Aaron Kushner’s push into newspapers has been ambitious but unprofitable, David Carr writes. Timing matters when it comes to news. I had been reading about Aaron Kushner’s audacious strategy to invest in journalism ever since he bought The Orange County Register in 2012 for about $50 million and the assumption of $110 million in pension obligations. After years of covering layoffs, I wanted to write a different kind of tale about newspapers.
MONICA ALMEIDA/THE NEW YORK TIMESAaron Kushner bought The Orange County Register in 2012 as part of a strategy to expand hyper-local reporting in the Los Angeles area.
Last week I was in Los Angeles and drove down to Santa Ana to talk to Mr. Kushner, 40, about his willingness to swim against an industrial tide. Mr. Kushner, The Register’s publisher, had no experience in publishing and looked every inch the young technocrat — he has an advanced degree from Stanford — but he is a bit of a romantic about print.
After a failed attempt to buy The Boston Globe in 2011, he has been on a mission that seems to defy logic and gravity, hiring a mob of reporters, playing hardball against distressed competitors and lustily grabbing for a bigger footprint. The ambition is admirable, but some of the execution has been head-scratching.
‘‘Many people think we are a little crazy,’’ he said, sitting in his office with a view of Saddleback Mountain over his shoulder. After experiencing success buying and operating a greeting card company — another legacy business others had left for dead — he says that newspapers have some life remaining. ‘‘We start from a very straightforward premise, which is that we believe newspapers exist to build a community, and I think that’s a very different mission than many newspapers have, and that educates our business model.’’
He and Eric Spitz, the company’s president, clearly believe that newspapers went off a cliff by cutting costs while chasing clicks and cheap digital advertising. Mr. Kushner funded 200 journalists to carry out a relentlessly local print strategy in Orange County, created two dozen new sections, upgraded the weeklies he owned, and in August began publishing a new daily, The Long Beach Register. In November, he bought The Press-Enterprise of Riverside for about $27 million, and last month he announced that he would create a daily to compete with The Los Angeles Times. Given all those counterintuitive moves, I wanted to know what the secret sauce was.
I was too late. On Thursday, Freedom Communications, which owns The Orange County Register and a number of other print publications, laid off about 35 people at The Register, including Ken Brusic, the longtime editor, and his senior editors. Rob Curley, an editor who has a reputation for digital innovation, will take over with a new team, although Mr. Curley said the emphasis would still be on print. That same day, about 40 people were laid off at The Press-Enterprise.
When I visited Mr. Kushner two days earlier, it was obvious some of the air had leaked out of the balloon, and over the course of the conversation, he let me know that cuts were in the offing. Like it or not, I was back to covering layoffs.
What happened? Even as Mr. Kushner continued to expand, cracks began to show. He was sued in October by Angelo, Gordon & Company, one of The Register’s previous owners, for failing to make a final payment of about $17 million. He responded by saying that the amount of pension liabilities had been fraudulently misrepresented. Deadlines came and went in the purchase of The Press-Enterprise as he scrambled for financing. He eventually completed the deal at the last minute, using what was reported as high-interest debt. At the end of the year, he put the company’s headquarters up for sale.
Mr. Kushner is a big believer in free markets — his politics are consistent with those of Freedom’s libertarian founder, R.C. Hoiles — but as the chief executive of a private company, he is less free with information. He declined to tell me whether The Register was currently profitable, saying only that his investments were part of a longterm strategy. But the string of events at the end of the year suggests that Mr. Kushner is having trouble operating what he already has his hands on.
But he continues to push. The table in his office was covered with a map of Los Angeles County. For all I know, an organization chart marking out layoffs was underneath, but he remains convinced that there is an appetite for a daily in Los Angeles other than The Times and The Daily News. He told me he had bought The Register because he believed that it had ‘‘good bones’’ and that a great print publication could knit together the sprawling county to profitable ends. It was a popular message in the newsroom.
‘‘He stood up in front of the newsroom and said that digital was a very small part of the business and that he was going to invest in making a highquality print product, and I was like, ‘Hallelujah,’ ’’ said Gary Warner, who was nearing 20 years as travel editor until he was laid off on Thursday. He bears no animus, but he said he thought the expansive agenda had collided with some brutal economic realities.
‘‘When all of the hires were made so quickly, our eyes all started darting, wondering where all the money was coming from,’’ he said by phone on Thursday. ‘‘And by the beginning of this year, it was obvious that things had changed. Paging started going down, and budgets were being crunched. We knew things were not going as planned.’’
Mr. Kushner built a better, or at least bigger, Orange County Register, but readers have not responded as he hoped, with circulation still flat. A hard paywall on digital access, intended to push readers toward print, reduced digital revenue about 40 percent, according to an estimate by Ken Doctor, a newspaper analyst, and print advertising was down in 2013.
Even after the layoffs, Mr. Kushner expects to produce the new Los Angeles Register with existing staff using a satellite office, which seems like a reach, given his commitment to hyperlocal coverage; it will take a lot of boots on the ground to cover over 80 towns in Los Angeles County.
He suggested that the libertarian editorial stance of The Register would attract readers by providing a conservative alternative to readers in Los Angeles.
‘‘We obviously have a very different political perspective than the L.A. Times,’’ he said, adding that ‘‘in terms of focusing on really local community and local journalism and local community building, we deliver a very different kind of product.’’
But people do not generally buy a newspaper based solely on ideology, so the three pages of editorial writing he plans for the new enterprise will not do the job alone. Where, I wondered, would all that local coverage come from?
‘‘We are evaluating our cost structure for the next leg of our journey in terms of covering Orange County and L.A. County,’’ he said. The bit of corporate speak obscures some harsh realities and his actual objective.
He wouldn’t say so, but he is seeking scale. The greater Los Angeles market includes three operators — Freedom, MediaNews Group, which owns The Daily News and several other newspapers in the area, and the Tribune Company, which owns The Times — that have all gone through bankruptcy, and their backers may be looking for an exit. With consolidation in the air, Mr. Kushner wants to be in a position to make a play. By amortizing the costs of all the journalists he hired over a bigger market, he can achieve savings in terms of production while adding marginal readers and advertising.
He clearly sees himself as a smart entrepreneur making bold bets. I see a man on a wire, with millions of dollars and hundreds of jobs at stake.
‘‘Is it a long-term strategy with short-term financing?’’ asks Mr. Doctor, who has closely followed The Register. ‘‘It would be a tragedy if that were the case, because he has been the boldest operator out there, and people want it to work.’’
No one wants it to work more than the people in the newsroom.
‘‘What he is doing is audacious,’’ Teri Sforza, a longtime Register reporter and columnist, told me. ‘‘Despite the bloodshed, I believe that the experiment is continuing and the jury is out. We had two really good years of expansion, and we are all grateful for that. But now the leadership of the paper has been replaced, and we are laying off even as we are expanding in terms of what we hope to do.
‘‘The aspiration is still there. It’s just going to be hard to figure out how to make it all happen.’’