Riordan faces tough run at publishing.

Former Los Angeles Mayor Richard Riordan may have picked a task even more daunting than running for governor.

The millionaire businessman, who just came off a grueling campaign and ultimate defeat in the Republican primary, has confirmed that he will start a newspaper in Los Angeles by this summer.

In an interview last week, Riordan said the paper is likely to be a 28-page broadsheet made up of news and commentary that would be fashioned after the weekly New York Observer.

"The paper will contain local news, California news, feature articles by top writers," he said. "We have a whole list of top writers from the L.A. area who have agreed to submit pieces for us. I would also like a page analyzing what's on the Internet. I'd also like to see analysis of articles in other media."

But as of last week, the paper remained a work in progress.

For one thing, it's unclear how often it will publish. The former mayor wants to start out as a five-day-a-week daily, but he left open the possibility that the frequency would be cut back to one or two days a week. Also unclear is whether the paper will be subscriber-based or given away. He apparently has a name in mind, but said he could not announce it until various legal issues were resolved.

Riordan said there would be a staff of about 40 and that he plans to start the publication with Matt Welch, co-founder of LAExaminer.com, a local media Web site that provides local news and analysis -- much of it biting -- about the heretofore ignored L.A. media scene.

"Why am I doing this? I've always liked writing," Riordan said. "I have always liked having input for a newspaper -- it's intellectually stimulating."

Welch said that he and Ken Layne, cofounder of LAExaminer.com, had been pursuing ideas for a print publication in Los Angeles when Riordan called out of the blue. "I laughed at first and then we started having a serious discussion on ideas," Welch said last week.

"For now, I consider myself a co-conspirator in this process," he explained. "I've started several other publications -- both print and online -- and that I'm sure is part of the reason he contacted me. I don't think he has a management team that's set in stone. But some of the people he's been talking to I know would be able to start working on this right away after he pulls the trigger."

Costly start-up

Riordan, who had been talking about the idea with numerous media people in recent weeks, refused to say how much he is willing to spend on the paper. "I have some sense of how much money would be involved, but it's still inexact," he said. "I don't want to release a figure until I have a better idea."

Whether daily or weekly, analysts say Riordan shouldn't expect to operate in the black for at least five to ten years, assuming the paper catches on.

"Someone has to be willing to stay in the red for a long, long time and even then there's no guarantee." said John Morton of Morton Research Inc., a media consulting firm in Silver Spring, Md.

David Cole; editor and publisher of News-Inc., a Bay Area-based newsletter about the newspaper business, estimated the startup costs of a weekly newspaper with a circulation between 30,000 and 50,000 to be around $5 million. A daily of that size, he said, would cost between $15 million and $20 million.

The 72 year-old Riordan has net worth estimated to be at least $100 million -- and friends whose wealth is greater still. As of last week, however, it was unclear how the paper would be financed.

"He might approach some venture capitalists or some friends," said Patrick Haden, a general partner at Riordan Lewis & Haden, the former mayor's private equity firm that he has recently rejoined. "Dick's been involved in many successful startups over the years, but they're difficult," he said.

However well financed, Morton said entrepreneurs looking to start a newspaper often don't realize the gargantuan costs until the losses begin piling up.

"There are lots of people who thought they were rich until they bought a daily newspaper," he said. Morton refused to speculate on how long it would take for a new paper to reach profitability because, in recent history, "nobody has ever done it."

Riordan's disclosure came the same week that a daily newspaper debuted in New York. The five-day-a-week New York Sun is backed by Canadian newspaper baron Conrad Black and several prominent New Yorkers. Estimates of the initial investment run from $20 million to $25 million.

Here in Los Angeles, investment guru William O'Neil launched the nationally distributed Investor's Business Daily in 1984 and the paper is not profitable. Asked recently how much money he had put into the paper over the years, O'Neil told the Business Journal, "We don't give that figure out because it's so much we'd probably be embarrassed. But it is a substantial amount."

Analysts say that Riordan's best chance would be to create an editorial product with a distinctly different voice from the dominant Los Angeles Times and to focus on relatively well-heeled readers that advertisers covet.

Cole said he thinks given the right conditions Riordan could be successful, but only as a weekly publication, which would be significantly cheaper to operate. "If Mr. Riordan wants to put money into hiring good people and is patient, he could probably have a successful weekly newspaper in five to 10 years," Cole said.

Others question whether the already saturated L.A. media market, with the Times, Daily News, numerous smaller dailies and weeklies, plus broadcast and Internet outlets, is fertile ground for yet another publication -- even one headed by the popular former mayor.

"I'm just not sure there's room for another paper," said Jill Marx, senior vice president and media director at Kovel/Fuller, an advertising agency in Culver City. "You have to fill a void that hasn't been filled and I'm really not sure that's possible."

For all the risks, the new paper will most certainly create an initial buzz that could attract initial interest by advertisers. But Lee Kovel, a partner at Kovel/Fuller, warned that, "after the first 90 days, if they don't have the circulation, it's over."

To the extent that Riordan's paper will be a reflection of his politics, Morton said his reputation as a maverick could help grab readers. "Mr. Riordan, I assume, has a particular point of view and I assume the paper will reflect it," he said. "Then the question becomes, are there enough readers interested in that particular take on journalism? If it distinguishes itself from other newspapers, that would be a big help."

Welch said he expects the new paper "to have a lot of personality and fun. Punchy writing with a good sense of humor. It would compete against the laborious tone of the L.A. Times Column One stories."

As for the chances of success, he added, "I believe there is plenty of room here for either a daily paper or a weekly one. This is a media town, under-served and under-appreciated."