After One Month -- Looking Ahead

From: Hiller, David
Sent: Monday, November 06, 2006 9:37 AM
Subject: After One Month -- Looking Ahead

Good morning,

Today marks the start of my second month here, and I thought it would be a good time to share some of my early thoughts.

First, I want to thank people for making me feel welcome, even under the circumstances of my arrival. You have been open, helpful and generally quite positive. I can't tell you how much I appreciate this.

I have also been impressed by the energy and talent of people I have met in every part of the company. This was not a surprise, of course. This truly is one of the nation's great newspapers, with a special role in the life of Los Angeles and Southern California. This has been brought home to me in scores of conversations, letters and emails with readers, community groups, and many of you.

Many of you have also shared your ideas and advice about the paper, our websites and our business, and this has been enormously helpful to me. You will see some of these ideas in what follows. Also please take these views as preliminary; they are the subject of our ongoing conversation. So here goes.

· We have a very strong foundation as the leading and most trusted source of news and information in and about Los Angeles and Southern California. Nobody else has our journalistic strength, brand, or scale and reach of our resources in the region and beyond

· At the same time, we have a serious readership challenge. We have lost significant numbers of readers in the last 5 years. Some of this is explained by the growth of the Internet, more media choices, etc. But much of this is within our control. This is a huge issue as readership is key to both our civic mission and our media business.

· Because of media fragmentation and the amazing diversity of our market, there are large segments of audience that we need to do a better job reaching (youth, young families, Hispanic audience).

· Our advertising business is under pressure like never before. Again, this has a lot to do with the Internet, but also changes in our advertisers' businesses (department stores, auto, movies, etc.). There is also great demand for more innovative "breakthrough" ad solutions, and more measurable results as we compete against all media for ad budgets.

· These changes are threatening the financial position of the whole industry. This is not about maintaining high newspaper profit margins. Look no further than recent reports on other large metro papers in Boston, Philadelphia, Dallas and San Francisco.

· These marketplace changes are not temporary. They are permanent and continuing.

So what do we need to do?

1. Focus relentlessly on growing local audience

Readership is everybody's job. We need to understand why people read us, why they don't, and change things in print and online so that more people do. Everybody who touches the reader (and online user) experience, including all aspects of customer satisfaction and service, has responsibility here. There is a lot of activity in this area, including the recent re-designs of the A section and Sunday Calendar in print, and the launch of YourScene and Entertainment News online. These are moving in the right direction, and we need to do more. Our editorial creativity and research-based insights point the way forward. Much research and planning has already been done and we need to quickly turn that that knowledge into action.

I also think we are right on with our strategy to "re-connect with Southern California." People turn to us for an array of their information and entertainment needs, but among the top in interest and importance are those about our communities and region. This is especially true when you take into account consumers' preference for newspapers for this sort of information as compared to broadcast media. I have heard this from many of you, and also from members of the community specifically about coverage in Orange County and in the Valley. So I think we are right to dial up the voice and visibility of our local and regional coverage.

In a related vein, a number of you have raised whether we are too focused on being like the New York Times. The New York Times has chosen a national audience strategy, and in so doing has seen significant drops in circulation and readership in their own metro market. That is not the path we want to go down. Our strategy is building audience in LA and Southern Cal, and being authentic and indispensable in the eyes of people here, not on the East Coast and not in Chicago. This does not say turn away from foreign and national coverage, but it would suggest focus on issues and regions of special relevance here - like our role as a gateway to the Pacific and our leading coverage of the entertainment industry.

2. Accelerate our growth on the Internet

We know the web and other new media are growing fast, and we need to grow faster on the Web than we are. Plainly this is a major part of our future and we need to build to it. Our interactive group is doing (and planning) some of the most creative and promising things I have seen, and we need to clear these for takeoff. I expect there will be some important ideas coming out of the Spring Street Project as well. Part of this is getting our signals straight with Tribune Interactive on who does what, and I think we are getting there.

Perhaps most important, we need to be re-tooling ourselves for the Web all across the company. I know there is a lot of work underway on this right now, and we really need to push it. Part of this means re-allocating resources to the Web, as well as recasting all of our work so it supports our multi-channel business. A key competitive advantage for us is integrating print and online.

3. Serve our Hispanic audience

There is widespread agreement we need a stronger overall Hispanic strategy. This will require that we resolve the future direction for Hoy (addressing the Spanish speaking part of the market), as well as better defining our strategy in The Times for reaching the English speaking Hispanic audience.

4. Develop new products for under-served markets

We need more media in the market. The math is inescapable. Media choices for consumers and advertisers are multiplying, so any given channel will likely lose share. So we have to offer more of our own new products to get consumers and advertisers to spend time and money with us. This is especially true for audience segments we under-serve with The Times - including youth, young families, and communities in the rapidly growing Inland Empire.

5. Drive more advertising revenue from existing (and new) audiences

We need to remember and remind everybody that we provide the best, broad reach as well as targeted audience in Southern California. We also need to continue to create new advertising environments, like The Envelope in print and online and the new Calendar sections, as well as to do an even better job of getting revenue from the high grade audiences we currently deliver. Effectively bringing advertisers solutions involving multiple products is increasingly important.

6. Resource allocation/expense reduction

The changes transforming the newspaper business are fundamental and permanent. These are not short-term budget issues, of gaps to close and expenses to cut. Rather, what we do in applying our great resources to our mission and business has to follow our vision of where we are taking the business over the next five years and beyond. It is clear that some of this will require moving resources from print to online, and other growth areas. It also means continuing to reduce costs in the core print business, across every area of the company, and doing so thoughtfully and strategically.

We need to spend our time imagining and inventing the future of our business, and finding the way forward to it. And managers need to lead this change, and be confident and positive, even as we are realistic about the challenging things we will need to do to get there. We cannot allow ourselves to feel victimized by change or to be in denial of what needs to be done to move us ahead.

I believe our future is long and bright, and will reflect well on our 125 year traditions of excellence and service to Southern California. It is not pre-ordained, however, but must be claimed every day. I look forward to that journey with all of you.



David