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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

Within a few days of Michael Parks' conversation with Kathryn Downing--on or about Sept. 17, memories differ on the exact day-- Chris Avetesian, then-director of financial planning and reporting at The Times, walked into the offices of the Sunday magazine with what he thought was a simple request. He asked Drex Heikes if the magazine could provide him with a breakdown on all the editorial costs associated with the Staples Center issue. Heikes told Avetesian that because so many costs are "fixed"--work done by regularly salaried employees who weren't paid extra for that issue--it would be a "monumental task" to determine precisely what costs should be attributed specifically to the Staples Center issue.

Heikes had never met Avetesian before, and he had never before been asked for such information, not on regular issues of the magazine, not on special issues devoted to fashion, home furnishings and other subjects, not even on the big Getty Center issue. Puzzled, he asked Avetesian why he needed the information.

Both men agree that Avetesian said he was putting together a profit and loss statement on the issue and needed the financial data so he could add up all the costs of producing the magazine and apply those costs to the revenue before The Times split the profits with Staples Center.

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.

Split the profits with Staples Center? Heikes was stunned. He says this was the first he had heard about the profit-sharing arrangement, the first anyone at the magazine had heard about it, as far as he knew. He told Avetesian he would talk to Alice Short and try to put some numbers together. Since the sports department had provided most of the stories, he suggested that Avetesian talk to Rick Jaffe as well.

'It Was Unbelievable'

The instant Avetesian left, Heikes says he called John Lindsay to tell him about the profit-sharing arrangement.

"I thought it was unbelievable," Lindsay says. He asked Michael Parks about it.

What was Parks' response?

Lindsay doesn't remember.

Did Parks already know about the profit-sharing?

Lindsay couldn't tell.

Was Lindsay angry?

Yes.

Did he urge Parks, then or later, to halt the press run or destroy the magazines or publish a disclosure about the profit-sharing in the paper?

"As far as I'm concerned at that point, it was the editor's job to do that," Lindsay said. "My suggestions up until then had been pretty much ignored. . . . I had provided much more input than anyone had cared to hear, and I had been criticized by a number of people about how I wasn't a team player."

In fact, Lindsay now wonders if, after that early meeting at which he had so strongly opposed using the magazine for the Staples center opening, he had been left out of future discussions at which profit-sharing might have been mentioned--cut off because he was "obstructive," as he puts it.

Stunned Reaction

Avetesian, meanwhile, took Heikes' advice and went to see Jaffe about the sports department's costs for the Staples issue. Jaffe echoed Heikes' concerns that it would be difficult to figure those costs. He had done much of the work at home, after-hours, he said, and he was not paid extra for it, either. According to both men, Avetesian then said, "I'll never be able to figure this out," at which point Jaffe asked, "What are you trying to figure out?"

Avetesian told him the same thing he had told Heikes about the profit-sharing arrangement. Like Heikes, Jaffe said he would try to come up with some figures, and like Heikes, he acted as soon as Avetesian left.

The two men had been standing in his office, Jaffe says, and without even bothering to sit down, he went directly to see his boss, Sports Editor Bill Dwyre.

"Bill," both men recall his saying, "You're not going to believe this." He then recounted what Avetesian had told him. Both men say that they sat there for several minutes, looking at one another in stunned silence, after which--prophetically, as it turned out--Dwyre said: "If one of those alternative newspapers gets hold of this, all hell's gonna break loose."

Dwyre says he went straight to his boss, Managing Editor John Arthur, to report what he had just been told. Dwyre says he remembers specifically what Arthur was doing ("working at his computer") and how he reacted ("he was outraged"). But Arthur says he doesn't recall Dwyre's visit. He says he didn't learn about the profit-sharing until it began to receive attention in other media.

Belated Regrets

Ten minutes later, when Parks passed Dwyre's office, Dwyre says he flagged him down and gave him the same report he had given to Arthur. Parks' response was so low-key that Dwyre thought, "Either he didn't hear me, he didn't get it or he already knew."

Did Dwyre press for an explanation or urge some remedial action, such as destroying the magazines or publishing a disclaimer?

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