Cover Story — July / August 2008
Sulzberger at the Barricades
Arthur Sulzberger Jr. is racing to transform the embattled New York Times for the digital age. Is he up to the job?
By Douglas McCollamCorporate annual meetings are generally drowsy affairs—a pep talk by management, some PowerPoint graphics, a little predetermined voting, all topped off by a parade of cranks to the microphones to excoriate management about their pet causes. April’s annual gathering of shareholders in The New York Times Company certainly featured all of those ingredients, down to the codger who shuffled in late, grabbed the seat next to mine, and promptly dozed off.
But beneath the surface routine there was an undercurrent of tension. Shareholders in the Times Company have been taking it on the chin recently, to say the least. In the five years between 2003 and the end of 2007, the Times’s stock lost about two-thirds of its value before rebounding slightly this year. As with most newspapers, daily circulation has been steadily eroding for years, dropping about 4 percent in the six months before the meeting. Sunday circulation has done even worse, declining almost 10 percent in those same six months.
The company’s “challenging” (to use CEO Janet Robinson’s word) first quarter of 2008 pointed to an even bumpier road ahead as the economy softens. Some bright spots poke through the gloom, but company-wide revenue was down about 9 percent year-over-year, with newspaper classifieds free-falling almost 23 percent compared to the first quarter of 2007. Despite the steep decline in the Times’s stock, an April report by media analyst Paul Ginocchio at Deutsche Bank concluded it was still overpriced: “We believe NYT’s valuation has been inflated well above fundamental levels, and continue to see a near-term selling opportunity,” his report said.
As a result of these difficulties the company has taken some aggressive steps, notably cutting the newsroom head count at the flagship paper, a move that Arthur Sulzberger Jr., publisher and chairman, had long sought to avoid. Management has also pledged to make $230 million in spending cuts across the company by the end of 2009, partly by moving more business operations offshore. Despite these measures, in late April, Standard & Poor’s lowered the company’s debt rating to BBB-, one notch above junk-bond status. A week after that downgrade, Bill Keller, executive editor of The New York Times, circulated a memo noting that, because the company had failed to get enough voluntary buyouts, it would have to resort to layoffs. “We hope that the worst is now behind us,” Keller wrote to his staff. When I asked Sulzberger whether Keller’s hope was justified, he said, “The memo speaks for itself. We have no reason to anticipate more cuts, but we cannot predict what the future holds.”
The company’s financial problems are hardly unique in the print world; no one has yet solved the challenge to newspapers posed by the digital revolution. Still, the pall hanging over the annual meeting seemed especially striking given the setting, the sleek new TimesCenter, a 378-seat auditorium appended to the company’s new fifty-two-story Renzo Piano-designed headquarters, a building that cost the company about $600 million. The Times Building is just one of several big outlays the company undertook in recent years, even as its financial fortunes worsened. From 2003 through 2006, the company spent hundreds of millions buying back its own stock only to see its value steeply depreciate. Last year, it chose to substantially raise its cash dividend to shareholders, a principal source of income for members of the Ochs-Sulzberger family that controls the company.
Despite pressure from large shareholders, Times management has also been reluctant to shed some of its under-performing assets, such as The Boston Globe, which the company acquired in 1993 for $1.1 billion, a price that many critics called absurdly high even at the time. That judgment was vindicated last year when the company had to absorb a painful $814 million write-down on the Globe deal and a later acquisition of the Worcester Telegram & Gazette.
The assorted financial difficulties and declining stock price have increased shareholder agitation about Times management, particularly about Sulzberger, still referred to as “young” Arthur by some though he is fifty-six and has been chairman of the company for more than a decade. Sulzberger’s youthful qualities—notably his zeal—have been something of a double-edged sword. Though admired for his passion in defending the cause of journalism, that same fervor has at times been seen as pushing him to damage the very institution he sought to defend. In some precincts, it has fueled his reputation as a mercurial man not quite up to leading the country’s most esteemed news organization. Sulzberger has demonstrated an admirable capacity to stick by reporters and editors in tough times, but has also shown he can quickly change course and turn his back on them.
As an early adapter to new technology, Sulzberger is given credit for understanding before most the implications of the Internet for journalism and for correctly charting the fundamental course the Times must take, which is no small matter. He gets less credit for execution, and is seen by some as slow to reposition the Times to respond to the kinds of changes that he himself predicted. He’s also shown a tendency to loudly tout new ventures, such as the online subscription service TimesSelect and the Discovery Times cable television channel, only to drop them quietly when they failed to meet the outsized expectations that he helped to create.
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Jay Rosen![[TypeKey Profile Page]](http://www.cjr.org/nav-commenters.gif)
Thu 17 Jul 2008 07:03 PM"Arthur Sulzberger Jr. is racing to transform the embattled New York Times for the digital age. Is he up to the job?"
I'm curious. Why didn't CJR try to answer the question? And if you cannot answer it, why ask it?
valwayne
Sun 20 Jul 2008 04:19 PMThe times commitment to quality may have made it the Newspaper of record in the U.S., and seen it through some tough times, but Quality & the NYT have ceased to go together for some time. Quality at the NYT is not just dead, but dead and stinking to high heaven! You no longer turn to the NYT for news, you turn to its front page to be outraged or titilated, depending on our viewpoint, with the latest Bush derangement editorial, Obamamania propaganda, or unsubstantiated slur against former favorite McCain. The NYT may find a financial niche that will let it survive on the left wing fringes...but other than that its time to throw on the dirt.
Emmett Wright Jr,
Sun 20 Jul 2008 04:52 PMI have never seen so many words used to say so little.
charles higgins
Sun 20 Jul 2008 05:20 PMMaybe they can get the 'World Workers Party' to pass out their anti American and anti Christian values gibberish to the fish mongers and owners of birds? -- Or maybe they could reduce their carbon footprint and just go away
Detmar Finke
Sun 20 Jul 2008 05:23 PMwhat bothers me is that the NYT that i grew up with no longer exists. my NYT was known for attempting to provide its readers with ALL sides of an issue with little or no pre-emphasis or bias, leaving it up to the reader to formulate his or her own opinions based on the facts presented by the reporter(s). in this new "internet age" of advocacy journalism, fueled by innumerable blogs and cable news channels, all vying for my undivided attention, i don't feel that the Times should have given up its earlier attempts to be a reasonably objective arbiter of the news. it's a real mistake to try and compete (either by being more "focused" or more "confrontational" than your competition only compromises and devalues the excellence that the NYT was once known for. to my mind, this constricting of "all the news that [was once] fit to print" into what i call "point-of-view" reporting is a bigger factor in the Times' slide into a discouraging and all too often nondescript irrelevance than anything described in this article.
Kelsey
Sun 20 Jul 2008 06:04 PMDespite a lot of recent coverage of the Times story, what I have not seen is a detailed examination of their online efforts. They receive mention above, but there is more to be said.
The Times produced some pioneering, amazing interactive graphics during the primaries. They produce slide shows, videos, journalist backstories on video, blogs, commenting, e-mail newsletters. There are a lot of subtleties to getting these features right. The Times does great work in all these areas.
Clearly they are pumping a lot of resources into these efforts. This kind of innovation does not come cheap. I think the Times' online efforts deserve closer examination, and credit, than I am seeing in the press. Perhaps the press is more inclined to look at the content of the traditional journalism than the innovations in presentation and visualization that the Times is bringing about.
Tor Lars
Sun 20 Jul 2008 07:25 PMI, as well as many of my friends and co-workers, have stopped our subscriptions and reading of the times mainly because it has become an opinion sheet in just about every facet of its coverage. If one needs info hard and clear, we must go elsewhere.
This piece doesn't address the issue at all. Odd (hello?)
Arnold Beichman
Sun 20 Jul 2008 08:19 PMAn article about the NYTimes which makes no mention of its contemporary savior, Abe Rosenthal, is woefully incomplete or uninformed.
T Taylor
Sun 20 Jul 2008 08:36 PMI hope this article was not written by a Columbia J-school student. If so, one need look no further than our college campuses for a root cause.
Elroy Jetson
Sun 20 Jul 2008 08:41 PMThe basic model for the Times changed a long time ago. When you move the editorial page to page 1 and push stories like why women can't play Augusta, you tend to lose a lot of credibility.
Crappy journalism + fewer readers =
decreasing ad revenues
BillSanford
Sun 20 Jul 2008 10:06 PMI used to be a NYT reader, along with a couple of other papers. Like many people, years ago I started to migrate to the Internet for my news, as it was easier to read several sources in one setting.
The NYT went far-leftist in it's reporting several years ago and I simply do not trust it's "journalism". The paper lies. I hope it goes out of business. And, I advise my friends and associates that way.
If the paper wants to declare it 'solidarity' with moveon.org, or kos, that would be acceptable, but to pretend to be a world-class newspaper is adding to the lies it publishes.
Tai Pan 91021
Mon 21 Jul 2008 01:17 AMSo will democrats criticize their flagship propaganda medium for "outsourcing" and sending operations overseas????
iykwimaityd
Mon 21 Jul 2008 02:52 AM...because of its commitment to quality journalism...
LOL.
Anna Turtle
Wed 6 Aug 2008 05:03 PMNot to pile on, but a BBB- rating from Standard & Poor's is not "one notch above junk-bond status," it is junk bond status.