In New York Magazine, Joe Hagan tells one part of the story of the decline of the New York Times as a company and as a newspaper. Hagan focuses on the personal: publisher Pinch Sulzburger’s relationships with long-time CEO Janet Robinson, now departed; his recent girlfriend, Claudia Gonzalez, a Mexican marketing executive who formerly worked for the World Economic Forum in Davos; and other members of the Sulzburger-Ochs family.
The personal anecdotes are interesting, of course. But the real story here is an economic one: the drying up of advertising revenue that has brought the once-profitable New York Times Company to its knees. The paper’s most recent effort to restore profitability is its second attempt at erecting a pay wall:
With the success of the pay wall in the summer of 2011, it seemed the paper was turning a corner—which made what came afterward even worse. Between the About.com debacle and the sudden decline in print advertising, the paper was headed toward a 3 percent drop in revenue and an overall loss of almost $40 million in 2011. Since Robinson began as CEO in December 2004, the Times stock has lost more than 80 percent of its value. And this was significant not only for the business but also for the family that owns it. The Times has always had conflicting business prerogatives: to turn a profit, yes, but also to supply the family with what amounted to a trust fund by churning out several million dollars a year in stock dividends. At one time, the family received upward of $20 million a year, which served as a kind of Ochs-Sulzberger operating budget. But when the dividend was suspended, the family were left with only their stock wealth and whatever they had in trust funds and savings. That was fine for Sulzberger and the five other family members with salaried positions at the company, but the wider family of sons and daughters, nieces and nephews were now forced to sell stock at a historical low to raise money. Most of them have admirable if low-wage jobs as academics, novelists, musicians, and psychotherapists, but the money also funded second homes and hobbies such as underwater exploration.
Not everyone would agree with the assumption that the work of academics, novelists, musicians and psychotherapists is especially “admirable,” but it is no surprise that the current generation is mostly “low-wage.” The story of the New York Times Company is, in large part, the familiar story of a family business gone bad. The paper’s financial condition is grim:
In the era of Arthur Sulzberger Jr., when newspapers have flailed under new digital realities, the New York Times Company has shrunk dramatically. Once it was a wide-ranging media empire of newspapers and TV stations and websites, and even a baseball team, that was worth almost $7 billion; today it’s essentially two struggling newspapers and a much-reduced web company, all worth less than $1 billion (for comparison, consider that the Internet music company Pandora is valued at almost $2 billion). Despite the shrinkage, the company has retained essentially the same top-heavy management, which it has kept well compensated. Even though the paper froze executives’ pensions in 2009, as it is threatening to do with union employees, the company created two loopholes, called the Restoration Plan and the Supplemental Executive Savings Plan, which allowed certain high-earning executives to take money out anyway. As a result, Janet Robinson received an additional lump-sum payment of over half a million dollars upon exiting the Times.
As the company slides down the drain, jettisons one property after another, lays off employees and battles with its unions to reduce costs, the last thing to go will be management’s sense of entitlement.
Articles like this one chronicle the Times’s downfall while still assuming that it remains a great newspaper. I, on the other hand, think it is a lousy newspaper–unreliable, biased and editorially toxic. How much do the newspaper’s shortcomings have to do with its current financial crisis? It is hard to say. Maybe those who turned the Times into a left-wing niche publication, intended to appeal only to a small, urban and liberal-leaning slice of American news consumers, made a wise business decision. But I doubt it. It would seem that the paper could only do better if it appealed to a broader cross-section of readers. The Times is the newspaper equivalent of MSNBC; how well has the left-wing niche strategy worked for that struggling network?
If present trends continue, the Times Company will either go bankrupt or–much more likely–its last remaining properties, the Boston Globe and the Times itself, will be sold to new owners who, one hopes, will take both newspapers in a new direction. A direction which will not only make them better papers, but perhaps will also return them to profitability.