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Geffen Eyes Another Medium: The Times

September 17, 2005|James Rainey | Times Staff Writer

He helped build the careers of Joni Mitchell and the Eagles, created a record company and then joined a couple of other entertainment moguls to form a movie studio.

Now, could David Geffen really want to own a newspaper -- specifically, the Los Angeles Times?

Three well-known civic figures in Los Angeles said they had heard Geffen in recent weeks talking about how he would like to take control of The Times, owned by Tribune Co.

Geffen met with Tribune Chief Executive Dennis J. FitzSimons this summer to say he was interested in buying the paper.

"We had a meeting at his request, with no disclosed reason in advance," FitzSimons confirmed in a telephone interview. "At that point, he indicated his interest in the paper. And I told him it was not for sale."

FitzSimons said he considered the issue a dead one and that any additional advances by Geffen would not change his mind. He declined to provide any other details -- including whether Geffen made a specific offer.

Geffen declined to comment, said a spokesman at the studio he helped found, DreamWorks SKG.

Ever since Chicago-based Tribune Co. bought the Times in 2000, reports repeatedly have surfaced about wealthy and powerful Angelenos toying with the idea of buying the newspaper.

Among those reportedly interested in The Times have been: Eli Broad, who has fortunes from home building and financial services; Haim Saban, an entertainment magnate who first scored big with the "Mighty Morphin Power Rangers"; and Michael Milken, who made a fortune in junk bonds.

"People, when they get to that level, they always think they can do it better," said one city power player who spoke on condition of anonymity because he said his conversations with Geffen were supposed to be confidential. "I think I could do a lot better with the L.A. Times too."

This businessman said the DreamWorks executive's interest in The Times had persisted, even after FitzSimons rejected his overture during a meeting in Los Angeles.

"He has reiterated his interest to me. I believe him," the business leader said. "It's not just something [Geffen] said and then is going to move on to something else."

Since Tribune bought the newspaper five years ago, The Times has flourished journalistically, winning 13 Pulitzer Prizes, but stumbled financially, with daily circulation falling from 1,018,000 to 902,000 last year.

The national economy's slow recovery from recession has dragged down advertising sales at The Times, the biggest property in the Tribune empire. Total revenue at the Los Angeles paper peaked at $1.14 billion in 1999 at the height of the technology boom, but has since remained relatively flat, coming in at $1.07 billion last year, according to internal company documents.

Although The Times' revenue has been stagnant, the paper is still highly profitable, though it does not disclose its actual earnings.

Tribune paid about $8 billion for the Times and the rest of Times Mirror Co., which included a mix of newspapers, magazines and other publishing enterprises.

Based on its 2004 profit and the price-to-earnings ratios in recent newspaper deals, The Times would be valued at more than $3 billion.

But the price a potential buyer might have to pay is complicated by a number of factors, including a still unresolved dispute over whether media companies such as Tribune can own newspapers and television stations in the same markets.

In Los Angeles, the company owns both The Times and KTLA-TV Channel 5.

The Supreme Court announced in June that it would not rule on the legality of such cross ownership -- returning the question to the Federal Communications Commission to settle the matter.

Tribune has expressed confidence that it will win relief from monopoly regulations so it can own television stations and newspapers in the same cities. A failure to do so could force the sale of some of those properties.

So why would Geffen, whose net worth is estimated by Forbes magazine at $4.4 billion, want to plunge into an industry that is struggling to maintain its footing as many readers shift to cable television and the Internet?

It's possible that the 62-year-old businessman could be looking for a new venture. Entertainment industry executives have been talking for weeks about the possibility that NBC Universal might buy DreamWorks' live-action movie division. And Geffen has talked in the past about being less than enamored of the studio business.

When he spoke about buying The Times at a party this summer, Geffen explained that he wanted "local ownership" of the paper, said one guest who heard him. "It was the same thing that has been said by other people before -- that local ownership of papers is better."

According to another civic figure, who also spoke on condition of anonymity, Geffen said on another occasion that he would be a generous publisher because he wouldn't insist on making huge profits and would spend money to improve The Times' editorial product.

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