What Would I Change?
So now the hedge funds pushing New York Times Company management own about as much
as the Sulzberger family. I don’t know whether they’ll win their effort
to elect directors to the board, but I do think this has reached a
critical mass and that the family and management will be forced to make
strategic changes. So I’m curious: what would you change? The hedge
funds are urging the company to divest some assets and concentrate on
the Times, investing in digital. What do you suggest? (And please
refrain from the obvious Times-bashing. There’s plenty of opportunity
for that in the post below about the McCain scandal. This is about the
business of news and media.)
I’d spin off The NY Times (paper and online) into a separate company and bring in new management to run it. I’d liquidate the rest of the assets, possibly including About.com.
I’d make the NY Times all about their audience. Let the people who read the paper have a much larger role in the content that gets published, both online and offline.
The best thing about the NY Times is their readers. The only way they can fix their problems is by leveraging them as the other half of their newsroom.
> I’d like to acknowledge my friend Dave Morgan for helping me frame my thoughts on this.
I agree that spinning off the NY Times into a separate company would be a good idea. The online edition should get more attention, they should hire someone from the blogging business to lead their online efforts.What I don’t agree is that they should liquidate About.com – first, because it’s a business that could make big bucks, but secondly and more important: About can be transformed into something better. It suffers from a management that has no vision (or at least a bad one) for the company. It’s already a separate entity, so no need to spin it off again, they should just get a better top management, which could transform the company into a cash cow (which would make the hedge funds happy).
Hey Sebastian,I don’t think Fred is saying About.com is a bad business – it’s just not the business NYT should be in. At the end of the day, the companies who “win” over the long term, are those that focus on one thing and one thing alone.Coke: Making syrup for sodaGoogle: Search (I know they have a lot of apps, but look at where their revenue comes from)Geico: InsuranceWal-mart: Lowest cost retailerNYT is about informing, About.com is more about educating, which certainly has its place somewhere, but not at a news company trying to pick itself up by its shoelaces.Just my two pesos.-Wayne
About.com is a cash cow. I know the numbers but don’t know if they are public so I won’t divulge themI think about is a great business and can and should be grown into an even better businessI see your point about keeping it with the times. I am not sure that’s the right call but it might beFred
Hi Fred,From Reuters, in 2007 About.com had revenues $103 million and operating income of $35 million. Sam
There you go. Its public so I would point out that the price NYT paid for about looks pretty good nowFred
Turning the NYT into a full media company (largely leveraging online video and interactive mediums for discussion) where high-quality news coverage is the leading strategic goal would be an ideal extension of what I imagine is its current objective. As a consumer of the Times and living outside the NYC area, many folks like me are drawn to the content because it is one of the leading sources of quality journalism matching global leaders like The Economist, the Financial Times and the Wall Street Journal. To that end, I’m concerned that changing the Time’s leading objective to a more audience to the forefront creates a greater chance that journalistic standards get diluted in the overall message. I know we don’t agree on this one, but I wonder about where the line of a quality content standard meets up with the masses. If something like Outside.in is going to be an add-on for the TImes, I’d want to see how that platform ensures quality community content gets brought to the top.Why wouldn’t the Times re-invent the delivery model as part of its objectives? It has the audience to price-offset paper delivery with wireless media devices + content subscriptions and via partnerships with hardware providers and leading advertising sponsors, could truly transform how we all consume the news (e.g. I am not a fan of having my laptop at the breakfast table, or my Blackberry).About.com? Honestly, it is no where near the content leader the Times is and borders on being an also-ran ad revenue content aggregation model in need of being merged with a player like Britannica to broaden its online search + credible content strategy. My bet is that the About.com asset is better valued in someone else’s hands.
Great points. I think the ‘quality’ that the times stands for can be extended to the two way media world and the times would be an ideal company to do itFred
The question the NYT needs to ask itself is what business is it in. If it is in the newspaper business then it is a dinousaur and will face the same fate. If it is in the information and editorializing (if that is even a word) business then it has a future. The Times is the “newspaper of record” which really means that they are the most respected source of information on the subjets they cover. I’ve always found it interesting that the total Enterprise Value of the NYT company is about $3.5B as of this morning – how much do you think it would take to replicate the entire NYT information flow if you wanted to set up a completely separate company? The newsroom employs some 1000 people or so – can you imagine offering each of these writers a better salray and a piece of the upside to work for a web only company that would be more nimble and able to cover a greater swath of thier readers interests? The NYT Business section does a great job for the most part – and occasionally breaks stories – but Silicon Alley Insider probably does a better job on a minute by minute basis nd has like 3 guys in a room writing stories. So you asked what to do with the NYT: sell off all ancilarry assets including About.com (yeah it is a cash cow but it is not in the business that the NYT is in) – get rid of all the other papers other than the NYT – kill off the print version of the paper, ridding yourself of tons of overhead in printing and distribution (clearly not value accretive propositions) and convert all of the subscriptions to web subscriptions. Someone has to do this sooner or later – or all of these newspapers will get picked apart by more focused and more nimble web based competitors. I read 4 physical newspapers per morning but I am a severe anomoly and I am 41 so kind of like a dinosaur in term of where companies should be focused on. Ask a 25 year old where they get information and the NYT or any other paper will not be on the list. They need to focus on that.
Building on this point, I think the best option for NYT is to make a move towards where it sees itself in 8-10 years, starting now. The whole on-line, comprehensive media content provider will not work for them so to me, it makes sense to stop following the herd in looking for the conventional internet media growth paths and to settle into its profitable niche.Specifically, one idea would be for NYT to go fully online (as mentioned above, the printing infrastructure is going to increasingly be a burden) and leverage its reputation to provide a (moderated) forum for people willing to pay a premium to be a part of the NYT community.The quality news reporting and editorials will continue as before but that alone cannot be the sole revenue source- some guy will always just cut and paste onto some website hosted in the Caymans. Instead they can draw a client base willing to pay some premium to exchange ideas with Thomas Friedman. Pricing plans and marketing are a little outside the scope of this post but in general I think there is enough value and differentiation there for NYT to become a highly profitable business.
I agree. People like Tom Friedman have huge followings and they are missing a big opportunity to open that up in a big way.Fred
Additionally I think at some point NYT will have to overcome the knee-jerk rejection of many internet users towards any online pay-for-newspaper-type service.Given the recent white flag by many papers (including WSJ, arguably the ideal newspaper for premium online content) vis-a-vis fee-based web services, it would be an interesting exercise to speculate how NYT would hypothetically (re)broach the issue.My best guess would be to market it primarily as a new forum-based product with the NYT intellectuals, with the traditional NYT offerings (articles and editorials) thrown in as a bonus- the goal being to avoid comparisons to the already failed “premium content” offerings.Sounds like the makings of a HBR case study!
I’m not an expert, so full disclosure: But my guess is that the future of The New York Times — and any other content business where the individual content thingy can be made by an individual or very small team (ie., like writing an article or recording a song — but, not in the near-term, like creating a broadcast-quality television show or a big video game) — is to become a platform for independent experts, pundits and assorted content-makers.Again, I’m guessing, but this platform needs to provide distribution, publishing tools, revenue sharing, and some way of letting readers have an expectation for the quality of the contributor. There’s probably a bunch of other stuff the platform could provide also — as the comment about Friedman mentioned, the revenue streams should go way beyond advertising (and even include Fred’s worst enemy, premium content). But the platform should not employ any of these content people as employees and it should not try to control their brand or content.Now, I’ll admit that I don’t go there much. Okay, never. But from the other comments it sounds like the current About.com product is not a 100% perfect fit for this future platform — not so great brand; not so great content.But on the other hand it’s probably pretty useful if they want to get to the future faster: it seems to have a ton of distribution through Google and some kind of bloggy publishing tools. And an ad sales force. And, as Fred said, real revenue. And, most importantly, a framework for working with independent content people. So it’s a start.So, basically, I don’t think selling About.com makes a ton of sense, since my guess is that they would end up needing to build something a lot like it. Maybe they should change the About brand or fire the current writers. And they should definitely run the numbers on winding down the paper version, but I’m sure they are and it probably doesn’t make sense yet.
I have a vested interest in the paper side of the NYT as I’m a delivery foreman…..saying that, I have to mention that the physical paper has enormous overhead costs. Unionized work force, with most having some kind of ‘lifetime guarantees’ (that incidentally, were all re-worked, mostly to the benefit of the grandfathered-in members, within the last three years), all (drivers, mailers, pressmen,etc.) making at least 60k base + health+ 401-k, etc. Diesel fuel approaching 4 bucks a gallon, insurance, rent on the distribution warehouses they have all over in the tri-state area, paper costs, etc. etc. etc. Bite the bullet, print 10,000 copies for Manhattan and go on line totally NOW. It’s inevitable anyway, and I think the first major daily to have the balls to do it would get a great jump on the future. Give buyouts to the mostly boomer production work force, run one press at College Point. Personally, I think Sulz, Jr can’t do it while Sulz, Sr is still with us……………………
maybe compete with AM NY by distributing a free paper with just top stories from metro section + maybe 1-2 stories from other sections.don’t know the economics but no-how can they allow those free papers to eat their lunch if there is a lunch to be had there.
and I should add… free paper should have plenty of teasers to send readers to the website when they get to the office.
I was just thinking about that earlier this week as I declined a free paper on my way into the subway at 8th and 14th.I would have accepted a 8 page quick read version of the NYTFred
What new business model will allow NYT to replicate their $3B in revenues? Print is passe. So they have to go online. Evidently paid subscription models don’t work online. So NYT will have to figure out an advertiser-supported model. My quick guesstimate is that they’ll need perhaps 16.4 million unique visitors per day to get $3B in ad revenue. Can’t get that in Manhattan or NYC or USA. They need to create a news product that appeals to a global audience that’s desired by the largest global brand advertisers.
Irish, that’s a really interesting notion, ditching the print side or seriously sidelining it. Your point about the massive overhead of print production and distribution is well taken. I’d love to hear the actual numbers, but I bet they’re enormous.But I was under the impression that the print side still makes good money. My thought is that, for now, they should maintain print, but reverse the emphasis. They’re perceived as a newspaper company with a web site; they should be doing everything they can to be seen as a (digital) information company, with a legacy newspaper business. Which will pave the way for the newspaper side to fade away as that become appropriate/feasible.As Fred and others have said, they need to go to much greater lengths to involve their readers online. I wrote about this a few weeks ago: The New York Times Should Be a Social Network.
The print side COSTS them money….it costs more than a buck and a quarter to print and distribute the daily paper. Advertising subsidizes the cost. If they had to rely on circulation revenue alone, they’d be dead. Remember, at bottom, a newspaper is an advertising platform, no different except in form from a billboard, or a guy walking around with a sandwich board. Granted, a little more elegant……….
One more point here……we have newsies, guys in the business 30 years, railroad stations in the burbs that are selling 50 copies a day, when they used to sell 300 to 400………..they’re hanging on, waiting……waiting for what? I have an iPhone…….I have the latest edition of the Times in my pocket at all times; the Guardian, too and the WashPost and the Beirut Daily Star and and and…….
Sorry to get back to About.com but I’ve been wondering about its profitability lately.Why it should be so easy for About.com to make a healthy profit on web content while the NYT struggles with dimes for dollars in the digital transition is unclear to me.About.com’s content is not consistently high-quality so what makes is the cash cow that earlier commenters have called it?SEO? Doubtful since SEO really doesn’t amount to much beyond repsecting a few basic rules.Could it be that most of About.com’s cash and profits don’t actually come from its much-touted content sites with guides but rather from its pure ad pages?I’d like to know how many of these so called MFA (made-for-adsense or pay-per-click) pages it actually has and how much of the cash they bring in, because if that’s About.com’s main source of profits then, just like the companies that operate parked domoains and the ones that do ad arbitrage, its cash flow could dry up overnight and the asset the Times paid more than $400 million for would be worth next to nothing.
First, let me stipulate that I have no idea what the NYTimesCo strategy should be going forward. Mea dumb-a.But I’m anxious about your post for two reasons, Fred.1) “The best thing about the NYTimes is their readers.”No disrespect to the NYTimes readers (I am a fanatic one) but I must disagree.The best thing about the NYTimes is their information gathering resources and editorial management.Audiences are fickle, and, with digital media, increasingly easy to aggregrate. Which also means increasingly fickle.But fiercely independent world-class editorial and information gathering and sorting and monitoring and the like are rare indeed.If the Times were to “fix their problems… by leveraging [their readers] as the other half of the newsroom…” and “…let the people who read the paper have a much larger role in the content that gets published,” well, we might end up with something hugely popular and successful but it wouldn’t be the NYTimes.Likely, it would be something like “American Idol.”Mind you, I LOVE “American Idol”! (Never miss an episode.)But it ain’t what I want from the NYTimes.Please? Pretty please?2) Separately, even if the NYTimes did in fact “…let the people who read the paper have a much larger role in the content that gets published” but somehow avoided the extreme case “American Idol” risk, I don’t see how boring obscure arcane stuff like, oh, the initial coverage of the Watergate scandal, would ever see the light of day.I’m not talking about the splashy bigtime news that came out of the last stages of Watergate reporting (e.g. congressional hearings, indictments, firings, resignations and the like.)I’m talking about the months, nay years, of gray boring very low level arcane — but extraordinary and courageous — shoe-leather-burning old-school reporting that went into the Watergate story, the seemingly trivial but relentless day after day journalism that ultimately brought Watergate out into the open.Remember? For a helluva long time, the writers and editors at the Washington Post followed a story that seemed, well, obscure and worthless, and certainly dull for the avst vast majority of readers.But — ignoring their readers and the gravitational pull of what may be popular at any given moment — the Post kept doggedly on.Does that happen in your future scenario?Think that boring obscure stuff shows up on Digg? Or survives if it has to pass some kind of popularity filter?The Roman artistocracy famously kept the mob at bay by giving them “bread and circuses.” IMHO, if in the name of a democratization movement that, in the end is nothing more than giving the people endless digital “bread and circuses,” we tear down the essential modern institutions which safeguard the masses against the temptations of the powers that be, in the end we will be seriously degrading modern democractic society, not improving it.
SteveYour concerns are totally validBut that s why I said ³leveraging [their readers] as the other half of thenewsroom²I think they need to invest in and maintain/improve the newsroom and connectit to the readers and leverage that connection for the benefit of bothThink of what I do with this blog and how the readers make it so muchbetter.Think of this very discussionThat’s what I meanFred