Sounds Good, but Really….

Sometimes the headline can sound so good.  But then the article gives no reason to believe the headline.

Take the recent case of Tribune Company deciding to hire a new Chief Innovation Officer (read article here).  The headline says Tribune is hitching onto a star from the radio industry to help innovate out of its huge media mess.  Of course its primary business, newspapers, is declining in readers and revenues.  And its television properties have declining viewership as customers shift to more targeted programming.  And its radio stations with their all-talk format have been duplicated and specialized to the point that the early Chicago innovator is barely noticable and easily forgetable in the competitive fog.  So innovation is badly needed at Tribune, and we all should be glad that the cost-chopping Mr. Zell is finally seeing the light!

Mr. Lee Abrams is very talented person with a lot of historical success.  I’ll grant him that he may well be perfect for this job.  But he’s going to fail.  Why can I say that?

1. Firstly, because there have been no internal Disruptions at Tribune since the budget slashing began 6 years ago and accelerated under the change of ownership.  The talk is all about finding some way to Defend & Extend the old businesses.  Even the article indicates the company is hoping Mr. Abrams will find some golden D&E practice that will keep the newspaper competitive in the face of mounting internet competition.
2. Secondly because Mr. Abrams was not given White Space.  He has not been given Permission to do whatever he wants to find a new future – even if that means getting out of newspaper production faster, or dropping out of cable TV for more internet plays.  And equally important he has not been given the Resources to create anything substantially new.  Face it, Tribune is a multi-billion dollar business.  For innovation to matter Mr. Abrams will need billions to invest.  If the way to make a fortune in the future Media industry is to create or buy the next YouTube or Facebook or Yahoo! where’s he supposed to get the money for that?  Tribune is using all its free cash to pay for those hugely expensive junk bonds that financed going public.  Unless Tribune sells not only the Cubs but also WGN and some other properties, then stops trying to shore up great, but dated, Chicago Tribune and L.A. Times newspapers, there simply isn’t anywhere near the money needed for innovation to make any marked difference on this company.
3. This comes way, way too late as a marginal effort.  Almost all the Tribune assets are in no-growth businesses.  And Tribune is huge.  To make a difference, it will require an enormously big shift.  A very dramatic change.  Not just a big cost cutting.  Not just a change in advertiser strategy.  Tribune can’t wait on a bunch of small projects to bear out over the next 4 or 5 years.  We’re talking about needing a wholesale restructuring of the business to get out of things that are quickly losing value and making giant bets in new things.  And that is very risky.  This project comes very, very late in the lifecycle at Tribune.  The company can see the Whirlpool on the horizon.  By letting the Re-invention Gap get so large between what Tribune does and what the future markets want it has created a very risky transition requirement – and under the best of circumstances we simply have to remain skeptical.

I’d like nothing more than to read about a big internal Disruption at the Tribune.  Like replacing the CEO with an executive from Google.  Or a program to convert 30% of its newspaper advertising customers to the internet over 24 months – thus starting a big transition from paper to digital news media.  Compare the Tribune portfolio to News Corp. and you can get a sense of the kind of Disruption needed to get Tribune into a growth mode.  Sell off substantial assets NOW.  There are many buyers that want to get their hands on the L.A. Times and Chicago Tribune and Cubs.  Do it NOW while the greater fools are out there ready to buy.  Before readership drops another 15% and ad revenues fall another 25% and the Cubs potentially end up in the cellar (who knows, we’d all love them to win the World Series – but do you build a corporate transition plan on that?).  Then give Mr. Abrams that money, and announce he has permission to do whatever it takes to create a new Success Formula.  I’d love to read that headline and article.  But so far, really….

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