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March 20, 1996

Times Mirror CEO Says Cuts Balance Creativity and Costs

By IVER PETERSON

NEW YORK -- Trimming personnel and cutting costs at Times Mirror Co., including closing down New York Newsday, was hardly an unusual experience for a major corporation, the company's chief executive, Mark H. Willes, said Tuesday night.

What made it different and difficult, he said, was that the cutting was done at an information company, where profits depend as much on fostering creativity as they do on containing costs.

In his first speech in New York since he was pummelled editorially by local news organizations for ending 700 jobs and closing New York Newsday last summer, Willes said the challenge for the news-gathering industry was to inspire its employees' best efforts at a time of rapid change and uncertainty.

"We want people to feel secure, we want people to feel trusted, we want people to feel safe at the very time they are seeing their friends all around them losing their jobs," Willes said.

Willes, who became chairman of Times Mirror in June, spoke to the Columbia University Business School Alumni Club on the perils and prospects of adopting a centuries-old product like newspapers to a market fraught with competition from the latest electronic attraction.

He said that Times Mirror, which publishes The Baltimore Sun, The Hartford Courant and Newsday in addition to its flagship, The Los Angeles Times, would beat the competition.

But, he said, he has also put each of his company's divisions on a strict sink-or-swim regimen: they must each earn profits of at least 12 percent, matching the company's cost of capital.

Few Times Mirror managers, he said, even knew what the company's capital costs were when he was hired from General Mills Inc. to force a change in direction in the $3.5 billion company, which most analysts agreed had become an underachiever.

Besides closing New York Newsday, Willes has set out to cut another 1,000 jobs in the company's chain of newspapers, has disposed of its consumer multimedia division and its cable programming division, and has put parts of the educational publishing operations up for sale.

Willes stopped by his company's art-book publishing house, Harry Abrams & Co. in Manhattan, this week to deliver that message.

"They make absolutely the most beautiful art books in the industry," he said. "They also don't make any money, and we are going to work on that."

Still, Willes said, proving he can cut costs is not enough. "The question now on everybody's minds is: Can we grow?" he said of industry analysts. "They believe us when we say we'll control costs. They believe us when we say each division will have to earn at least our cost of capital. But they still want to know if we can grow."

Willes said Times Mirror's core businesses, the newspapers, would lead the way in this growth, and he suggested that they would do so by becoming more intimately connected with, and more responsive to, their readers.

He cited the way The Sun published a special edition to commemorate Cal Ripken Jr.'s breaking the baseball record for consecutive games played last year. The special edition was waiting for Baltimore Oriole fans as they left Camden Yards the night the record fell.


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