Of course, all that technology doesn’t come cheap. In an era of fiscal austerity and higher borrowing costs, the logical way to fund the revolution is by selling assets that no longer fit. The Times started down that road in 2006 by unloading its joint venture with the Discovery Channel and its entire Broadcasting Group in 2007, as well as a radio station, for $715 million. That generated some needed cash, but also concentrated the company even more in the troubled newspaper segment, something Sulzberger doesn’t flinch at. In fact, when explaining why the stock of The Washington Post Company hasn’t been driven down as much as that of the Times, Sulzberger said it was partly because the Post is “no longer really a newspaper company,” a reference to the fact that it draws a majority of its revenue from Kaplan, Inc., an educational-publishing venture. Sulzberger, for better or worse, is intent on having the Times Company remain a newspaper-driven enterprise and by dumping broadcasting, he doubled down on his bet.
Whatever one thinks about the Times Company’s decision to get out of broadcasting, it was in keeping with the push by many large shareholders to sell off noncore assets. The pressure to sell more will likely only increase now that Harbinger and Firebrand have seats on the Times board. Among the candidates that remain to be shopped around are the Times Company’s fourteen regional newspapers, as well as the International Herald Tribune; its minority stake in the Boston Red Sox and the New England Sports Network; its 58 percent ownership of the new Times Building; its paper mill holdings; and, of course, The Boston Globe and related entities. (Asked whether any of those items was sporting a sales tag, CEO Janet Robinson would only say that “the company is always reviewing its portfolio.”) Money from these putative sales would then presumably be used to acquire digital assets, but exactly what those assets might be is also not clear. Though the Times has made some minor online acquisitions recently (Calorie-Count.com, anyone?), there doesn’t seem to be any About-level deals in the offing. And though on the one hand Sulzberger sees the changes the company faces as the most profound in the history of the business, on the other, he still believes in the Times’s basic model: quality journalism + quality readers = quality advertising. “It has been our formula for success for decades. We believe it will remain so in this digital era,” he told shareholders in April.
Maybe. Sulzberger clearly sees the challenges facing the paper as part of a long continuum. Just as the Times saved itself in years past by going from two to four to six sections, introducing color, and becoming a national newspaper, so too can the digital transformation resolve this generation’s problems. Still, those past changes were evolutionary, not revolutionary, and while the Times may be, as Sulzberger termed it, a “uniquely resilient” institution, its recent struggles have come during years of relative prosperity.
In part because of its commitment to quality journalism, for which so many are rightfully grateful, the Times Company’s profit margins have always been narrower than most of the industry, and consequently it has less of a margin to absorb declines. Yet it is on that foundation of quality that Sulzberger places his faith. “It is our belief that the reason why the Times has survived when so many of its competitors have faded, is because it maintained a strong value system that has always been an essential part of our tradition,” he wrote to me.
With the economy slowing, and critical retail, real estate, and auto ads evaporating, it seems inevitable that things must get worse before they can hope to get better. That means Sulzberger’s abiding faith in the Times is about to undergo its sternest test of all.