THE NEW YORK TIMES COMPANY: A Case Study Analysis
John J. Head
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
Table of Contents
I. Historical Overview...... 1
Early steps...... 2
Diversification...... 3
Challenges, changes ...... 4
II. Organizational structure...... 5
Table 1...... 5
III. Business Operations...... 6
Table 2...... 7
The flagship...... 8
IV. Financial performance...... 9
Table 3...... 9
V. Future outlook...... 11
Branding ...... 11
SWOT analysis and other risks...... 12
Table 4...... 13
Demographics...... 15
Philosophy ...... 16
Endnotes...... 18
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:
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
The company’s origins date back to September 1851, when the first issue of The New York Daily Times was published. Messrs. Raymond and Jones founded the publication on the premise of offering the news “in a conservative and objective fashion, in contrast to the yellow journalism of the day … .”5 The paper’s coverage of key events — President Lincoln’s Gettysburg Address and the Battle of Bull Run among them — made the Times the newspaper of record. Under Raymond and Jones’s guidance the publication grew. Their subsequent deaths, in 1869 and 1891, respectively, and the handing of the newspaper to their ill-equipped heirs nearly resulted in the paper’s failure. It was near bankruptcy in 1896 when a respected, albeit little-known, newspaper editor named Adolph Simon Ochs came on the scene.6
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.
Diversification
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
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
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 AssetsNYTimes 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
III. BUSINESS OPERATIONS: CURRENT PRODUCTS AND SERVICES
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
As 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.
Table 2.
Management structure of The New York Times Company.
Control
CFOAssistant Control
Internal Audit
Treasurer
New York Times
International Herald Tribune
New England Media
CEOLegalSecretary & Assistant Legal
CIO
Vice Chairman of the Board
Board of DirectorsCommunication
DevelopmentResearch & Development Ops
Digital Ops/About GroupPaid Products NYTimes.com
Human ResourcesHuman Resources / Diversity
Compensation / Benefits
Organization Capability
Source: TheOfficialBoard.com, September 201217
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.
The Flagship
The New York Times serves more than the residents of New York City: Its reach extends nationally and globally. The newspaper boasts a print circulation of 779,731 daily and 1.26 million on Sundays. In addition, the company has found success since venturing into the digital news dissemination domain in January 1996 with the launch of its website, The paper’s digital efforts since then have resulted in a 73-percent increase in overall daily circulation, print and online, year over year ending March 2012, and a nearly 50-percent increase on Sundays.18
The Times maintains a high online profile while positioning itself for improving revenue in this portion of the market. The newspaper had maintained free access to its online product prior to 2011 when it began structuring online packages from which customers could choose. At that time, the company allowed non-subscribers (to either the print or the online version) access to up to 20 stories a month for free. In mid-March 2012, a year after its launch of paid digital subscriptions, the company reported it had approximately 454,000 paid subscribers to its various digital packages, replica editions and e-readers. Included in this number are subscribers of The International Herald. At the same time the company announced it would cut back from 20 to 10 the number of free articles accessible to non-subscribers.19
IV. FINANCIAL PERFORMANCE
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.
Table 3.
New York Times Company Business Analysis.
RevenuesReport Date / 12.25.11 / 12.26.10 / 12.27.09
Currency / USD / USD / USD
Scale / Thousands / Thousands / Thousands
News Media Group / $2,212,575 / $2,257,386 / $2,319,378
About Group / $110,826 / $136,007 / $121,061
Total / 2,323,401 / 2,393,463 / 2,440,439
Source: The New York Times (
Though not reflected in this table, financials from quarter three of 2012 illustrate — dramatically — the importance of transition to digital. The company’s net income fell 85 percent from the same period in 2011, as reported in The Financial Times. Any gains in circulation revenue in the media group failed to offset the almost 9 percent decline in advertising revenues from the third quarter last year.21
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
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.
Branding
It is difficult to put a dollar value on branding, but in the case of The New York Times (and tangentially its parent company), the name carries much weight when considering its future. The newspaper has a long and rich history as a member of the Fourth Estate, particularly enriched during the 34 years when Arthur Sulzberger was at the helm as publisher. Certainly high among his contributions was his decision in 1971 to publish the Pentagon Papers, detailing how the U.S. government had lied about the Vietnam War.25 The decision earned the newspaper a Pulitzer Prize, one of more than 100 the newspaper earned since 1918.26 Despite moments of journalistic scandal, including the 2003 revelation that reporter Jayson Blair had plagiarized or made up numerous stories, The New York Times name remains a positive in the sense of branding.27