Why The New York Times Co. Will Still Never Be Great Again
New York Times (NYT) finally has its new CEO, but this doesn't mean its problems are going away.
The newspaper giant's announcement -- revealing that BBC Director General Mark Thompson will step up as the company's next president and CEO come November -- may answer one lingering question, but it doesn't address the litany of lingering doubts when it comes to print journalism in general and New York Times in particular.
Its former CEO left at the end of last year with a golden parachute of severance, consulting fees, and pension benefits topping $15 million to break her fall. Investors weren't impressed. Is Thompson going to get a similar deal that rewards disappointment?
Revenue has been falling every year since 2006, and analysts see the company's top line heading lower again in both 2012 and 2013. What will it take to reverse that bleak trend?
A price hike in January may help in the near term, helping to boost circulation rates for a change, but advertising revenue -- even digital advertising revenue -- declined in New York Times' latest quarter. How long will it take before print subscribers revolt over the increase?
Oh, and it took New York Times eight months to find a new leader for its newspaper company, and it wound up with a British television executive?
Really?
All the News That Fits
New York Times has been on a crash diet. It sold off 16 of its smaller regional newspapers several months ago. It wrote down the goodwill value of About.com in its latest quarter, confirming last week that it's in the process of scaring up a buyer for the website.
Layoffs and asset sales aren't fun, but there's nothing wrong with streamlining operations and focusing on what works. It's something that the company has gotten right.
The company may have seemed more glamorous when it shelled out quarterly dividends or when it had multimedia assets and entertainment properties, but there's something to be said for rallying around its three core publications -- The New York Times, the International Herald Tribune, and The Boston Globe -- and their related online hubs.
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The Digital Divide
There's no arguing that the company owns the class of print and investigative journalism, but we live in a simpleton new media era when hobbyist bloggers, WikiLeaks, and Twitter celebrities break news. Sometimes -- sadly -- a 140-character tweet or a grammar-massacred blog post is good enough for most consumers.
%Poll-77159%So New York Times began an experiment in March of last year by installing tollbooths in cyberspace. It began by limiting readers to 20 free stories at NYTimes.com a month. Encouraged by its ability to drum up premium subscriptions, the company lowered the ceiling to 10 freebie stories a month. Anyone who wants to read more will have to pay up -- or access the site from a different connection.
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Bulls will argue that the company is winning the war. By the end of June, the service had 532,000 paying digital subscribers. That's nothing to scoff at for a pay wall that was only put up 16 months earlier, but is it enough to offset the inevitable print decimation at a company with a cool enterprise value of $1.6 billion?
Fans of the paper's award-wining journalists may seem to be showing unwavering support, but the failure of About.com says it all. The dot-com pioneer set itself apart as an information hub with topic gurus who helped shape online conversations. These days, an eye-catching YouTube thumbnail or trendy hashtag will do the trick when it comes to attraction.
We can lament the declining quality of the tastemakers, but it's amazing what consumers will settle for when something is available for free.
Thompson will have his hands full later this year -- if he's lucky.
Longtime Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article.
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