The Lincoln Plawg - the blog with footnotes

Politics and law from a British perspective (hence Politics LAW BloG): ''People who like this sort of thing...'' as the Great Man said

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Thursday, January 13, 2005

The New York Times business

As I've mentioned before, when controversies arise over Times coverage, those outraged inevitably concentrate their fire on bylines - Wilgoren, Nagourney, Bumiller etc - with some attention on editors like Bill Keller, less on publisher Arthur Sulzberger. None at all on Scott Heekin-Canedy.

Who? Described [1] as President and General Manager - The New York Times, he is responsible for, inter alia,
advertising, circulation [and] marketing
-the minor matter of generating the moolah to pay the extortionate salaries of the journalistic Parnassus directed by Keller.

I've no idea what input Heekin-Canedy has into editorial content; but I'd be surprised if he did not express views on the market impact of particular editorial lines and approaches.

If - to take an example from the Land of Druther - Keller proposed to stop attendance at USG anonymous briefings, SHC might query the effect on advertising revenues of the likely controversy. As - surely - would senior management and directors.

While Keller would no doubt defend his right to decide on editorial matters, such decisions would clearly be informed by advice - the more radical the decision, the more detailed the advice - on their business impact.

A piece in Business Week is useful reading from that perspective.

The NYT Co is trailing competitors in stock value (January 2) and profitability (due to super-spending on the editorial operations, apparently), and is unclear what business model to adopt.

It seems stuck between the metro paper and national paper models; whilst
nearly 50% of all subscribers to the weekday Times live somewhere other than Gotham
this has been almost as much through home-town defections as out-of-town conversions:
Since the national expansion began in 1998, the Times has added 150,000 daily subscribers outside New York but is thought to have lost about 96,000 subscribers in its home market.

One reason to go national would be that
On average it costs the Times about one-third more to produce and deliver a newspaper in its home market (the only place where it owns its printing plants) than in the rest of America.

Another, that
in the New York region, where the Times reaches only 14% of all adult readers, the paper's circulation is too diffuse to allow for effective targeting by ZIP Code -- a technique that has enriched many other metro dailies with revenue from inserts.

But the paper's sales are around half of the national rags the Wall Street Journal and USA Today, which hurts the Times in getting national advertising.

Again, the online operation is profitable -
nett[ing] an enviable $17.3 million on revenues of $53.1 million during the first half of 2004
- with revenues growing by 30-40% a year - but from a low base.

The company is apparently toying with the idea of taking the site pay-only - but one senses straws being clutched at: so far as I'm aware, of newspapers that have gone pay-only, only the WSJ has made it produce significant revenues.

Beyond problems of detail (such as the effect on online advertising revenue if traffic drops 95%), the pay-or-free question is a classic managment time black hole: online is peripheral but glamorous, literally the window on the company. By contrast, the dead-tree operation is so last century - but it actually pays most of the wages, and its success or otherwise will determine the fate of the company.

Finally, the capital structure of the NYT Co gives the Sulzberger family a one-way bet: they have 91% of the Class B voting shares (the rights of which are explained on p84 of the 2003 10-K) for just 19% of the equity. The grandson also rises...

My guess is that the reason why the price of the stock (Class A, that is) has drifted in the last year or more may be less connected with the Jayson Blair shenanigans and more with the apparent lack of strategic direction by top management of what is essentially a closely-held company.

(Mentioning the Boston Metro (January 11) would be a cheap shot, I guess...)

  1. The bios and job descriptions of NYT Co executives and board members may come in handy.

The family: Adolph Ochs begat Iphigene Bertha Ochs who married Arthur Hays Sulzberger who begat Arthur Ochs Sulzberger Sr who begat Arthur Ochs Sulzberger Jr - currently, the Head Sulzberger In Charge.

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