Metro staff writer James Rainey laughs about his days as a reporter at the Los Angeles Times in the early 1980s. He worked on the Santa Monica edition, out of a large office that housed both editorial and advertising. "Jim Leavy used to be the editor there, a big white-haired guy who'd been around forever. And even though we shared the same office, if anybody from advertising ever crossed over to our side, he'd start shouting, "You goddamned ad goons, what do you think you're doing over here?'"

Much has changed at the Times, gradually over the past decade, and now in a rush under Mark Willes, who became c.e.o of the Times Mirror Company in June 1995 and added the title of publisher of the Times in October.

Throughout the paper, editors are sitting down with delegates from circulation, marketing, research, and advertising to develop new sections and new offerings within sections, to establish targets and goals for revenue and readership, and to search for new ways to achieve overall increases in circulation, advertising, and profit. "There are teams everywhere," says an exasperated news employee. Each team is headed by a business-side executive -- a "general manager" or, in the marketing lexicon now ascendant at the paper, a"product manager."

 The man in charge of all these teams is Jeffrey S. Klein, a senior vice-president who recently added the ambiguous new title of general manager, news. "We're trying to get people who think only about their area of responsibility to think about the whole paper," he says. "It shouldn't be that the only person worried about the whole paper, the whole enterprise, is the publisher."

From the outset, Willes made change the hallmark of his regime. He sold several Times Mirror subsidiaries, cut thousands of newspaper jobs, and closed New York Newsday outright. And, with less notice, he convened company-wide management retreats to press editorial and business executives to rethink the conventions of the industry.

 He was thinking about experimenting with the nature of news coverage at the Times well before he became publisher. Within a week of joining Times Mirror he asked assistant managing editor Leo Wolinsky go through the paper to see if the Times was "relentlessly negative." Willes had the idea that the newspaper "had a way of discouraging innovation in the community," of making risk-taking less likely. Wolinsky did so and found, "to my surprise," that the paper was not all that often the generator of criticism, though it reported the criticism of others.

 Once he became publisher, Willes's determination to let the business side help shape news coverage set off a wave of skeptical press reports, but his ideas have enjoyed a somewhat warmer reception inside the Times newsroom. "I'm not worried," says associate editor Narda Zacchino, a veteran of twenty-eight years. "There's a feeling of everybody being on the same team." More than camaraderie, though, it is Willes's promise to reverse the defeatism that has infected newspapers generally -- and the Times in particular -- that has its attractions. "Before Willes got here, the prevailing attitude was that newspapers are dead, and we're going to have to diversify to say afloat," observes senior metro projects editor Joel Sappell. "Now this guy comes in and says 'I believe in newspapers.' He wants to market the paper more aggressively, sell the paper more aggressively. That feels good."

At the same time, Willes has made clear that resistance to his vision would be dealt with sharply. As he put it last spring, "I indicated [soon after arriving at Times Mirror] that if people had a supervisor or a boss who was getting in the way of ideas and repeatedly got in the way of ideas, that we would work with them and if they didn't change, we'd be delighted to have them go get in the way of the ideas of one of our competitors."

Former senior editor Carol Stogsdill had the temerity to get in the way of new ideas in 1996, when then-publisher Richard Schlosberg moved to combine editorial and business-side responsibilities at the paper's Orange County edition under the new title of president. Stogsdill objected strongly, meeting with Schlosberg to argue for preserving the separation of church and state. To Schlosberg's vexation, several other editors voiced similar concerns, and senior writers from Orange County and Los Angeles signed petitions. The protests were ignored, and from that point forward Stogsdill's influence at the paper waned. In October, after Schlosberg was replaced by Willes, Stogsdill was stripped of her editorial duties.

Willes makes no apologies for his break-the-eggs approach to managing the nation's second-largest metro daily. During an interview in his gleaming, glass-and-wood-framed corner office at Times Mirror headquarters, three floors up from news, he recalled his deliberations in 1995 when he was recruited to run the company, deliberations against a backdrop of the perception that newspapers were in decline: "If all these doomsayers were right then I'd be signing on to an organization that was going to sink, and, if they were wrong, it would be fun to help try to think things through in a different way, to make things turn out so they are wrong."

He returned often in the interview to the themes of innovation and experimentation: "What we're trying to do is to say there are lots of ideas, let's break open those ideas, let's examine those ideas, let's test those ideas, and you know, sooner or later we're going to find something that works."

One of the early testing grounds for new ideas was the Times business section. Beginning under former business editor Bob Magnuson (who became president of the Orange County edition and now holds the corporate title of senior vice-president for regional editions), and continuing under current business editor Bill Sing, the section has become a showplace for specialized, revolving features that explain themselves easily to readers and advertisers alike. Cutting Edge, on Monday, is devoted to new technology; Tuesday is Wall Street California, which focuses on personal investment strategies; Wednesday features two packages, Small Business and Personal Finance; and Thursday is Advertising & Marketing. In addition, four days a week, the section includes stories on the film and music industries under the standing headline, "Company Town." These features have come to dominate the section, both in terms of space and graphic presentation. Aside from the stock charts, at least half the pages in the section are devoted to the themes.

The idea behind themes is what the paper's managers are calling "vertical products" -- news packages that appeal to a narrowly-focused readership, which can, in turn, be promoted to advertisers. Kelly Ann Sole, national sales manager for financial advertising, was recently named the "general manager" for the business and health sections. Sole says investors are a good example of the specific, sharply defined target of a vertical product: "We had a real lack of advertising from financial and securities firms, and a raging bull market." Wall Street California, she says, was a way to get at that market, and to serve a select group of readers at the same time. Now, Sole says "the brokers are telling us that they use Wall Street California to educate their clients. That makes it a must-buy for the advertisers." Sole says financial advertising is up 40 percent over the past year as a result of this new feature, part of a 10 percent gain overall in business-section advertising.

And how does this play on the editorial side? "Bill Sing has more ideas, more solutions, than anyone on the business side," Sole says. (Sing himself did not respond to several requests for an interview.) "Bill and I will regularly sit down and talk about how to make the product more compelling."

 Still, the new, more focused business section has its critics. Some of the features, especially with their formulaic format, seem designed solely to cater to advertising sales instead of reader interest.

Associate editor Zacchino concedes that "some of the features started off with the intent to sell advertising." As an example she cites The Executive Traveler, "designed to sell to people who don't buy the travel section." But ad sales were not forthcoming, "so they killed it." Company Town was another ad-driven concept, Zacchino says. "The advertising department lobbied to run it in the business section to see if we could pick up [entertainment] ads outside the Calendar section." Again, the ads did not follow, but in this case, reader response was strong, so the feature was retained, and then expanded.

Zacchino sees the experience of Company Town as instructive, and positive. "The question is what works for the reader. If everyone always thinks of the reader first -- and that's the first question we ask, and the last question we ask -- then we don't have a problem."

But the critics wonder if the general-interest reader isn't left out of the vertical marketing mix. This newly focused business section, they say, tends toward consumer-oriented, how-to journalism, and leaves less space -- and fewer resources -- for broader trends in the workplace and the markets, not to mention investigative work. "It's almost to the point where it's difficult to get a general-interest business story in the paper unless it fits a preordained theme," says one skeptical non-business staff member.

Times editor Michael Parks retorts that business writers have ample opportunity to place their stories in the paper. He holds up a copy of the December 4 edition -- the day a record loan package to South Korea was announced, as were Michael Eisner's stock options -- and points to five front-page stories written by members of the business staff. "Case closed," Parks says.

If the business section is the forerunner to the marketing strategy sweeping through the Times, the new Health section is the prototype, the first section to incorporate all the elements of Willes's new editorial strategy. It grew, says Jeffrey Klein, "from a variety of discussions, from people who were on the business side and the editorial side saying, now here's an issue that people are really interested in, and probably could sustain itself because advertisers are interested in the readers who are interested in that subject."

Michelle Williams, who became editor of the section a year ago, had been the editor of a regular "Body Watch" fitness feature in the paper's daily Life & Style section. Research showed that the column had strong readership, and the advertising department was convinced that, expanded to a weekly package, the section could make money.

 "Look at the market," says Kelly Sole. "Health care is larger in Southern California than the entertainment industry." The sense was that coverage of health issues was scattered throughout the paper. "We did [health-related] mergers and acquisitions in business, fitness and nutrition in Life & Style, health-system scandals in news," Sole recalls. "We made a proactive decision to put all of those in one place. We're creating a vertical product, a product our readers need to have."

So a team was put together, with representatives from advertising, operations, promotion, marketing, classified, and editorial. The team met each Tuesday at 4 p.m. for the next nine months. Prototypes were developed and printed, then run through a battery of focus groups, then reworked and run through again. According to Janis Heaphy, senior vice-president for advertising (who was recently assigned, like Klein, to work with editors in developing new sections and features), the Times research department employs two sets of focus groups -- one to test ideas with readers and one to test them on advertisers. Each of those is divided as well, with subscribers and non-subscribers on the reader side, for example, and current and prospective advertisers on the advertising side.

The point of an advertising focus group, Willes says, is to see if a potential new section or feature is something "that they're interested in from an advertising point of view." Could such a focus group's opinion be a deciding factor? "The reason for doing that is not to have a go or no-go decision, but to understand the financial implications of whether you're going to go with it or not, and what it's going to cost you to go with it."

In such considerations, of course, is where the balance is struck between editorial and advertising priorities. Times managers declined to release any of the prototypes or research summaries generated in producing the Health section. Editor Williams emphasized her independence throughout the process, but acknowledged a continuing interaction with the advertising side. "I didn't have to deal with advertising on a regular basis" until the Health section planning was under way, "so we had to learn to dance the dance."

Williams says then-editor Shelby Coffey III, who left the paper two weeks after Willes stepped in as publisher, expressed concern about church-state separation to her early in the process. "Shelby pulled me aside and said, 'In these meetings, you know what your job is.' I told him, 'You don't have to worry. I'm dancing, but I'm not smoking afterwards.'" For example, Williams says she never shares her story list with the business department, a pattern she established early on. "I understand the walls, believe me."

At the same time, Kelly Sole feels that she was able to help shape the general design of Health. "Michelle and I partnered together," Sole says. "We're trying to find ways to make the product more compelling."

Sole and the other business-side managers seem comfortable with the idea that they should avoid asking for, or commenting on, individual stories, but they seem to believe that engaging editors in more general discussions about content has no bearing on editorial independence. "I don't talk to editors about particular stories and the way in which they write stories," Jeffrey Klein says. "But we may talk about subject matter. Like, is there an area that we are not covering, that we could cover? That goes on every day."

The result of all this effort, in the case of the Health section, is a bright, photo-and graphics-laden package of six or eight pages that runs every Monday. The section wraps literally dozens of snippets from medical books and journals around two fitness profiles each week -- one celebrity and one ordinary person -- several advice columns, and a lead feature that seems intended to hold readers more with its chatty tone than eye-opening reporting. The lead story for Thanksgiving week, titled "Thigh Anxiety," examined the fact that by January 1, "so much excess dressing and pie will have taken up residence [in the thighs] that normally simple tasks -- say, pulling on jeans -- will be a chore for Crisco and a magician."

What's lacking in the section is a dimension that Sole said was integral to the initial vision -- hard news of the world of health care, from HMOs and managed care to fraud and government action. Also lacking is any sophisticated treatment of new advances in science and medicine. Editor Parks calls it "reader friendly," but to judge by its content, Health was founded on a very low estimation of the readers' intellect and attention span.

Still, it wins plaudits from Heaphy, Sole, and the other business-side managers. "We did our research, we did our focus groups, we got our financials together, and we rolled it out," Heaphy says crisply. "We launched it October 8 and we're already at 80 percent of our ad revenue goals." (The Times will not release the figures.)

Teams are now being assembled to reexamine the paper's Travel, Book Review, and Real Estate sections, and to consider new sections designed to reach women and Latino readers, both of special concern to Willes.

Not all of this is new. Editors across the country have been experimenting for years with different ways of packaging and presenting news to draw advertisers and specific groups of readers, and they have often consulted with the business side about how to do it (see "It's Not Just in L.A.," page 24).

 At the Times as well, beginning in 1990 under publisher David Laventhol and editor Coffey, innovation was a primary goal, and the advertising department pushed for its measure of influence, especially in the "soft" sections of the paper. "There have always been stronger advertising pressures on the feature side," notes Leslie Ward, editor of the Times's travel section for the past seven years. "But we all make the judgment that we are writing for our readers."

Ward says the business-side pressures have intensified, and that her response has changed, under Willes. "There's more asking for things now, things like ad placement. Advertising is asking for more, but they're not getting it. What's different now, is you take the call. You talk it out."

One of her skirmish lines now, Ward says, is special travel sections. Where she used to produce three per year, now there are ten. She is sensitive to the pitfalls of designing a section to meet advertising needs. "You lose space for spontaneity, and I think that's a danger. Luckily in our case, the paper is so big -- it doesn't mean there's no room for news."

 In the end, Ward trusts the Times's leadership to recognize the limits of manipulating the editorial product, a trust shared by many news-side employees interviewed for this story. "I think the guy that runs this company is not stupid," she says. "The minute you start putting out a paper for the advertisers and not for the readers, you're going to kill it."

Willes makes the same point, vigorously and repeatedly: "There is no doubt that for a paper the size and sophistication of the Los Angeles Times, our franchise revolves around our quality. That's frankly why I was so surprised that people think I'm going to do something stupid with regard to the paper we put out. Because that is the franchise."

He is convinced that modern marketing has the tools to unlock the riddle of newspapers' declining market share. Willes is likely to find, however, that some of the central dilemmas in journalism tend to defy such straightforward analysis, in part because a reader, like a great paper, is more than the sum of his parts.

Times research shows that two of the best-read sections in the paper, for example, are Metro, the local news section, and Life & Style. Yet both are shunned by advertisers. Asked why, Willes responds that he simply doesn't know, and that more research is in order.

 Regarding local news, Willes was willing to concede that, perhaps, "the Metro section ought not to have much advertising -- that's not what it's there for." But: "We've got to think very clearly about the reason for being of Life & Style, how we can bring that out and make it so clear and compelling that it's not only clear to our readers, but it's also clear to our potential advertisers."

Willes expressed his doubts about Life & Style in the first round of staff meetings after he became publisher. Section editor Terry Schwadron reacted strongly, pointing out that the section enjoyed strong readership, and contending that the advertising problem might lie with the advertising or marketing departments. Willes thanked Schwadron for "pushing back," something he claims to like from subordinates. A week later, in one of his first moves as editor, Parks let Schwadron go. He has since joined The New York Times, at least the twentieth person to make that jump in the last five years.

 Isn't Willes afraid of tampering with a mix which, his own research shows, is especially popular among women -- an audience he has made a project of wooing? Readership, apparently, at least in the soft sections, is not enough for Willes. "The question is why do people look at Life & Style, and how compelling is it, and therefore what kind of vehicle is it? Is it a place that advertisers will find productive?"

That analysis gets to the root of Willes's approach. As he put it later in the interview, "The fundamental challenge is to be successful on the business side, because that's also the way we're going to be successful on the journalism side."

Which reverses the formula that made publishing dynasties out of The New York Times and The Wall Street Journal, the two papers Willes cited when asked to name his journalistic models. Both started with great journalism and built their businesses around that.

Willes seems confident that the journalism will take care of itself, and that the destruction of the firewall between editorial and advertising is a "phony issue," because publishers have always had the ability to jump over them.

In place of firewalls Willes is proposing "standards." "Whether there were walls or not, if you were very clear about standards, and you believed deeply in editorial integrity, then it doesn't matter if you have the wall there or not, because you've got the standard. It's the standard that's important, not the wall."

Many Times staffers seem ready to take Willes at his word. Others -- some inside the paper, and some recent Times refugees -- feel that Willes has broken something that they consider fundamental. "If there aren't structural barriers to conflict, then there's going to be conflict," says one former staff writer. "It's a matter of what signals you send, what people are being rewarded for. Structures matter. Incentives matter. Directives from the top matter."

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