The new york times company: a case Study Analysis

WestCom Group Consulting Inc.

School of Communication

Telecommunications Management 4480

Western Michigan University

1903 West Michigan Avenue

Kalamazoo, Michigan 49008

November 8, 2012

©2012 John J Head

Source: New York Times Co.

Table of Contents

Early steps 2

Diversification 3

Challenges, changes 4

Table 1 5

Table 2 7

The flagship 8

IV. Financial performance 9

Table 3 9

Branding 11

SWOT analysis and other risks 12

Table 4 13

Demographics 15

Philosophy 16

I. HISTORICAL OVERVIEW

“All the News That’s Fit to Print.”

Special are those instances in business when a slogan becomes so synonymous with a company. Those words, found on the front page of every copy of every edition of The New York Times since 1896, began as a way to define the publication to its readership. That slogan stands to this day, but the newspaper and its parent, The New York Times Company, have grown far beyond the reaches of New York City and its surrounding boroughs.

The New York Times Company is a diversified media company whose core purpose is “to enhance society by creating, collecting and distributing high-quality news, information and entertainment.”¹ It is a publicly traded company (NYTC on the New York Stock Exchange) and publishes three major daily newspapers. It also operates eight network-affiliated television stations and two New York City radio stations. The company has become more global in nature through The Times Syndicate: Among the largest syndicates in the world, it specializes in text, photos, graphics in a variety of customized packages to more than 2,000 newspapers and other media to clients in more than 50 countries.²

While its footprint today is global, The New York Daily Times (the word “Daily” would be dropped in 1857) had a simple, straightforward and — at least, structurally — humble beginning in 1851, in a rundown six-story brownstone building on Nassau Street in New York City.³ Move forward to August 19, 1896, a Wednesday morning, and The New York Time’s readers were greeted on page one with the following salutation:

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To undertake the management of The New York Times, with its great history of right doing, and to attempt to keep bright the luster which Henry J. Raymond and George Jones have given it, is an extraordinary task. But if a sincere desire to conduct a high-standard newspaper, clean, dignified and trustworthy, requires for success honesty, watchfulness, earnestness, industry, and practical knowledge applied with common sense, I entertain the hope that I can succeed and maintain the high estimate that thoughtful, pure-minded people have ever had of The New York Times.

It will be my earnest aim that The New York Times give the news, all the news, in concise and attractive form, in language that is permissible in good society, … to give the news impartially, without fear or favor … to make (it) a forum for the consideration of all questions of public importance, and to that end to invite intelligent discussion from all shades of opinion.⁴
Adolph S. Ochs, who assumed management of the newspaper in 1896 from the newspaper’s founders, the aforementioned Raymond and Jones, penned that announcement. Ochs’ intent was to continue the course set by his predecessors in producing a newspaper consistent in its delivery of news unfettered by bias and scandal.
Early steps

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Despite his lack of formal schooling, Ochs had learned the newspaper business on the job as newsboy, printer’s devil, printer, and reporter. He was 20 when he bought controlling interest in and became publisher of the failing Chattanooga Times; hearing of the financial troubles at The New York Times, he offered to become publisher in exchange for a contract that would reward him should he achieve his goal of making the paper profitable for three straight years. One of his first decisions was to add the slogan “All the News That’s Fit to Print,” his commitment to avoidance of sensationalism and adherence to high editorial standards;⁷ but of particular note was his decision to respond to dwindling capital in 1898 not by raising the single-copy price of the paper, but rather by reducing it, from three cents to a penny. Paid circulation tripled within a year, advertising increased, and the paper turned a profit.⁸ As much to his business acumen as to his commitment to his readership, Ochs set The Times on a path of steady growth and profitability.

Ochs’ ill health and subsequent death in 1935 handed the reins of the paper to Ochs’ son-in-law, Arthur Hays Sulzberger. He improved the newspaper editorially, financially and technically, and began what would be a series of moves to diversify and acquire other properties, including Amo Press and Cowles newspaper, magazine, television, and book properties.⁹

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The diversification continued throughout the 1900s. In 1980 the company paid approximately $100 million for the New Jersey cable television operation; in 1984 it sold its book publishing operation to Random House. Five regional newspapers and two television stations were acquired, as were the magazines Golf World and Sailing World; at the same time the company, making little progress with cable television, sold all its cable TV properties.¹²
Challenges, changes

Newspaper readership decline in the 1990s prompted the company to buy and sell in the areas of print, broadcasting and electronic media. In 1993 NYTC purchased Affiliated Publications, which owned the Boston Globe; in 1995 it bought a majority interest in a video newsgathering company, Video News International. Also in 1995, the company joined eight other newspaper companies in New Century Network, an online news service. It also created the New York Times Electronic Media Company to develop new products and methods of distribution.¹¹ This sparked the beginning of a fervent move from the print world of its origins to the rapidly growing world of digital media.

NewYorkTimes Digital, an independent business unit, was created to oversee the company’s online presence, NYTimes.com (by this time boasting more than 10 million registered users). Key to its plans to establish synergies between print and electronic offerings, TheStreet.com was created as one of the top Internet providers of financial and investment news, and related commentary. Its second business segment, the About Group, includes websites About.com, ConsumerSearch.com and UcompareHealth.com, among others. The company also owns equity interests in a Canadian newsprint company, and quadrantONE LLC, an online advertising network that sells premium, targeted display advertising onto local newspaper and related websites.¹²

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II. Organizational Structure

Broadly defined, The New York Times Company is in the business of disseminating news. The Times’ group includes the International Herald Tribune and the Worcester Telegram and Gazette, as well as related websites and businesses. Other assets include a 17-percent interest in New England Sports Ventures LLC (which owns the Boston Red Sox, Fenway Park and adjacent property) and about 80 percent of New England Sports Network, a regional cable network that broadcasts Red Sox games (see Table 1).¹³

Table 1.

Key components of The New York Times Company.

Print/Broadcast	Digital Ops	Joint Ventures	Other Assets
NYTimes Media Group • The New York Times • NYTimes.com • International Herald Tribune New England Media Group • The Boston Globe • BostonGlobe.com • Boston.com • Worcester Telegram and Gazette • 16 regional daily newspapers • New England Sports Network	About Group • About.com • ConsumerSearch.com • UcompareHealthCare.com • CalorieCount.com • nyt.com (paid products)	• Metro Boston LLC (49%) • Donohue Malbaie Inc. (49%) • Madison Paper Industries (40%) • quadrantONE LLC (25%, online ad network)	• New England Sports Ventures LLC • Roush Fenway Racing • AK Networks • Appssavvy • Brightcove • FM Publishing • Betaworks

Source: Ward’s Business Directory, September 2012¹⁴

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While the parent company of The New York Times has grown and diversified, it has stayed true to the principles to which the newspaper ascribed more than 150 years ago. Those principles are uppermost in the company’s corporate governance practices and are directly tied to the company’s journalistic roots: “The Company’s core purpose is to enhance society by creating, collecting and distributing high-quality news, information and entertainment.”¹⁵ These values also weigh significantly on the company’s business philosophy by offering content of the highest quality and integrity (the basis for its reputation and maintaining the public trust); fair treatment of employees based on respect, accountability and standards of excellence; creating long-term stockholder value through investment and constancy of purpose; and good corporate citizenship.¹⁶

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s with any publicly traded company, shareholders’ return on investment must be considered in the business philosophy. In the world of journalism, particularly as it pertains to newspapers, this poses an ongoing challenge: to maintain balance between journalistic integrity and purpose to the betterment of community (audience) and ensure the products and services (newspapers, other media) remain profitable. In spite of a continuing industry-wide decline in circulation — and, as a result, advertising revenue tied to its core print products — the company has fared better than most largely through diversification. It should be noted that while some of the company’s overall business commitments display variety, much of its diversification has been born out of common sense; that is, those business ventures tangential to the company are the result of logical consideration of and connection to the core principles and products.

We will look at some of those products later. Here, in Table 2, is a breakdown of the company’s operational structure. The chief executive officer of The New York Times Company oversees the managers of the company’s 11 primary divisions. The CEO reports to the company’s board of directors and its vice chairman. The primary division managers in turn oversee various sublevels of the corporate structure.

Internal Audit

Treasurer

New York Times

International Herald Tribune

New England Media

CIO

Board of Directors Communication

Human Resources Human Resources / Diversity

Compensation / Benefits

Organization Capability

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As CEO, Arthur Sulzberger Jr. oversees all primary divisions of the company and reports to the board of directors. The corporate structure is straightforward and caters to the company’s focus on its core products — print media. At the same time, this makes for a seamless connection between print and broadcast media services and the ever-more important division of digital media.

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The meteoric rise of computer use by the consumer — with particular emphasis on smartphones and tablets — has driven an equally explosive increase in the number of venues from which consumers can get their news. Newspapers of every size and type have wrestled with this modern reality: that the world of print in which they long thrived was becoming less viable. Reinvention of its method of delivery — or, at the very least, an addendum to that delivery system — has become tantamount for survival. The New York Times Company’s products, while certainly in better financial shape than many newspapers to make this transition, are no less impervious to the storm. Table 3 below illustrates a recent decline in revenues.

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The News Media Group, which includes print and digital properties, declined each of the past three full years back to 2009, although the drop in revenue was subtle. This trend continues nine months into 2012: According to Business Wire, the news media group’s total revenues for January-September 2012 were down 2.2 percent compared to the same period in 2011. More significantly, advertising revenue — which had dropped 6.9 percent in 2011 from 2010 — continued to fall during the same period in 2012, down 9.7 percent. Of particular significance to the News Media Group during this same period was the 9.5-percent decline in national advertising lineage, a key revenue draw that outpaces retail and classified ad lineage nearly three to one. On a positive note, thanks to steadily growing online subscriptions, circulation in this division increased 9.3 percent in the first nine months of 2012, compared to a year ago. Given the company’s continuing trend to promote its online product, as well as the stability of the brand, it is likely digital subscriptions will grow.²²

Numerous factors come into play when reviewing any newspaper’s financial standing, advertising and circulation being the two most considered. While advertising and total revenue declined during that three-year period, decisions to divest some of its assets helped serve as a buffer for the company’s bottom line. As late as August 2012, the company decided to sell the About Group, parent company of about.com and other online sites, to InterActiveCorp for $300 million.²³ This followed a December 2011 decision to sell its Regional Media Group to Halifax Media Holdings for more than $140 million.²⁴

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V. FUTURE OUTLOOK

We live in an age when information is at our fingertips and instantly obtainable. If the day of the personal computer has given way to smartphones and social media, then surely the information dissemination model so long used by newspapers — print and advertising — will continue to be increasingly irrelevant. That said, there are multiple factors at play that warrant us to be optimistic, albeit cautiously, about the future of The New York Times Company and, specifically, its publications. Many of these factors are positive in nature; others, however, give reason for some concern as the company moves forward in an industry where many players are on unsure financial and viability grounds. We will look at the following as we consider the Times’ future: branding, SWOT analysis and other risks, demographics, and philosophy.

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Newspaper executives continue to face tough personnel and staffing decisions as they confront the industry’s transformation from print to digital. The economics of newspapering were, at best, a roller-coaster ride during the past 20 years as the Internet provided more options for news readers; at worst, these times saw — and continue to see — newspapers cutting editorial staff to make up for lost print ad revenue, revenue not yet fully realized in the online platform. According to Times’ records, the company overall peaked in 2000 with 14,000 employees; by 2010, that number was 7,414, with staffing declines posted each year except for two years (2002-04) when additions to the About Group saw a slight increase.²⁸

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September 2012 saw the death of Arthur Sulzberger, but despite the love and respect he engendered in his staff and the industry, the passing of the publisher nicknamed “Punch” is hardly the most significant development in Times’ personnel matters. In August 2012 Mark Thompson was named as the company’s new chief executive officer, a position the younger Sulzberger had held on an interim basis since 2011. Thompson had been director-general of the British Broadcast Corporation (BBC) from 2004 until March 2012, and his success with the publicly funded broadcaster helped him secure the Times’ CEO spot. However, his possible involvement in the cancellation of a BBC-produced investigation into a sex scandal involving Jimmy Savile — one of the BBC’s and the United Kingdom’s most beloved celebrities — has raised questions about his viability as Times CEO.²⁹ Indeed, despite Sulzberger’s reassurance that Thompson “possesses high ethical standards and is the ideal person to lead our company as we focus on growing our business through digital and global expansion,” at least one Times senior editor, Margaret Sullivan, said it was time to ask a number of tough questions concerning Thompson’s suitability for the Times position. “It’s worth considering now whether he is the right person for the job, given this turn of events,” she said in reference to the Savile sex scandal.³⁰

Thompson is scheduled to begin his duties at The Times on November 12, 2012. It remains to be seen if his appointment, which some analysts think might have contributed to an 85-percent plunge in third-quarter (2012) net earnings for the company, will stand.³¹

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Arthur Sulzberger died on Sept. 29, 2012, at age 86. He retired in 1992 and was succeeded by his son, Arthur Sulzberger Jr. The young Sulzberger’s predecessors were newspapermen, but Sulzberger Jr. described himself as a “platform-agnostic” multimedia man, perhaps the perfect man for the job in a constantly transforming industry.³⁹ As Steve Jobs was a visionary in his field, so in some respects Sulzberger Jr. has been to The New York Times Company. He has maintained his father’s fervent belief in the principles that guide journalistic integrity, and has married that to the pressing needs of newspaper survival in the digital age. He is not afraid to consider all options that might lead to a better newspaper and an improved company. Several examples:

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• In 2010, The New York Times and The Washington Post teamed up with Google Inc. to test a new online news presentation style. The two-month experiment, according to Martin Nisenholtz, married “Google’s purely Web-centric sensibility and the journalistic sensibility” of the Times and the Post. Nisenholtz, The Times’ senior vice president for digital operations, said the union created one destination page for each of nine test storylines published in both newspapers. Dubbed “Living Stories”, the experiment let readers filter and organize the articles by subtopic, by type, by importance and by date. Each time a user visited the story’s page, articles they already had read were grayed out, allowing them to focus on the latest news. It was a look at a different way to organize the content, Nisenholtz said.⁴⁰

• Ensuring viability in expanding technologies, in October 2012 The Times announced a new app, featuring the newspaper’s latest content, designed and formatted for optimal reading experience on Windows 8. This outreach to fans and users of Microsoft-related products also included the newspaper establishing its own channel within the Bing News app, which is pre-installed on all Windows 8 devices, including desktop and laptop computers, and the Microsoft Surface tablet.⁴¹

In conclusion and to reiterate, the future of The New York Times Company, like its flagship product, should be viewed with optimism, with a dash of caution added. There remains uncertainty throughout the newspaper industry about the viability and continuation of the traditional news delivery system, and forces from competition, variable and /or declining print circulation numbers and advertising revenues, the need to add to or let go of related properties or joint venture assets all figure into the mix of this company’s future.

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To its benefit The New York Times remains a brand to which many people relate, and its parent company has shown an understanding of the need for its news products to transition to a new delivery system, one that caters to today’s generation of news consumers. It closely monitors all of its segments from both financial return and customer benefit perspectives, giving no reason to believe it cannot survive the industry’s turbulent waters. The company is not afraid to face challenge and adapt, a philosophy that began with the first editions of The New York Daily Times.

In a 2005 interview with Business Week, Arthur Sulzberger Jr. said:

Within our lifetimes, the distribution of news and information is going to shift to broadband. We must enter the broadband world having mastered the three key skill sets — print, Internet, and video — because that’s what’s going to ensure the future of the news organization in the years ahead.⁴³

Endnotes:

1. 
   Elmer Davis, History of the New York Times 1851-1921. New York Times. http://www.questia.com/read/9199060/history-of-the-new-york-times-1851-1921. Retrieved Sept. 29, 2012.
   

2. 
   International Directory of Company Histories, The New York Times Company. http://bi.galegroup.com.libproxy.library.wmich.edu/global/article/GALE%7CI2501315937/c585ac873c0eb4d4274ce94e2678c851?u=lom_wmichu. Retrieved Sept. 29, 2012.
   

3. 
   International Directory of Company Histories, The New York Times Company.
   

4. 
   Elmer Davis, History of the New York Times 1851-1921. New York Times.
   

5. 
   International Directory of Company Histories, The New York Times Company.
   

6. 
   International Directory of Company Histories, The New York Times Company.
   

7. 
   International Directory of Company Histories, The New York Times Company.
   

8. 
   International Directory of Company Histories, The New York Times Company.
   

9. 
   International Directory of Company Histories, The New York Times Company.
   

10. 
    International Directory of Company Histories, The New York Times Company.
    

11. 
    International Directory of Company Histories, The New York Times Company.
    

12. 
    International Directory of Company Histories, The New York Times Company.
    

13. 
    Ward’s Business Directory of US. Private and Public Companies, New York Times Company, Gale Directory Library. http://find.galegroup.com.libproxy.library.wmich.edu/gdl/start.do?prodId=GDL. Retrieved Sept. 29, 2012.
    

14. 
    Ward’s Business Directory of US. Private and Public Companies, New York Times Company.
    

15. 
    The New York Times Company, Company business units.
    

16. 
    The New York Times Company, Company business units.
    

17. 
    New York Times Company, Organizational Chart. The Official Board.com. http://www.theofficialboard.com/org-chart/new-york-times. Retrieved Sept. 29, 2012.
    

18. 
    Neil Lulofs, The Top U.S. Newspapers for March 2012. http://www.accessabc.wordpress.com/2012/05/01. Retrieved Sept. 29, 2012.
    

19. 
    Eileen Murphy, NYTimes.com Pay Gate to Move to 10 Free Articles Each Month Starting in April, BusinessWire. http://libproxy.library.wmich.edu/login?url=http://search.proquest.com/docview/929061645?accountid=15009. Retrieved Oct. 20, 2012.
    

20. 
    New York Times Company, Business Analysis, www.mergentonline.com. http://www.mergentonline.com/company/detail.php?pagetype=business-segments. Retrieved Oct. 27, 2012.
    

21. 
    Emily Steel, NY Times hit by fall in ad dollars. Financial Times. Business Insights: Global. http://bi.galegroup.com/global/article/GALE|A306443729/dfa338898e28f1fea944137ffed817b?u=lom_wmich. Retrieved Oct. 27, 2012.
    

22. 
    Business Wire, The New York Times Company Reports 2012 Third-Quarter Results. Business Insights: Global. http://www.businesswire.com/portal/site/home. Retrieved Oct. 20, 2012.
    

23. 
    Kevin Shalvey, IAC to Buy about.com from New York Times for $300M. Investor’s Business Daily. http://search.proquest.com/docview/1035158125?accountid=15099. Retrieved Sept. 27, 2012.
    

24. 
    Zacks Equity Research, NY Times Offloads Assets. Business Insights: Global. http://www.comtexnews.com. Retrieved Oct. 20, 2012.
    

25. 
    Alex S. Jones, Arthur Sulzberger. Time. http://search.proquest.com/docview/1095353407?accountid=15099. Retrieved Oct. 20, 2012.
    

26. 
    New York Times Company, company business units. http://www.nytco.com/company/business_units/new_york_times_media_group.html. Retrieved Oct. 20, 2012.
    

27. 
    Bloomberg Businessweek, The Future of the New York Times. http://www.businessweek.com/stories/2005-01-16/the-future-of-the-new-york-times/html. Retrieved Oct. 20, 2012.
    

28. 
    MarketLine, SWOT Analysis Overview. http://advantage.marketline.com/Product/. Retrieved Oct. 20, 2012.
    

29. 
    Keach Hagey. Corporate News: Times Co. Stands by Incoming CEO. Wall Street Journal. http://search.proquest.com/docview/1115058910?accountid=15099. Retrieved Oct. 20, 2012.
    

30. 
    Independent (London, England), Thompson may not be right person to run New York Times, says senior editor. Business Insights: Global. http://www.independent.co.uk. Retrieved Oct. 20, 2012.
    

31. 
    Keach Hagey. Corporate News: Times Co. Stands by Incoming CEO. Wall Street Journal.
    

32. 
    MarketLine, SWOT Analysis Overview.
    

33. 
    Gina Lovett, The New York Times Company prepares for paywall launch. New Media Age. http://libproxy.librarywmich.edu/login?url=http://search.proquest.com/docview/756934331?accountid=15099. Retrieved Oct. 21, 2012.
    

34. 
    New York Times Company, 2012 Annual Report: Risk Factors. New York Times Company. http://nytco.com/company/reports. Retrieved Oct 20, 2012.
    

35. 
    New York Times Company, 2012 Annual Report: Risk Factors. New York Times Company.
    

36. 
    New York Times Company, company business units.
    

37. 
    New York Times Company, company business units.
    

38. 
    New York Times Company, company business units.
    

39. 
    Bloomberg Businessweek, The Future of the New York Times.
    

40. 
    Abby Brownback, A Web-Centric Approach to Traditional Journalism. American Journalism Review. http://www.ajr.org/Article.asp?id=4880. Retrieved Sept. 29, 2012.
    

41. 
    M2 EquityBites [EQB], The New York Times introduces new app for Windows 8. Business Insights: Global. http://bi.galegroup.com/global/article/GALE|A306456609/027388dc8bf19be4654dbb3de4207f1a?=lom_wmich. Retrieved Oct. 27, 2012.
    

42. 
    Rick Edmonds, What dismal earnings at The New York Times mean for the newspaper industry. Poynter.org. http://www.poynter.org/latest-news/business-news/the-biz-blog/192904/why-dismal-earnings-at-the-new-york-times-are-and-arent-a-bellwether-for-the-rest-of-the-newspaper-industry/. Retrieved Oct. 27, 2012.
    

43. 
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    loomberg Businessweek, The Future of the New York Times.