A real-life drama in the land of Hollywood

Turmoil is gripping one of America's most venerable titles, reports Andrew Gumbel from Los Angeles

Imagine a newspaper that enjoys a monopoly hold on one of America's top media marketplaces, a paper of real depth and influence that breaks major stories two or three times a week and regularly rakes in Pulitzers and other top prizes. Imagine, moreover, that the paper is a reliable cash cow, bringing in a 20 per cent profit margin on annual revenues of around $1 billion (£520m).

One would think the owner of such a newspaper must be pretty happy. But one would think wrong, certainly in the case of the Los Angeles Times and its corporate parent, the Tribune Company of Chicago, which are embroiled in a struggle for the paper's future so bitter and profound that it has disturbing implications for the future of journalism everywhere.

For the past five years, the Tribune Company has been insisting on budget cuts and staff cutbacks in an effort to boost profit margins at its flagship publication even further. And for five years, the LA Times has yowled and yelped and resisted, to little effect. One Pulitzer-prize winning editor, John Carroll, was unceremoniously shown the door a year ago. And now his popular, widely respected successor, Dean Baquet, has been shoved out too – following an extraordinary two-month-long rebellion in which both Baquet and the paper's publisher refused to enact the latest round of cuts ordered up by head office.

Perhaps the best way to understand the battle is to reimagine it as a Hollywood gangster movie, in which a Chicago crime syndicate sends a succession of hitmen to deal with a problem at its West Coast operation, only to watch in amazement and fury as each of them goes native and refuses to carry out the assigned hatchet job. By now, honour as well as money is at stake, and the tommy-guns are starting to rattle in earnest.

The Tribune's first publisher, John Puerner, was purged after he questioned the wisdom of one round of cuts. Its second, Jeff Johnson, was the man who fell in with Mr Baquet and mounted the proverbial barricades around the Times's headquarters on Spring Street in downtown LA in early September. He was fired just a few weeks ago.

In Johnson's place, the Tribune Company sent the equivalent of a mafioso consigliere, a hard-nosed trial lawyer with no background in journalism called David Hiller, and he has proved an altogether harder nut to crack. Hiller said he'd spent a few weeks getting to know Baquet before laying down any ultimatums. But the two men clearly did not get along. The word is, Hiller insisted on 50-75 job cuts over the next few months, Baquet could not go along with it, and he was given his walking papers.

News of Baquet's departure came on the same day as America's mid-term elections last week – a piece of timing as shocking as ordering up a gangland massacre on St Valentine's Day. There were tears and explosions of anger in the newsroom. When Hiller jumped up on a desk to confirm the news to the assembled staff last Wednesday, at least one journalist turned his back in protest. Over a speaker phone, a member of the paper's Washington bureau joked that he and his colleagues had just hanged an effigy of the Tribune Company's chief executive, Dennis Fitzsimmons. Hiller did not laugh. In fact, he came into the meeting escorted by an armed security guard – only reinforcing the impression that he is very much a henchman trampling on enemy territory.

The Tribune's principal argument is that, in a rapidly transforming media landscape, the Times needs to change or die. Since it took over, the company has regarded the paper – not entirely without justification – as overbloated and underdynamic in certain key areas, and argued that a leaner Times would also be a better Times. The problem is, every round of staff cuts has also led to a drop in circulation, which has then tempted the company to order yet more cuts to keep profit margins high. The paper has lost about a quarter of its circulation since 2001 (it now stands at around 775,000), and almost a quarter of its staff (940 people now, compared with 1200 five years ago). John Carroll, the former editor, said last week the paper was sliding inexorably towards mediocrity. Veteran staff writer Henry Weinstein told the trade publication Editor & Publisher: "I have been here 28-1/2 years and this is the single worst moment in that time."

Now the plot is thickening, because some of Los Angeles' most eminent power brokers feel that a vital part of their city's fabric is under threat, and they intend to do whatever it takes to protect it. Late last week, two local billionaires, the property developer and noted philanthropist Eli Broad, and the supermarket magnate and Democratic Party fundraiser extraordinaire Ron Burkle, joined forces to put in a bid for the Tribune Company and its myriad assets – 11 daily papers in all, including the Chicago Tribune, 28 local television stations, including one in Los Angeles, and the Chicago Cubs baseball team.

Their offer is expected to be joined shortly by a rival bid by David Geffen, the billionaire entertainment mogul, who has been looking for a new project ever since he sold out his share in Dreamworks, the film and music venture he founded a decade ago with Steven Spielberg. Mr Geffen just collected $140 million from the record-breaking sale of one of his collection of Jackson Pollock paintings, very possibly for the express purpose of putting together the seed money for a foray into the newspaper business.

"Local control" is the widely trumpeted mantra, both inside and outside the LA Times building, but that concept is not without its dangers, either. For more than 100 years, The Times was run by the powerful Chandler family, which used the paper for decades as a tool to further its property and business interests – so much so that until a major overhaul in the 1960s it was known across the United States as little more than a red-baiting rag.

The idea of a Geffen takeover sends chills down certain Times staffers, especially the entertainment reporters who know his reputation for hating even a hint of bad publicity about himself. Mssrs Burkle and Broad, meanwhile, both have reputations as micro-managers, even control freaks, who are unlikely to get along with each other, let alone anyone else. Both will also have to reconcile themselves to the fact that they are too big around town not to have stories written about them on a regular basis.

However the story ends, it will be an important test case to determine the future of print journalism in the Internet age. The Times has a robust web presence, but it is having a much harder time retaining advertising revenue in its printed form. Can a paper survive these days without being part of a wider media group? Given the corporate priorities of an outfit like the Tribune Company, can it survive within such a media group? The eyes of all American journalism are on Los Angeles for an answer.