Why The New York Times Company Will Never Be Great Again

The New York TimesYou're reading this online. Remember that.

Shares of New York Times (NYT) have been floundering in the single digits since early March. The publisher hasn't dished out a dividend in three years. Revenue has been falling every year since 2006.

New York Times is a survivor, but it's bleeding internally.

It's in fire-sale mode, unloading 16 of its smaller regional newspapers last week for a mere $143 million payday. It may seem like welcome money for a company that can use the focus and breathing room, but this is the same company that's shelling out more than $15 million in severance, consulting fees, and accrued pension benefits after CEO Janet Robinson unceremoniously stepped down last week.

Isn't that a whole lot of money for a company that saw its stock shed roughly 80% of its value during her seven years at the helm? Then again, I guess it's true: The last of the well-paying jobs in traditional journalism is to fail at the top of New York Times.

All the Bad News That's Fit to Print

Streaming the documentary Page One: Inside the New York Times earlier this month helped me put faces and personalities to the bylines that have helped distinguish the namesake newspaper from the regional reads that have literally stopped the lesser presses. The documentary details the modern struggles of the daily as it faces layoffs, fading circulation rates, and a world where WikiLeaks can scoop the pros and cyberspace can level the playing field.

It can take weeks for an investigative reporter to file a single important story. It then takes minutes for a hobbyist blogger -- or seconds for a Twitter user -- to break it down and benefit from the initial research.

Newspapers have obviously embraced the immediate nature of the Internet to get their stories across quickly and distributed widely. However, websites aren't made to support massive newsrooms and layers of overhead.

My hometown paper -- McClatchy's (MNI) Miami Herald -- recently sold its huge waterfront digs to an Asian casino operator. The arrangement calls for McClatchy to be paid a tidy sum and operate rent-free for the next two years. The building will then be replaced by a giant resort, with whatever is left of the publication setting up camp elsewhere.

A Groupon deal last week offered a yearlong subscription to the digital edition of The Miami Herald for a mere $9. Nine bucks for an entire year? Can the Internet really be a sustainable model for traditional publishers?

In an embarrassing gaffe last week, The New York Times accidentally sent out an email to subscribers who had recently cancelled, offering them a deal to come back at a 50% discount for the next 16 weeks. Unfortunately, a promotional missive intended for 300 people was circulated to 8.6 million people on its email list. Forget the nature of the blunder. Now everyone knows that cancelling the paper is the best way to get a marked-down offer -- and that's even if they will still want it.

Burying the Lead -- and the Publishers

Newspaper companies are trying.

Rupert Murdoch made a bold move in launching the iPad-centric magazine The Daily early last year. Murdoch proclaimed that it would only take a modest circulation of 500,000 readers paying $40 a year for access to the original digital publication.

Well? A few months ago, an ad executive told Bloomberg that Murdoch's ambitious foray into digital had only corralled 120,000 premium readers.

The New York Times resorted to a paywall last year. After consuming 20 ad-supported articles for free in any given month, folks hoping to access more New York Times articles will have to shell out between $15 and $35 a month.

No one should be surprised if these efforts flop. The tastemakers on Facebook and Twitter will just link to similar stories elsewhere, and others will be the ones benefiting from the viral traffic.

Ink About It

The Internet is the ultimate frenemy for newspaper publishers, though it's really more of an enemy than a friend at this point.

Let's think about the newspaper model, in which subscriptions and print advertising have historically provided the lion's share of a publisher's revenue.

The Internet has plenty of sources of free news, naturally available well ahead of a daily print edition that was haphazardly tossed into your rosebushes. Why subscribe? Local newspapers will obviously break a lot of material news, but that gets disseminated and regurgitated quickly as it happens.

Now we get to advertisers. Who is still paying up for print ads? Google (GOOG) offers marketers the ability to pinpoint specific users and pay only for generated leads in an immediately accountable platform. Can a regional newspaper do that? The same automakers and travel companies that used to buy ad blocks in morning dailies are now finding it more effective to get their messages across through their own websites.

It doesn't get any better when we turn to individuals with something to advertise. Craigslist killed classifieds. Free dating sites including OK Cupid and Plenty of Fish killed personals. Monster Worldwide's (MWW) Monster.com and HotJobs are doing a better job of matching the hiring with the unemployed than papers ever will.

The one thing working in New York Times' favor right now is that it is still profitable. Analysts see a profit of $0.62 a share in 2011, though that's well short of the $0.82 a share it generated in earnings a year earlier. McClatchy and USA Today parent Gannett (GCI) are also eyeing lower net income in 2011.

New York Times may be good enough to be the last publisher left standing after the next few years of logical evolution, but it doesn't mean that its knees won't be shaking.

There will always be a need for eye-opening investigative reporting and journalism that easily surpasses what I'm doing in this slightly mean-spirited column. The means of delivery will evolve, making it possible to continue once the industry shakes its doomed and bulky infrastructure. However, for mainstream audiences, this is good enough.

After all, you're reading this online, right?

Longtime Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article. The Motley Fool owns shares of Google. Motley Fool newsletter services have recommended buying shares of Google.



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16 Comments

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spynewz007

The old journalism adage: "Don't kill the messenger" remains as true as it ever was/is. The New York Times despite its problems remains one of the last true bastions of good old-fashioned shoe-leather journalism, but Big Business types (whose ONLY interest continues to be: "How can we reap the highest profits possible?") and world financial sectors don't like looking at themselves in the mirror--so Corpate America/Global interests do all they can to take control in crafting the message for bigger profit--the average or struggling working class Joe/Jane be damned!

Thank God for The New York Times!!

January 04 2012 at 3:18 PM Report abuse rate up rate down Reply
chris1011

# 2.08 "We support the definition of manure as a natural fertilizer."

That sounds pretty reasonable, kind of like a definition of apple pie
as a dessert that contains apples, until one knows what it means.

It means "We support the right of farmers to dump unlimited quantities
of animal manure into rivers, streams, and lakes, which is why we also
pledge to abolish the Environmental Protection Agency."

I think we all know that no "natural" substance could possibly be
harmful to our waterways, right?

Years ago I saw a TV segment on Iowa politics. A farmer said "Iowa will
vote Democratic when the Methodists recognize the Pope." Iowa chose
Obama over McCain by 10 points. Welcome to Iowa, your Holiness.

January 04 2012 at 1:20 PM Report abuse rate up rate down Reply
chris1011

Want to know what Iowa GOP voters really believe in?

A few "Statement of Principles" from the Iowa Republican Platform:


# 2.08 We support the definition of manure as a natural fertilizer.


# 3.16 We call for the repeal of all mandatory minimum wage laws.


#4.27 We believe that Intelligent Design theory, or Creationism,
should be included with all science instruction along with the
Darwinian theory.


#4.32 We believe that voluntary teacher or student led prayer shall
not be restricted in public schools. The use of the Bible as a
textbook should be allowed.


#4.40 We oppose the teaching of homosexual behavior as a normal or
acceptable lifestyle in our public schools.


#4.42 We oppose the “Bullying Law”.


#5.04 We believe that claims of human caused global warming are based
on fraudulent, inaccurate information.


#7.06 We oppose any effort to implement Islamic Shariah law in this
country.


#7.27 We oppose unconstitutional “hate crime” laws.


#11.08 We support “Don’t Ask Don’t Tell.”


Yes, you have just entered the Twilight Zone...

January 04 2012 at 1:17 PM Report abuse rate up rate down Reply
1 reply to chris1011's comment
chris1011

Conservatives used to be responsible
people who worked for the betterment of the nation. Now we have Neo-
Conservatives, who work mainly for the betterment of large
corporations, who have zero moral attachment to this country any more
since most of them are multi-nationals. These corporations hide their
profits off-shore and pay no taxes on profits made here in the U.S.,
leaving the middle class to pick up their share of the burden. More
and more middle class wages are falling, federal taxes paid are at
historic lows, federal income versus GDP is lowest ever, and the debt
keeps rising as a result.

They also seem to have zero interest in real conservative policies,
that of conserving the environment, which if depleted or destroyed
cannot be replaced. House Republicans voted 191 times last year to
undermine existing environmental protections or reject Democratic
efforts to strengthen them — even killing off a modest regulation
requiring more energy efficient light bulbs — and in general have
vowed to resist new energy strategies or do anything at all that might
disturb their patrons in the fossil fuel industries.

January 04 2012 at 1:18 PM Report abuse rate up rate down Reply
lenguss

It's ironic that Munarriz failed to mention the primary reasons for the NYT decline; lousy jouralism, fake stories and a bias against half the country and for the most wild-eyed Democrats in history. Once the NYT was brave and a leader; now it is a sorry mouthpiece for the Democratic party. It is not true that all print newspapers are failing. Try the WSJ.

January 04 2012 at 1:13 PM Report abuse rate up rate down Reply
fosterandco2000

Rick:

You miss the most important point. The only point that in the end that matters is Content, Content, Content. 20 years of "Journalism" not "reporting", has doomed the NYT. Look at the WSJ, Lots of good reporting, good content and they are doing just fine.

January 04 2012 at 1:13 PM Report abuse rate up rate down Reply
rickpetersonms

The NYT should give up on print and go 100% digital, downsize and try to hold onto it's far-left base. It has become irrelavent to the Average American.

January 04 2012 at 12:43 PM Report abuse rate up rate down Reply
1 reply to rickpetersonms's comment
chris1011

"The modern conservati­ve is engaged in one of man's oldest exercises in moral philosophy­; that is, the search for a superior moral justificat­ion for selfishnes­s." -- John Kenneth Galbraith

January 04 2012 at 1:12 PM Report abuse rate up rate down Reply
itacurubi

There are only two newspaperrs worth routinely reading in the United States, NYTimes and WaPo.

January 04 2012 at 12:16 PM Report abuse rate up rate down Reply
1 reply to itacurubi's comment
chris1011

I agree completely

January 04 2012 at 1:12 PM Report abuse rate up rate down Reply
Marco

Yo, dogg, page 22 of the NYT 10k. The flagship newspaper has reversed dozens of quarters of shriking revenue at its flagship paper. It is now growing revenue at its flagship paper. Hear that? GROWING revenue. The losses in print advertising were met and exceeeded by growth in circulation. Hmmmmmm... I wonder where that circulation growth cane from? Perhaps something to do with 400k new online subscribers? As paywalls go up at the Boston paper and elsewhere, i think people will be eating crow.

January 04 2012 at 11:50 AM Report abuse rate up rate down Reply
drholcomb

The NY Times is liberal to the core. I would walk a mile every morning to read The Wall Street Journal, but they deliver it to my door in Florida promptly every morning but Sunday and certain Holidays. It was, and is, the liberal press that gave an untested, unvetted Senator from Illinois a "free pass" in 2008. The liberal press was too busy flying to Alaska to go through Sarah Palin's garbage to look into the most basic facts about Barry Sotero. I will never forget the liberal MainStream Media for its egregious gaff at our Country's expense. I am glad to see The NY Times, as the epitome of the MSM, hemorrhaging.

January 04 2012 at 11:21 AM Report abuse +2 rate up rate down Reply
1 reply to drholcomb's comment
itacurubi

THE WSJ! Why bother even reading? You already know its opinion. It's not as if they have a Krugman AND a Brooks. The WSJ was never a serrious general newspaper, though it was a middling business and economics one; it is now neither.

January 04 2012 at 12:14 PM Report abuse rate up rate down Reply
veteranspost

Remember when they decided to print America's National Security Secrets? Remember when they allowed their writers to print false stories? Remember when they were supporting the right for that church group to defile American Military Dead at Grave-side? Remember when they printed the original invasion plan into Iraq, even though they were sworn to secrecy by Gen Swartzkoff? Remember when they felt 'Cheated' because they were given false information because the General wanted to 'Prevent' our Military from slaughtered? YES... Many other publications took higher ground and 'Refused' to print such things. I can only hope that one day, some true Americans could print (even on line) the names, address's and phone numbers of Every person higher than the title of lackey who was responsible for this shame brought upon an Icon of the newspaper world!

January 04 2012 at 11:13 AM Report abuse +2 rate up rate down Reply
1 reply to veteranspost's comment
rich

You said it so well my only comment is WELL DONE and THANK YOU!

January 04 2012 at 12:14 PM Report abuse rate up rate down Reply