly unlikely that any newspaper competitor would succeed, because of the newspaper industry’s bass-ackwards command-and-control culture.
The little chiefs controlling such a competitor would be too busy trying to figure out how to maximize revenue to actually serve their customers. Also, the little chiefs would likely be techno-ignorant corporate droids, used to giving orders to the lower-ranking people who actually do stuff, and then taking the credit. In the fluid culture of Internet business, the worker bees wouldn’t likely stick around for that stultifying environment.
The U-T still has a Tijuana bureau.
Thanks, Onell. I called the U-T office, and was told you don’t have a Tijuana bureau. I’ll correct my entry.
Its great to hear you have read those works. Excellent stuff there. They’re worth studying closely and rereading carefully. The Austrian school, Objectivism and big “L” Libertarianism are not one and the same thing though. There are differences. When it comes to non initiation of force however, they hold similar views (as I understand matters). / p Nevertheless, there are several possibilities in a free market that can lead to reduction of CO2. First, there has to be a demonstrable damage or a proveable…