Another Staples-Like Proposal Was Made to Times

Tim Leiweke had been down this road before. He was in the office of Mark Willes, chairman and chief executive of Times Mirror, parent company of the Los Angeles Times, soliciting funds on behalf of the host committee for the Democratic National Convention. Leiweke was making his appeal as vice chairman of the committee--officially L.A. Convention 2000--but he is also president of Staples Center, where the convention would take place, and almost a year earlier, he had been soliciting money from The Times to help build Staples Center.

On that occasion, he had asked the paper to pay $2 million to $3 million a year for five years to become one of the center’s 10 founding partners; when The Times had balked at the price tag, Leiweke had come up with what both sides in the negotiations considered a creative compromise--a combination of cash, free advertising and a pledge from The Times to cooperate with Staples Center in “the development and implementation of joint revenue opportunities.”

Now, just as the first of those “joint revenue opportunities” was well underway--a special issue of the paper’s Sunday magazine, to be published a week before Staples Center opened--Leiweke was asking Times Mirror for money, and again he was being told he wanted too much.

In about 12 weeks, when word of the profit-sharing agreement on the Staples Center issue of the magazine would become widely known, The Times would become embroiled in an enormous, nationwide controversy. News organizations aren’t supposed to share their profits with the people and institutions they write about; such arrangements jeopardize their credibility. But there was no controversy on the horizon when Leiweke visited Willes on Aug. 3. Indeed, Willes was one of several heads of local corporations whose companies had already pledged contributions of at least $100,000 to help lure the convention to Los Angeles, and when the Democrats chose Los Angeles as their convention site, all parties involved seemed quite pleased.

Discussion of a Special Section

Now the host committee wanted Willes and the other corporate leaders to “step up to the plate” with contributions of $500,000 to $1 million, says Lucy McCoy, president of the host committee. That’s why she and Leiweke found themselves in Willes’ office, along with Kathryn Downing, publisher of The Times, that midsummer day.

When Willes told McCoy and Leiweke that 1998 had been a difficult year for Times Mirror and that he didn’t think the company could give that much to the host committee, Leiweke and McCoy suggested a number of alternatives. They said the company could host a media party, sponsor any of several other convention-related events, provide gift bags and free daily copies of The Times for the delegates or . . .

At one point in the discussion, one of them--they both think it was Leiweke--proposed that part of the Times Mirror contribution could come from “something like what we did on Staples,” sharing profits on a special section or magazine in The Times. The contract that The Times had signed to become a founding partner of Staples Center required the paper to have one profit-sharing project a year with Staples for five years; the Staples Center issue of the magazine had been the first, and Leiweke says he told Willes and Downing that if The Times would do another magazine or a special section on the convention, Staples Center would “treat that as the second [year’s] joint venture and we would waive our share” of the profits.

Downing remembers Leiweke mentioning “some kind of special section” on which Times Mirror and the host committee would “share revenues,” but Willes says he doesn’t recall that part of the conversation. He says he never heard anyone mention, in any context, the profit-sharing arrangement on the Staples Center issue of The Times Magazine until somewhat later.

Regardless, all parties agree that no commitments were made and no decisions were reached at that meeting. Two days later, McCoy wrote Willes to thank him for receiving her and Leiweke and to ask him to consider her more formal “Los Angeles Times Primary Partner of L.A. Convention 2000 Proposal.” In her proposal, McCoy listed the $100,000 contribution already pledged (“$12,500 paid to date; $87,500 outstanding”) and suggested a “Los Angeles Times commitment” that would include a “special convention section in L.A. Times (approximately 200 pages), with a “50/50 advertising split. . . .”

In exchange for that and for one full-page advertisement in The Times for each of the eight to 10 other “primary partners,” McCoy said the host committee would give The Times a variety of convention-related benefits and opportunities, including VIP tickets to various functions and the right to have its name on signs and banners during the convention, in Staples Center and “on utility poles throughout the city . . . in airport terminals, hotels receptions and other [convention] events . . . [on] posters distributed to L.A. area retailers.”

Why would Times Mirror--or The Times--want to make such a deal? Many journalists think a newspaper should remain free of all civic involvement for fear of creating at least the appearance of a conflict of interest in its news coverage. But Willes--like many business executives, at newspapers and elsewhere--thinks a newspaper has an obligation to be a good corporate citizen; helping the host committee with a national political convention could be one way to exercise that civic responsibility.

There is probably another, less altruistic reason that Willes and Downing were willing to at least consider the host committee’s proposal. It’s called “branding”--getting The Times’ name in front of as many people as possible in hopes that some of them will decide to subscribe to the paper.

Three weeks after McCoy sent her proposal to Willes, she and another host committee official met with Maryanne McNellis, president of the paper’s national edition, who had been designated to take charge of whatever the paper decided to do in conjunction with the convention. The three discussed McCoy’s proposal and various alternatives, and McCoy says she asked McNellis about the various kinds of “special sections” The Times could produce on the Democratic Convention. One possibility was the Sunday magazine. Another was a special editorial section apart from the magazine. A third was what is known as an “advertorial”--a section that has stories and photos but is prepared entirely by the advertising department, with no involvement by the paper’s reporters and editors.

“It was a free-form conversation with no hard decision made,” McCoy says. “I was interested in how much money the committee could make from it. I was less concerned with what form it took.”

On Sept. 3, McNellis wrote McCoy a two-page follow-up letter--copies of which she sent to Willes and Downing. In that letter, she said she was “unclear about the scope of [what] you are calling the Special Convention Section.” But she was quite clear about profit-sharing. “Revenue-sharing,” she said, “would begin after all Los Angeles Times costs were covered.”

McNellis neither approved nor rejected any of the host committee’s specific proposals. “We do have a lot to talk about,” she wrote.

Seventeen days later, at 9:15 a.m. on Sept. 20, McNellis, three top Times editors and the paper’s two top advertising executives met in the publisher’s sixth-floor conference room to discuss what form, if any, a convention special section might take and “what, if anything, Kathryn had agreed to with the host committee,” says Scott Kraft, Times national editor. Everyone in attendance at that meeting agrees that Michael Parks, editor of The Times, made it clear that he didn’t think there would be sufficient reader interest to justify a full issue of the Sunday magazine. Kraft says that was consistent with a position Parks had taken at a meeting July 19, two weeks before Leiweke and McCoy had suggested the possibility of a profit-sharing special section or magazine in their “step up to the plate” pitch to Willes and Downing.

At the July 19 meeting, called to discuss general convention coverage and the paper’s role as the major news organization in the host city, those in attendance say that Parks suggested broadening the coverage beyond the convention but opposed a special section or full magazine devoted to the subject.

“The only thing I could see doing from a reader’s perspective,” Parks says he told the group, “were a couple of pieces [in the Sunday magazine] on the role of California and Southern California in national politics.”

John McKeon, the paper’s senior vice president for advertising, was also opposed to devoting an entire issue of the magazine to the convention. Advertisers, he said, like to steer clear of partisan politics.

But it was Downing who had been part of the original discussion with McCoy and Leiweke and, as publisher, she would have the final say on the use of the magazine and on any profit-sharing arrangement. She was delayed by other obligations that morning, though, and although her secretary popped into the meeting several times to apologize for her absence and to say she would be arriving shortly, Downing never made it.

“I said, ‘We can’t decide this . . . because Kathryn isn’t here,’ ” McNellis recalls. The meeting ended with no decision having been made.

Parks thinks he had first heard about the Staples Center profit-sharing deal the previous week, at which time he had explained to Downing why that arrangement was “a violation of the basic principles of journalistic independence.” He says he repeated that to her, in relation to the Democratic Convention proposals, either on the phone the day after the Sept. 21 meeting or in a subsequent meeting, probably Oct. 4. “I said, ‘We can’t have any revenue-sharing arrangement. I was fairly short-spoken and direct. . . . That was the end of that discussion. It was a very short meeting.”

Parks and Downing say that as far as they were concerned, plans for a convention issue of the magazine and the possibility of a profit-sharing arrangement on any editorial section were both dead well before the Staples Center controversy erupted. Parks says that he thought he had an agreement with Downing and McNellis to so inform McCoy.

That’s what Downing and McNellis say they did, on Oct. 14. They and McCoy, along with McKeon and Robert Magnuson, the paper’s senior vice president for circulation and regional editions, met at The Times at 9 o’clock that morning. Also in attendance were Sheri Wish, who had led the advertising department’s sales effort for the Staples issue of the Sunday magazine, and Lisa Reale, a consultant to the host committee, who had previously been director of community relations at The Times.

There is a general consensus among the attendees that Downing told the host committee representatives they shouldn’t spend a lot of money in the expectation of receiving a lot from The Times--that the 200-page magazine originally proposed was unrealistic. . Apart from that, recollections are in conflict. Magnuson says that he doesn’t remember what was discussed or decided at that particular meeting, but says he would be surprised if a profit-sharing special section or issue of the magazine were still on the table then, given Parks’ opposition. Downing and McNellis say they specifically told McCoy and Reale that the paper had decided against devoting an issue of the Sunday magazine or any other editorial section to the convention and that an advertorial didn’t seem likely either. They say McCoy said she thought advertisers would buy into an advertorial, so they agreed to at least consider that.

“Michael felt very strongly about it,” she says. “John did, too. So we killed it. . . . It was clear before we went into that meeting that we weren’t doing editorial.”

But McKeon, Wish, McCoy and Reale all say that nothing was ruled out in that meeting. McKeon says he regarded the meeting as purely “informational,” with no commitment being given to do anything and no proposal rejected. “I don’t recall it being put that way or the discussion coming up to that point,” he says.

Wish agrees. At the end of the meeting, she says, “it was Lisa Reale and Lucy and I who wound up sitting in the room for a few minutes discussing the pros and cons of whether it was advertorial or editorial. We pretty much, among ourselves, decided that it would probably be better being an advertorial piece, but we didn’t have a decision clearly defined when we left that room.”

As a result, McCoy says she was “left with the impression that . . . this had to be discussed inside The Times. Numbers had to be looked at. Kathryn said she had to talk to Michael.” (Downing said she was going to talk to Parks only about whether he had any objections to an advertorial.)

Two days after that Oct. 14 meeting, McNellis’ husband died. She was out of the office the entire next week, and neither she nor anyone else at the paper subsequently wrote McCoy to tell her of the decision they say they made. To this day, McCoy says, she hasn’t been officially notified by The Times that either the magazine or the profit-sharing proposal has been rejected (thought both she and Leiweke say they assume, in light of the Staples Center controversy, that The Times will not do a profit-sharing editorial section of any kind with them).

Offering Assurances

Meanwhile, McKeon’s and Magnuson’s calendar show that yet another meeting of top Times executives was scheduled for Oct. 28 to discuss a convention “special section.” That meeting was canceled. Instead, Downing met that afternoon with a cafeteria full of angry reporters and editors, the vast majority of whom had just learned in the preceding two days about the Staples Center profit-sharing issue of the magazine.

When questioned at that meeting about the possibility of a similar venture for the Democratic Convention, Downing said she wanted it understood first that the paper had been talking with the nonpartisan host committee, not the Democratic National Committee. That’s an important distinction. The host committee is nonpartisan. But the committee’s two strongest members--Eli Broad and Bill Wardlaw--are prominent Democrats, and it’s clear that any money contributed to the host committee would ultimately, if only indirectly, help the Democrats have a more successful convention.

Downing and Parks told those attending the cafeteria meeting that there would be no special issue of the magazine and no profit-sharing, and questioners soon shifted back to other topics. But to this day, many Times journalists are unhappy that the paper even considered splitting profits on an issue of the Sunday magazine devoted to the Democratic Convention. They are particularly concerned that the first published story mentioning the magazine and the convention didn’t quote Parks as objecting on the grounds of journalistic ethics. That story, which was published in the New York Times on Oct. 26, focused on the Staples issue, and in so doing, it helped to trigger the newsroom uprising that led to the cafeteria meeting with Downing. The next-to-last paragraph of the story said there had been talks at The Times about “a similar, 200-page special issue of the magazine to coincide with next summer’s Democratic National Convention in Los Angeles.” The story quoted Parks as saying that he and McKeon had “ ‘advised the publisher that 200 pages was not a realistic thing,’ because they doubted that either reader or advertiser interest would be sufficient.”

Although the profit split with Staples was news--shocking news--to most journalists at The Times, many were even more upset by the possibility that the paper had even considered a profit-sharing arrangement for a magazine on the Democratic Convention. Splitting profits with a sports and entertainment venue was a serious enough blow to the paper’s credibility, they said, but anything that might create the appearance of a conflict of interest in the paper’s political coverage could irrevocably shatter its credibility. Why hadn’t Parks said something like that to the New York Times? Why hadn’t he said that he had advised against a profit-sharing magazine on the convention because it was wrong--a clear threat to the paper’s independence and integrity--rather than just saying that readers and advertisers wouldn’t be interested in it?

Parks says he doesn’t remember the question of profit-sharing on a convention issue of the magazine coming up in his interview with Felicity Barringer, the New York Times reporter who wrote the story. “I was sitting on the back deck [of my house] on a Sunday afternoon,” when she called, he says. “Whether she asked me in those terms, I don’t recall. “

Barringer doesn’t recall if she asked him that question either. But she does recall--and she says her notes confirm--that Parks didn’t volunteer the thought that profit-sharing was improper and that he mentioned only the readership and advertising concerns. Was that because he thought he had killed the profit-sharing idea before it had become a serious possibility so he was no longer even thinking about it? Given that most of his interview with Barringer was about profit-sharing on the Staples issue, might he have figured, why bring up another, even worse profit-sharing deal when she didn’t ask about it and it isn’t going to happen, was never going to happen, anyway?

Whatever his reason, many of Parks’ editorial colleagues at The Times think he should have said--loud and clear--that it was improper, whether Barringer asked him about it or not.