Indeed, it is a core question—and has been for most of the 112 years following Adolph Ochs’s acquisition of the Times in 1896 as a long-shot bidder from Chattanooga. Since Ochs’s death in 1935, the paper has been controlled by a handful of family members whose principal objective has never been to maximize financial returns. Perhaps as a result, and contrary to common perception, the paper has a long history of financial struggles that it has pulled through.
As detailed in The Trust, an authoritative history of the company written by Susan Tifft and Alex Jones, one of the reasons Adolph Ochs was able to acquire the Times in the first place was that it was headed for bankruptcy. And though Ochs greatly expanded circulation and advertising, it was still a touch-and-go proposition for much of his tenure. The paper was loaded with debt, and for years stock certificates representing a controlling interest in the paper sat in the safe of a creditor, pledged as security for loans (a fact Ochs concealed even from family members). During the Great Depression the paper’s net income fell more than 75 percent, from $5.6 million in 1929 to $894,000 in 1936. Even in prosperous times, the paper’s profit margins hovered below 5 percent. Money was seen as so potentially corrupting to the paper’s mission that for a time the family trust invested exclusively in Treasury bills to avoid any extraneous business entanglements.
The Times’s attitude toward profitability didn’t really become a critical issue until the late 1960s, when rising labor costs and declining circulation forced the paper to alter course. The company began an effort to diversify its holdings, buying a firm that sold teaching aids; a small publishing outfit; and later Cowles, a magazine publisher. But the biggest change—in fact, perhaps the most significant cultural shift in the company’s history—came in 1969 when the decision was made to go public. The matter was presented as one of basic survival. “At the time the company had no financial stability,” says James Goodale, who was general counsel for the Times Company. “The unions were a constant threat and if they struck, you really weren’t sure you’d come out alive.” There was a hitch, though. In order for the stock to be listed on an exchange, the A shares would have be given some voting rights (from the start,Wall Street was uneasy with the dual-stock structure of the paper). The problem was resolved by giving A shareholders the right to elect three directors (now four).
The Times Company’s lack of emphasis on profitability caused the stock to drop swiftly, from an initial price of $42 a share to $16, within the first few years it was publicly traded. The paper was producing some of its best journalism during this time, including its courageous stand in the Pentagon Papers case, for which it won a Pulitzer Prize. But Wall Street was unimpressed. Things didn’t get much better as New York slid into a financial crisis and the nation fell into a recession in the mid-1970s, cutting Help Wanted ad revenue in half.
Two things helped turn the tide in the late 1970s. First, the paper gained greater control of its labor costs, getting its unions to agree to begin automation of printing and production methods in exchange for job security. Second, the paper overhauled its layout, ditching its traditional two-section format in favor of a four-section paper, adding a weekend section, and expanding its business section. The makeover gave the paper much of its modern footprint, with additions like Science Times as well as sections devoted to lifestyle and home decorating. The combination of tighter cost controls and the addition of ad-friendly content dramatically enhanced the paper’s financial fortunes. For the next quarter-century, with some setbacks, the paper enjoyed strong profits and a healthy stock price. In 1993, the Times Company used some of its enhanced financial clout to make its deal for The Boston Globe. By that time, critics were already questioning whether newspapers were a forward-looking investment, and whether media companies should instead look at more aggressive diversification to offset erosion in circulation, ad pressures presented by the expansion of cable television, and the rise of a newfangled thing called the Internet.