With The Washington Post sold, will New York Times be next?

August 6, 2013

One is a venerable family-owned pillar of the national media establishment. So is the other.

One has a storied history of investigative reporting and a reputation for journalistic excellence. So does the other.

One was just sold to a baron of the Internet age.

How long before the other one is?

With The Washington Post’s sale to Amazon.com founder Jeffrey P. Bezos announced on Monday, the continued independence of the New York Times has been set in sharp relief.

The Times remains one of the few major media organizations still under the control of the family that has been its longtime steward — in this case, the heirs of Adolph Ochs, who coined the paper’s slogan, “All the News That’s Fit to Print.” It is adamantly not for sale; chief executive Arthur Sulzberger Jr., Ochs’s great-grandson, has said so repeatedly and recently. But that hasn’t stopped periodic rumors to the contrary. Among the Times’ alleged paramours: New York Mayor Michael R. Bloomberg (I), a new-media billionaire like Bezos.

A sale of The Post was considered unthinkable, too, until Monday.

“I can see scenarios where it could happen,” said Rick Edmonds, a media-business analyst for the Poynter Institute, a school for professional journalists. “The Times has a lot of strengths. But I think there is some pressure there, too.”

Most obvious are the external ones. The Times has been battered by the same economic forces that drove the Graham family and The Washington Post Co. board to accept Bezos’s $250 million offer. Indeed, it may be even more financially vulnerable than The Post.

Whereas The Post has been owned by a diversified media and education company that could absorb some of the newspaper’s continuing operating losses, the New York Times Co. has been shedding assets that might have cushioned its flagship newspaper. It sold its nine TV stations in 2007, its regional newspaper chain in 2011 and its once-high-flying Web operation, About.com, last summer. Last week, it sold the Boston Globe — the newspaper it had bought for $1.1 billion in 1993 — to John W. Henry, a hedge-fund billionaire who owns the Boston Red Sox, for $70 million.

As a result, the Times Co. owns just two major assets — its famous newspaper and the International Herald Tribune, a global paper that will be rebranded in October as the International New York Times.

While the Times has a formidable presence on the Internet (nytimes.com is among the most popular news sources in the world), it still bears the huge costs of printing and distributing newspapers nationwide every morning. It employs a thousand-strong army of skilled journalists, as well, and has largely resisted the deep cutbacks that have afflicted news organizations everywhere.

In addition to external pressures, Sulzberger probably has some from within. Much like the Washington Post Co., the Times Co. has a dual stock structure that ensures control remains among family members, not public shareholders. Edmonds estimates that two dozen Ochs descendants own these shares. And, he notes, demands for dividends and continued profits have split family-owned newspaper companies before, most recently the Bancroft clan that owned Dow Jones & Co., parent of the Wall Street Journal. Those pressures led the family to sell the company to Rupert Murdoch’s News Corp. in 2008. “It can make newspapers quite vulnerable,” Edmonds said.

Eileen Murphy, a Times spokeswoman, reiterated the company’s intent to remain independent. She said Tuesday that the company sees “lots of potential” to increase advertising and subscription revenue at its remaining papers.

In fact, the Times has been a leader in developing a potentially self-sustaining business model for newspapers in the digital age. Among just a handful of papers, it introduced a digital subscription system, known as a “paywall,” in early 2011. It has since attracted almost 700,000 subscribers who pay $15 to $35 per month (depending on the device used) for unlimited access. In 2012, it achieved a milestone: Subscription revenue exceeded advertising sales, a reversal of traditional newspaper economics.

That is an encouraging sign, not just for the Times, but for newspapers contemplating their own financial predicaments, said Rem Rieder, the former longtime editor of the American Journalism Review.

“It’s not a panacea,” said Rieder, now an editor and columnist at USA Today. “But it’s a significant step forward that has inspired others [including The Post] to take the plunge.”

On the other hand, Rieder points out that it was only four years ago that a cash-short and heavily indebted Times Co. turned to a Mexican billionaire, telecommunications titan Carlos Slim Helú, with its hat in its hand. Slim, one of the world’s richest men, lent the company $250 million at an exorbitant 14 percent interest rate.

In part because of its asset sales, the company has repaid the note. But the episode showed the squeeze that the Gray Lady was under, and its vulnerabilities.

The Times, Rieder said, is “hardly immune to the immense pressures on newspapers in the digital era that impelled the Grahams to sell The Post.”

Paul Farhi is The Washington Post's media reporter.
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