Newspaper companies have a hard enough time even when their management isn’t deluded or in turmoil. Print advertising revenue continues to free fall, and growth in digital revenue is failing to make up the difference. Which has to make things at the Tribune Publishing chain even harder than they would otherwise be. It can’t seem to manage some of its own major papers, and yet it won’t let them manage themselves either.

In the latest iteration of this ongoing soap opera, executives at two of Tribune’s newspapers in California—the Los Angeles Times and the San Diego Union-Tribune—told the New York Times that they were directed by Tribune head office to revise their financial numbers to make them more negative.

According to the report, which was based on leaked emails, Tribune Chief Financial Officer Sandra Martin told both papers that the company had “reviewed the forecast reports and believe there is risk” in the numbers submitted. She asked the San Diego Union-Tribune to reduce its ad revenue figure by $3.5 million, and the L.A. Times was also asked to revise its numbers down by an unspecified amount.

The day after these emails, Tribune Publishing lowered its financial guidance, based on what it said were lower revenue estimates from its Southern California papers. The company’s shares TPUB plummeted by more than 15% on the news.

Blame placed on Times publisher

Executives at both the L.A. Times and the San Diego Union-Tribune, however, said in emails to the head office that they were confused by the revised guidance, saying nothing had changed at their newspapers or in their local markets that would have justified the revisions. “The projection does not seem realistic in my experience,” Union-Tribune president Russ Newton said in an email seen by the New York Times.

The downward revision seemed designed to justify the chain’s dismissal of L.A. Times publisher Austin Beutner. When he was removed abruptly from his post in September (he apparently found out while listening to a local radio station), Tribune Publishing publicly blamed him for the paper’s “lagging financial performance” and for hiring a number of expensive senior executives.

According to Beutner, however—who had to write a farewell letter to his staff on Facebook after his L.A. Times email address was cut off—all he wanted was to make the paper a force in California society and political life again. And according to some in Los Angeles, he was starting to be successful in doing so.

What appears to have set the company off was an offer by California-based philanthropist Eli Broad to acquire the L.A. Times and the San Diego Union-Tribune newspapers. According to a report in Politico, Tribune CEO Jack Griffin saw this as an underhanded attempt by Buetner—who had helped push the company to acquire the San Diego paper—to take the two papers private.

A house divided against itself

More than anything, Tribune Publishing—which also owns the Chicago Tribune, another mid-market newspaper under increasing financial pressure—seems to be a house divided against itself. A centralized model with chain ownership of unrelated metro papers looks more and more like a house of cards. And instead of letting its papers experiment more, Tribune seems to be tightening its grip.

The company’s centralized control—something Beutner reportedly pushed hard against—looks substantially out of step with where the media industry is right now. As I’ve written before, the problem for mid-market metropolitan papers like the L.A. Times and the Chicago Tribune is that they aren’t big enough to have the reach that advertisers want, but they aren’t small enough or local enough to really connect with their communities.

It probably doesn’t help that the Tribune CEO continues to talk about how millennials will eventually pick up the habit of reading a printed newspaper (something virtually no one else in the industry actually believes). The chain also has a comparatively tiny base of online subscribers—only 70,000 across its stable of more than 10 daily newspapers.

Tribune’s response to the problem of disappearing readers and advertising revenue has been to cut costs as fast as it can. But as fast as it cuts, revenue continues to fall. At some point, those cuts actually make it harder for papers like the Chicago Tribune and L.A. Times to serve their communities properly. Which leaves the paper and its fellow Tribune publishers right back where they started: Twisting in the wind in an increasingly depressed newspaper advertising market.

You can follow Mathew Ingram on Twitter at @mathewi, and read all of his posts here or via his RSS feed. And please subscribe to Data Sheet, Fortune’s daily newsletter on the business of technology.