A media tower teeters
The New York Times Company has massive financial problems.
The New York Times is facing the most serious crisis in its 158-year history. In an age of competing internet content and changing media consumption, the newspaper is increasingly having to cut back on more than just its journalistic importance. Above all, the New York Times Company is in financial difficulties.
The reasons for this are manifold: the publisher, Arthur Sulzberger Jr., bought back shares worth a total of 2.7 billion dollars from other investors between 1998 and 2004, at a time when shares were at their most expensive. In 2003, the company became the sole owner of the still loss-making International Herald Tribune with an investment of 65 million dollars. And last year, the staff moved into the new Times Tower, a 52-storey skyscraper in Manhattan designed by star architect Renzo Piano, which cost the company 600 million dollars.
Although the Times Company was able to report a profit of 300 million dollars in 2008, this was a third less than in the previous year. In addition, the share price has plummeted in recent years and is currently worth just four dollars. But not all media observers see the situation as bleak: "It's true that the Times doesn't have the same financial cushion that the Washington Post has with the education company Kaplan," says Todd Gitlin, professor of journalism at Columbia University. "But the Times is still one of the best newspapers in the world, so it's too early to spread doom and gloom. A savior will be found."
Although the Times pursued a sophisticated Internet strategy early on and its website is one of the most successful English-language content offerings, the income from online operations - as in the publishing industry in general - cannot make up for the declining sales in the print advertising business. Online advertising revenue currently accounts for just 12 percent, while advertising revenue has fallen by 20 percent in the last two years. Many industry managers, including Sulzberger, are therefore considering whether they should charge for their online editions. "It looks like the industry is turning back to the paid model to protect its core content and promote its brand at the same time," says Amanda Richman, Director of Digital Services at marketing group Mediavest.
The Times Company had to take drastic measures to counter the shortage of funds: The company sold its share in the Times Tower in order to subsequently rent the premises again, but reserved the right to buy it back within ten years. At the same time, it borrowed 250 million dollars from Mexican media entrepreneur Carlos Slim, the largest shareholder after the Sulzberger family, to pay off its debts. The company announced that it would lay off 100 employees on the publishing side and cut the salaries of all employees by five percent to prevent further redundancies. It plans to sell its stake in the Bos¬ton Red Sox baseball team and senior editors are asking staff to come up with ideas for cost savings. However, the Times' core product will not suffer, according to editor-in-chief Bill Keller: "The solution to a bad economy can't mean less journalism for us."
Another Times subsidiary, on the other hand, could well go under the collar: the Boston Globe. The Times has threatened to close the newspaper, which is expecting a deficit of 85 million dollars for 2009, unless 20 million can be saved. Half of this is to be imposed on the editorial staff. The proposed measures include not only salary cuts and smaller severance packages, but also reduced contributions to employees' health and pension insurance. The trade union responsible calls the demands "draconian" and "scandalous".
But the New York Times Company has no other choice. A comprehensive report on the publisher, Arthur Sulzberger, in Vanity Fair summarizes how serious the situation is: "Almost everyone hopes Arthur will succeed. Few believe he can succeed."
Gerti Schön
The reasons for this are manifold: the publisher, Arthur Sulzberger Jr., bought back shares worth a total of 2.7 billion dollars from other investors between 1998 and 2004, at a time when shares were at their most expensive. In 2003, the company became the sole owner of the still loss-making International Herald Tribune with an investment of 65 million dollars. And last year, the staff moved into the new Times Tower, a 52-storey skyscraper in Manhattan designed by star architect Renzo Piano, which cost the company 600 million dollars.
Although the Times Company was able to report a profit of 300 million dollars in 2008, this was a third less than in the previous year. In addition, the share price has plummeted in recent years and is currently worth just four dollars. But not all media observers see the situation as bleak: "It's true that the Times doesn't have the same financial cushion that the Washington Post has with the education company Kaplan," says Todd Gitlin, professor of journalism at Columbia University. "But the Times is still one of the best newspapers in the world, so it's too early to spread doom and gloom. A savior will be found."
Although the Times pursued a sophisticated Internet strategy early on and its website is one of the most successful English-language content offerings, the income from online operations - as in the publishing industry in general - cannot make up for the declining sales in the print advertising business. Online advertising revenue currently accounts for just 12 percent, while advertising revenue has fallen by 20 percent in the last two years. Many industry managers, including Sulzberger, are therefore considering whether they should charge for their online editions. "It looks like the industry is turning back to the paid model to protect its core content and promote its brand at the same time," says Amanda Richman, Director of Digital Services at marketing group Mediavest.
The Times Company had to take drastic measures to counter the shortage of funds: The company sold its share in the Times Tower in order to subsequently rent the premises again, but reserved the right to buy it back within ten years. At the same time, it borrowed 250 million dollars from Mexican media entrepreneur Carlos Slim, the largest shareholder after the Sulzberger family, to pay off its debts. The company announced that it would lay off 100 employees on the publishing side and cut the salaries of all employees by five percent to prevent further redundancies. It plans to sell its stake in the Bos¬ton Red Sox baseball team and senior editors are asking staff to come up with ideas for cost savings. However, the Times' core product will not suffer, according to editor-in-chief Bill Keller: "The solution to a bad economy can't mean less journalism for us."
Another Times subsidiary, on the other hand, could well go under the collar: the Boston Globe. The Times has threatened to close the newspaper, which is expecting a deficit of 85 million dollars for 2009, unless 20 million can be saved. Half of this is to be imposed on the editorial staff. The proposed measures include not only salary cuts and smaller severance packages, but also reduced contributions to employees' health and pension insurance. The trade union responsible calls the demands "draconian" and "scandalous".
But the New York Times Company has no other choice. A comprehensive report on the publisher, Arthur Sulzberger, in Vanity Fair summarizes how serious the situation is: "Almost everyone hopes Arthur will succeed. Few believe he can succeed."
Gerti Schön
The Times Tower in Manhattan cost 600 million dollars - a sum that the company could not afford.
Under massive pressure: publisher Arthur Sulzberger.
Michael Wolff, media columnist at Vanity Fair and author of a Murdoch biography: "Practically every decision made by publisher Sulzberger was flawed"
WW: In one of your columns, you talk about the end of the New York Times. How did you come to this drastic conclusion?
Michael Wolff: All newspapers are doing badly and the Times is no exception. Many newspapers are poorly run and the Times' management is particularly inadequate. It starts with the publisher, Arthur Sulzberger. Virtually every decision he has made has been flawed.
What do you think were the biggest mistakes?
They are primarily strategic in nature. In particular, the investments in other newspapers such as the Boston Globe turned out to be colossal mistakes, as did his decision to buy back shares when they were at their most expensive. The choice of managers he hired under him was not only misguided, but did serious damage to the Times that can no longer be undone.
Do you think the Times can survive as an outstanding journalistic organ?
The notion of what kind of journalism sets the standard is changing, and I don't think the New York Times will be one of them in the future. But I don't think it will be shut down either, it will just be sold to someone who would like to adorn themselves with its property, such as New York mayor and media entrepreneur Michael Bloomberg or Rupert Murdoch.
What will happen to the Sulzbergers' publishing family?
They'll just have to look for another job.
Interview: Gerti Schön
Michael Wolff, media columnist at Vanity Fair and author of a Murdoch biography: "Practically every decision made by publisher Sulzberger was flawed"
WW: In one of your columns, you talk about the end of the New York Times. How did you come to this drastic conclusion?
Michael Wolff: All newspapers are doing badly and the Times is no exception. Many newspapers are poorly run and the Times' management is particularly inadequate. It starts with the publisher, Arthur Sulzberger. Virtually every decision he has made has been flawed.
What do you think were the biggest mistakes?
They are primarily strategic in nature. In particular, the investments in other newspapers such as the Boston Globe turned out to be colossal mistakes, as did his decision to buy back shares when they were at their most expensive. The choice of managers he hired under him was not only misguided, but did serious damage to the Times that can no longer be undone.
Do you think the Times can survive as an outstanding journalistic organ?
The notion of what kind of journalism sets the standard is changing, and I don't think the New York Times will be one of them in the future. But I don't think it will be shut down either, it will just be sold to someone who would like to adorn themselves with its property, such as New York mayor and media entrepreneur Michael Bloomberg or Rupert Murdoch.
What will happen to the Sulzbergers' publishing family?
They'll just have to look for another job.
Interview: Gerti Schön
Michael Wolff.
