Times editor to leave paper

O'Shea speaks to Times Publisher David D. Hiller as he packs up his office.
(Genaro Molina / Los Angeles Times)
Los Angeles Times Staff Writers

The editor of the Los Angeles Times will leave the paper in a dispute over newsroom cuts, becoming the fourth senior executive in less than three years to depart after resisting budget reductions.

James E. O’Shea, editor since November 2006, said Sunday that he was forced out after disagreeing with Times Publisher David D. Hiller’s plan to shrink the newsroom budget.

“We did not share a common vision for the future of the L.A. Times,” O’Shea said.

Hiller disputed the notion that O’Shea had been fired, saying his exit was part of a larger reorganization plan being put in place under The Times’ new ownership. The paper’s corporate parent, Tribune Co., was bought out last month in an $8.2-billion deal engineered by Chicago real estate baron Sam Zell.

“Think of it as the changes made at the start of a new presidential term,” Hiller said. “In the context of these changes, Jim and I decided we no longer saw things the same way about how to take the company forward.”

O’Shea had told senior editors that he opposed the constant drumbeat of cuts in response to falling advertising revenue.

The push and pull over budgeting is a long-running story at The Times, which has seen its editorial staff shrink in the last eight years to less than 900 from about 1,200. At the same time, the paper’s weekday circulation has dropped to about 800,000 from more than 1 million.

The staff reductions have stoked anxiety about the paper’s ability to adequately cover a sprawling, diverse and fast-growing region and maintain its foreign and national coverage.

“It’s a continuing cause for concern, both for the quality and reporting in the paper and for what it says about long-term prospects,” said George Kieffer, head of the Los Angeles Civic Alliance and one of 20 prominent Angelenos who wrote to Tribune in 2006, urging the company not to make cuts that could force The Times out of “the top ranks of American journalism.”

“How do you continue to cover the community and provide civic education with these continuing cuts in resources?” Kieffer said.

The newspaper industry is being roiled by change as readers and advertising dollars migrate to the Internet and other media.

Tribune doesn’t break out The Times’ sales and profit, but through the first nine months of 2007 the company as a whole saw publishing operating profit plunge 30% from a year earlier.

The buyout led by Zell and an employee stock ownership program left Tribune with about $13 billion of debt and scheduled annual loan payments of about $1 billion.

Some analysts have said they doubt that the company can generate enough cash flow to cover its loan payments if advertising revenue keeps declining.

Zell scoffed at the skepticism last month, saying that Tribune anticipated a cash-flow “cushion” of $250 million more than it needed to meet its debt obligations.

It wasn’t immediately clear when O’Shea would leave and who would succeed him. The next editor of the paper, the nation’s fourth-largest daily, will be the fourth in less than three years.

There was speculation in the newsroom that John Arthur, one of the paper’s two managing editors, and Russ Stanton, the innovation editor, were candidates. Stanton couldn’t be reached and Arthur declined to comment on the succession.

Arthur said that the discord between Hiller and O’Shea was common knowledge among senior editors.

“Jim had not disguised the fact that he was not getting the budget he wanted,” Arthur said. He added that Hiller’s proposed cuts wouldn’t result in newsroom layoffs or seriously impair coverage.

People familiar with the situation said the breaking point came when Hiller wanted to keep the newsroom budget at about $120 million, last year’s level.

O’Shea argued that amounted to $4 million in cuts because costs had increased and The Times was gearing up to cover the presidential election and the Summer Olympics in China.

O’Shea’s departure, which was to be announced this week, was reported Sunday on the Wall Street Journal’s website.

Zell has said repeatedly that his goal was to find ways of boosting Tribune’s revenue and that endless rounds of cost cuts were a “dead end.”

At the same time, Zell said he would give greater power to regional executives such as Hiller to act as they saw fit to cope with shrinking advertising revenue.

Zell was out of the country and couldn’t be reached for a comment, a spokeswoman said.

In November 2006, Tribune executives asked O’Shea to leave his job as managing editor of the Chicago Tribune to join Hiller, who in another budget dispute had fired Times Editor Dean Baquet.

O’Shea arrived at The Times with more than 30 years of experience in the newspaper business. He is author of “The Daisy Chain,” a book about a Texas banker and the savings-and-loan crisis of the 1980s, and co-author of “Dangerous Company,” about the role of consultants in corporate decision-making.

Baquet had succeeded John Carroll in 2005 after Carroll, editor for five years, retired. He said at the time that he was bothered by continuing pressure to cut the newsroom budget.

Baquet, now Washington bureau chief for the New York Times, said Sunday that it was a “tough period” for all newspapers and particularly for The Times.

“Everybody’s got to cut,” he said, “but the L.A. Times has sustained so many cuts already. It sounds like Jim took an honorable stand.”

Hiller, former publisher of the Chicago Tribune, took over as Times publisher in November 2006, succeeding Jeffrey M. Johnson, who had been ousted by his superiors at Tribune’s Chicago headquarters over the same issues. Johnson complained then that newspapers shouldn’t try to “cut their way into the future.”

“All of us who are editors are having to make difficult cuts in our budgets these days,” said Martin Baron, editor of the Boston Globe and a former business editor at The Times. “If we had our druthers, we wouldn’t make any of them. But we have to face up to the realities of the business.”

Martin Kaplan, a media professor at the USC Annenberg School for Communication, noted the similarity in the circumstances that led to O’Shea’s ouster and the departure of his predecessor, Baquet.

“Haven’t I seen that movie before?” Kaplan said. “It certainly makes the replacement want ad very peculiar. ‘Wanted: Great journalist with superb firing skills.’ ”