Worst of Times

By CATHY BOOTH/LOS ANGELES

Word swept quickly around the newsroom of the Los Angeles Times by interoffice e-mail. Otis Chandler, the former publisher who shepherded the paper to nine Pulitzer Prizes, was back--in spirit if not in fact. Chandler, who retired as publisher in 1980, sent his message directly to reporters, to the dismay of the newspaper's management. Read aloud as more than 100 staff members gathered in the newsroom, his words were stunningly direct. His successors, he said, had been "unbelievably stupid" and caused "the most serious single threat to the future" of the paper his family had bought in 1882. People gasped in surprise, then applauded as the shock wore off. Said a veteran reporter: "It was like a thunderbolt from Zeus."

What prompted Chandler's outburst was a special issue of the paper's Sunday magazine on Oct. 10, dedicated to the new Staples Center sports arena in downtown L.A., home to the Lakers, Clippers and Kings. Such special issues are common these days, as newspapers and magazines look for ways to attract advertisers, and it was a financial windfall for the Times, generating a record $2 million in ad revenue. But as one of the arena's 10 "founding partners," the paper had agreed to share the issue's ad revenue with the Staples Center without telling its reporters or readers about the fiscal arrangement. To give the subject of the paper's journalism a share in revenues seemed like a dangerous compromise of the paper's objectivity. Reporter Jim Newton, whose beat includes Mayor Richard Riordan's office, explains in layman's terms, "If I had a financial arrangement with Mayor Riordan and wrote about him, I'd be fired. It's a conflict of interest."

In response to a torrent of protest from reporters and editors, publisher Kathryn Downing, 46, who stepped into the job last June, made an extraordinary--some called it "abject"--apology. After taking questions at a two-hour staff meeting on Oct. 28, she admitted that she and her staff had failed to understand the ethics involved. "It was the angriest, most confrontational meeting I've ever seen at the paper in my 31 years," says David Shaw, the paper's media reporter. "People felt betrayed, embarrassed, ashamed, angry. What happened was wrong. It's Journalism 101." Shaw will get to draw lessons in print: he has been assigned to write an investigative story for the paper on the episode.

Downing, meanwhile, canceled all future revenue-sharing deals with Staples, promised to review all contracts with advertisers, and ordered up "awareness training" for the ad side. Yet in an interview with TIME last Thursday, some defensiveness seemed to be creeping back. She cited a recent Boston Globe report pointing out that promotional ties and revenue sharing are becoming more widespread at newspapers. "It makes me feel better to know it's a common industry practice," says Downing. "What I did was unfortunate. It was a mistake. I feel badly about the cloud it has put--for a little while--over the L.A. Times, but I feel great that the editorial integrity of the issue is intact."

Fears about editorial integrity have been Topic A at the Times since 1997, when Mark Willes, 58, the former General Mills cereal executive, became publisher and vowed to take a "bazooka" to the wall dividing "church" and "state"--the editorial operations and the business side. While journalists quaked, business types argued that it was a needed dose of cold realism for a paper whose profits had dropped and daily circulation had slipped from a peak of 1.24 million in 1991 to 1.1 million. Since Willes gave up the publisher's job to become chairman of Times Mirror Co. earlier this year, circulation remains stalled, but operating profits grew by double digits in the third quarter. While admitting a mistake on the Staples relationship, Willes backed Downing and defended his own efforts to "make sure the paper stays strong and vital."

For all the newsroom drama, the Times remains one of America's top newspapers. While the paper seemed to sag during the past decade, it has regained some bite under the tutelage of Michael Parks, the Pulitzer prizewinning foreign correspondent who became editor in 1997. The paper often beat its Washington rivals in covering campaign-finance abuses last year, does solid coverage of Hollywood business, and is in the middle of a hard-hitting series on police corruption. Though its Sunday magazine remains lightweight, the spiky, liberal-leaning Book Review is winning raves.

Yet Parks' reputation was tarnished by the Staples Center controversy. Reporters were troubled by his initial refusal to investigate the magazine deal. Parks says that after hearing their "candid counsel," he changed his mind. Journalism watchdogs see the incident as a cautionary tale. "People coming into publishing from other businesses just don't get the perishable nature of editorial credibility," says Orville Schell, dean of the graduate school of journalism at the University of California, Berkeley.

The troubles are not over. Downing further rankled Times journalists, already reeling from editorial cutbacks, when she called the newsroom a "velvet coffin," implying that more deadwood needed to be eliminated. When several editors were later chastised for letting Chandler's note be read to the open newsroom, some Times journalists talked of staging a one-day byline strike. "Downing is public enemy No. 1," said a reporter. "There's a bloodlust in the newsroom." Which probably means there will be more juicy headlines about the unsettled Times.