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SPECIAL REPORT / CROSSING THE LINE

Crossing the Line

A Los Angeles Times Profit-Sharing Arrangement With Staples Center Fuels a Firestorm of Protest in the Newsroom--and a Debate About Journalistic Ethics

December 20, 1999|DAVID SHAW | Times Staff Writer

On Aug. 16, when much of the work on the magazine was done but printing was still a month away, the paper's senior management team met all afternoon and into the evening hours to discuss various budgetary matters. An e-mail sent the next day by Dick Stanton, then the chief financial officer, to the other participants in the meeting, including Parks, includes on its list of "items that came up at Monday's . . . meeting" a reference to "Staples Center revenue-sharing."

The e-mail makes no mention of the magazine, and Parks says he doesn't remember either it or profit-sharing being discussed. He says that he assumes the reference to "Staples Center revenue-sharing" was made not verbally but as just "a line on a long chart . . . a legal-size page of numbers going back and forth." Stanton says that he can't recall the specific discussion, but "It would have to be clear that revenue-sharing was from the magazine; that connection was made." Nevertheless, he says, "These were not major . . . discussion points, [and] it would be wrong to go back and criticize Michael for failing to focus on some small business issue. I think that's unfair in the extreme." In fact, Parks left the meeting for an hour or so when Sen. John McCain (R-Ariz.) came to visit the paper, and if there was any discussion of the profit-sharing, it could have taken place while he was out of the room.

For the Record
Los Angeles Times Monday December 27, 1999 Home Edition Part A Page 3 Metro Desk 2 inches; 39 words Type of Material: Correction
Investment conference--Participants in the Philadelphia Inquirer investment conference are selected by members of the paper's newsroom staff but, contrary to what was reported in The Times last Monday, they are invited by Morningstar, the co-sponsor of the conference.

Parks' Reaction

But Parks was definitely in the room and he did focus on the profit-sharing deal when he heard it mentioned at what he thinks was the Sept. 14 budget meeting. His best recollection, he says, is that in the course of reporting on advertising revenue for the year, McKeon mentioned the $2.1 million in revenue on the Staples issue of the magazine, "whereupon," Parks recalls, "Helin, who was sitting next to him, asked him how much he had to give to Tim Leiweke." McKeon said that would depend on how much it had cost to produce the magazine, Parks says, and, "That's the point at which I realized that we had an arrangement that involved profit-sharing with the Staples Center."

What did Parks do then?

He says he took McKeon and Helin aside and "asked them what the deal was" and they explained it to him.

What was his response?

"I'm sure I let them know I found this to be a problem," he says.

McKeon and Helin say they don't recall such a conversation. Both say they go to so many meetings that they don't remember that particular one. They agree that Parks' account of their exchange about Leiweke sounds probable, but both say that they think they would remember if the editor of the paper told them they had made a major mistake.

In any event, Parks and Kathryn Downing agree that Parks did not immediately call her or go see her to talk about what he had just learned. "I see her as a matter of practice every day," he says, so he waited to bring it up until the next time he saw her, either later that day or the next morning.

Is that when Downing told him that she had withheld the information from him--and why she had done so? Parks says he doesn't remember when she finally told him that. But he says he does remember, in general terms, what he told her about profit-sharing--that as a newspaper, "we can't share revenue in a business arrangement with people we're covering, especially when we're covering them in that very issue or section of the paper." He says he told her that even though "the editorial integrity of that particular issue of the magazine was fully intact because we didn't know" of the profit-sharing arrangement, the arrangement "raised the appearance of a conflict of interest, undermined our credibility thereby . . . and as a practice was not acceptable. It put into question the editorial independence that is the guarantee of the integrity of the paper."

Upset but Not Angry

Downing says that she doesn't remember just how the subject of the profit-sharing deal came up between her and Parks, or even which of them brought it up, but she thinks it may have come up "in the context of the profit and loss statement that we were preparing for Staples. . . . It was just one of many issues at the paper at that point.

"There's no doubt Michael was upset about it," she says, but he was "not outraged and not angry." Parks and Downing both say that screaming and pounding the desk are not his style, or hers, and they agree that once he explained why the profit-sharing arrangement was wrong, even if the editorial department hadn't known about it, she understood. "I don't recall her as minimizing in any way the problem," he says.

Neither of them sprang into action, though. At that point, although the entire magazine had been sent to the printer, only some of the covers and some of the eight-page, center fold-outs had been printed; the vast majority of the magazine wasn't on the presses yet. Parks and Downing say that they didn't even discuss stopping the press run--or destroying the magazines or publishing a disclosure about what had happened.

'Profound Regret'

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