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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

But that was The Times' decision, he said, and he didn't protest. What he did protest, albeit not very strongly, was The Times' accounting on the magazine after it was published. He had heard before publication how successful the magazine was, and he assumed Staples Center's share of the profits would be considerably more than $300,000. But when he got the profit and loss statement, shortly before the magazine was published, it was only slightly more than that, which means the total profit was only a little more than $600,000.

"We were shocked and alarmed," he says. "Because we knew what the gross was, and we kind of scratched our heads, saying, 'How could we be down to such a small amount of money?' "

Did he think it was coincidental that the founding partner agreement specified a joint revenue opportunity that would give about $300,000 to Staples Center and even though revenue for the magazine wound up more than doubling John McKeon's most optimistic prediction, The Times still said Staples' share of the profits would be about $300,000?

Leiweke's only reply was to grin, shake his head and repeat that he was "shocked and alarmed."

Staples Didn't Protest

Dick Stanton says Leiweke is just "naive" about the costs of magazine production, and Leiweke says that's probably true. But an early estimated profit and loss statement prepared last May forecast expenses of just under $1.2 million, which would have yielded a $900,000 profit, $450,000 of which would have gone to Staples. Among the costs that increased from May to October were those for editorial, from $78,000 to more than $160,000.

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.

Leiweke says that when he questioned the profit and loss statement, The Times made a couple of adjustments and agreed to send him an additional $50,000. "We didn't raise a big stink about it," he says.

By then, however, journalists at The Times were raising their own big stink.

CHAPTER EIGHT / The Press

The stink was slow in coming. Neither the early rumblings and grumblings about profit-sharing nor the celebratory quality of the magazine created a furor. Then, the day after the magazine came out, the Los Angeles Business Journal published a story headlined: "L.A. Times Finds Arena Membership Has Its Privileges." The story quoted Tim Leiweke as referring to the magazine as a joint venture between the arena and The Times and said Staples Center had urged corporate sponsors and arena concessionaires to buy ads in it.

Apparently, few Times reporters or editors read the Los Angeles Business Journal, and those who do don't pay any attention to it. Initially, that story had no impact.

Four days later, on the eve of the Staples Center opening, Michael Parks sent the following computer message to all "slot" editors at the paper, those editors who are often the last to see a story before it's printed: "Our style on the new arena will be: Staples Center--without a preceding 'the,' as in Dodger Stadium. Thanks."

Parks subsequently explained the change not as a capitulation to the advertising department but as an invocation of what he called "the Muhammad Ali rule." When Cassius Clay decided he wanted to be called Muhammad Ali, the media complied (however reluctantly and tardily in many cases), and Parks felt that any individual or institution had the right to be called by his or its chosen name.

Why doesn't the paper follow a similar policy with other venues and corporate entities--Edison International Field, Yahoo! or the Arrowhead Pond of Anaheim--none of which is identified in the paper by the precise nomenclature its owners prefer? Parks says that he would be willing to "listen to all arguments" on those but there had been no request from or controversy about them, as there had been about Staples Center. Besides, he says, the paper has an established style on them, whereas Staples Center was new, and having seen a wide variety of usages in the paper---"Staples Center," "the Staples Center, "The Staples Center"--he wanted to ensure conformity.

Since he knew about the profit-sharing arrangement by then, did he consider the possibility that the staff might see this as kowtowing to the demands of a business partner in an inappropriate venture?

He says he was aware of that, but he went ahead anyway because it was "the right decision."

Critical Column

Six days later, New Times, an alternative weekly newspaper, published one of its periodic attacks on The Times in a column called "The Finger." The column is written by Rick Barrs, the editor of the paper and a former night city editor at The Times who clearly takes delight in poking fun at his old employer. In this particular column, Barrs criticized Mark Willes and the Staples Center issue of the Times magazine and--relying, as usual, on unidentified sources--recounted the "the" controversy and said The Times had agreed to "split profits from the Staples Center issue with, uh, the Staples Center."

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