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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

The latter concept was embodied in clause 5d of the final contract, which said, in part, that The Times and the L.A. Arena Co., owner of Staples Center, would "agree to cooperate in the development and implementation of joint revenue opportunities . . . (e.g., a special section in the Los Angeles Times in connection with the opening of the Arena, or a jointly published commemorative yearbook). Such opportunities shall be subject to the mutual agreement of both parties." The clause went on to say that the goal of any such endeavor would be "to generate approximately $300,000 of net revenue [profit, after expenses] for each party annually."

It was that one-paragraph clause that would ultimately lead to the special Staples Center issue of the Los Angeles Times Magazine and to the momentous controversy that would follow.

At her cafeteria meeting with Times newsroom staffers 10 months after the contract was signed, Kathryn Downing would say: "I made the decision that [the Los Angeles Times Magazine] would be the product this year that we would share the revenues on." But in an interview 10 days later, she would say she didn't know who made that decision. She took responsibility for it, she said, because she's the boss and she signed the contract.

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.

In fact, it appears that no one actually "made" the decision, as such, that the magazine would be the profit-sharing vehicle. It was generally assumed on the business side of the paper that The Times would print some kind of special publication to mark the opening of Staples Center and whatever that section was would automatically become the profit-sharing vehicle. Editors involved in the early planning for Staples opening coverage, seemingly unaware of the profit-sharing arrangement, initially--and strongly--opposed devoting a special issue of the magazine to Staples Center but did so for other reasons. In any event, the magazine itself really didn't figure in the contract negotiations.

Variety of Options

Some advertisers actually thought at first that they were buying ads in a commemorative book or program, and Leiweke says he was thinking that the first year's joint profit-sharing venture might be what is known in the newspaper business as an "advertorial." That's a special section of the paper with stories, photos and advertising, all produced by the advertising department rather than the editorial department, and clearly labeled as an "advertising supplement." The paper already did something like that for the Kings--a four-page advertorial published before the team's home opener each season. Because it is labeled as advertising, an advertorial has less credibility than a section produced by the editorial department. But it has one big advantage: Whoever pays for it controls what it says. It has no negative stories.

Klein says that he also had in mind for the first profit-sharing venture either "an advertorial or a commemorative book or maybe a program that would be sold at the Staples Center, certainly not an editorial product.

"But nothing specific was decided on," Klein says. "It was completely left open to be discussed by the partners"--Staples and The Times.

Klein, however, would not be part of those discussions.

Klein had hoped to be publisher of The Times one day, but when Richard T. Schlosberg III left as publisher in 1997 and Willes named himself to succeed Schlosberg and then, 20 months later, named Downing as president, it seemed clear that she would be the next publisher. Klein realized he wouldn't get the top job, and it didn't take long for him to find that his style and Downing's didn't mesh. By the end of 1998, he had left the company.

Klein is unwilling to criticize Willes or Downing or to second-guess his former employers, but unlike them, he had been in the newspaper business and at The Times for 15 years; he has a master's degree in journalism from Columbia University in New York, wrote a column on legal affairs for The Times for 10 years and was the paper's in-house counsel for four years before becoming an executive on the business side. Although it's easy to say in hindsight, those who worked closely with Klein find it difficult to believe that he would have approved of sharing profits on the magazine with Staples Center.

"Jeff would not have allowed anything like that," Schlosberg says. "Jeff had a very keen awareness of and appreciation of editorial integrity and independence."

But Klein spent most of December 1998 packing up and he says he left the paper without even knowing that the Staples founding partner contract had been signed.

Executive Departures

Several other experienced executives on the business side of the paper left in the weeks and months surrounding Klein's departure--so many that the New York Times wrote a story about the upheaval, illustrated with a graphic that showed the names of 12 of the paper's top 21 executives crossed out on the paper's masthead, the list of high-level executives that runs on the editorial page every day.

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