Can Mark Thompson save the New York Times?
The outgoing boss of the BBC leaves a media giant in need of heavy cost-cutting. And now he's about to join another
Stephen Foley is a former Associate Business Editor of The Independent, based in New York. He left in August 2012. In a decade at the paper, he covered personal finance, the UK stock market and the pharmaceuticals industry, and had also been the Business section's share tipster. Between arriving with three suitcases in Manhattan in January 2006 and his departure, he witnessed and reported on a great economic boom turning spectacularly to bust. In March 2009, he was named Business and Finance Journalist of the Year at the British Press Awards.
Thursday 16 August 2012
It is just as well that Mark Thompson's biting days are behind him. American newspapers take a dimmer view of newsroom "hijinks" than the BBC did when its future director-general bit into a junior reporter's arm when he was running the Nine O'Clock News in the late Eighties. One can only imagine the disciplinary uproar that "man bites man" might cause at the stately New York Times, the beacon of liberal newsgathering in the US, which Mr Thompson is going to run.
The British executive has come very far, of course, in the intervening years (and, by the by, he long ago apologised to the hapless employee for the biting, which he said was horseplay, hugely misinterpreted). But as he sets sail for the US, and his new challenges, it seems he may yet again have to bare his teeth. With revenues falling, The New York Times looks in need of the same brand of cost-cutting that Mr Thompson brought to the Beeb.
Mr Thompson was announced late on Tuesday as the new chief executive of The New York Times Company, a post he will take up in November, a few weeks after he hands over the reins at the BBC to George Entwistle.
For watchers of the US newspaper scene, the appointment of a man steeped in news broadcasting, and with no print experience whatsoever on his CV, looks a leftfield appointment to run the Gray Lady. Yet there are more similarities between the BBC and The New York Times than might appear on the surface.
Both have built huge news operations across the world that pride themselves on their objective reporting, while being assailed by outsiders for a perceived liberal bias. Both have a public service mission at their core.
In the case of The New York Times, this is protected by the controlling Ochs-Sulzberger family, whose patriarch bought the title in 1896 and whose scion, Arthur Sulzberger Jnr, is chairman today. Both, in their different ways, have been pioneers on the internet, The New York Times having built by far the richest American newspaper website and a powerful brand that has expanded across the US and now has ambitions internationally.
And both are facing a harsh squeeze on their revenues. Mr Thompson has found £1bn in cuts at the BBC in the past five years, the inevitable response to a freeze on the licence fee that included shifting jobs out of London and forcing reporters to work across more of the broadcaster's platforms.
It is a set of changes that have sent morale at the organisation to an all-time low.
At The New York Times, falling advertising revenues have cancelled out the benefits of introducing a paywall on the website, and its publicly traded shares are bumping along at all-time lows. Yet at the same time, the newsroom is in denial about the need for cuts. Mr Thompson will have his work cut out.
Ed Atorino, analyst at Benchmark Company, who monitors shares in the New York Times Company, is not a fan of the appointment.
"The fact is, he is British and he is not a print guy, he has not worked with the print community, and there are a lot of prima donna reporters at the Times, the cream of the crop. Will he speak their language? Can he have an immediate impact? Running The New York Times is a far cry from running the BBC. He will face a lot of problems with the very strong print unions, he inherits a declining print business, he has to deal with very difficult competitive and economic conditions."
Mr Thompson is one of the few director-generals to have found another major media job on leaving Auntie's warm bosom. He has spent almost his entire career in public broadcasting, and almost all of that at the BBC, with the exception of two years running Channel 4 before ascending to the top job at the Beeb in 2004. As if to reassure the Times newsroom, much was being made yesterday of the fact Mr Thompson still considers himself, foremost, to be a journalist.
Mr Thompson's impending arrival has been greeted with a mix of caution and even optimism in newsroom. The talk from management on Tuesday was not of grim cuts but of the exciting digital future, and the director-general's strong record in moving the BBC online through ventures such as the iPlayer. The fact that the Olympics, streamed in their entirety online, were a triumph for Auntie – in contrast to the terrible reception that NBC's sporadic coverage received in the US – helped boost Mr Thompson's stock here.
"The Times needs to be transformed and people there are more receptive to an outsider than they would have been five years ago," says Reed Phillips, managing director of the media-focused investment bank DeSilva & Phillips. "In fact, the rank and file are actively looking for someone to take charge and to show them the way to future. The company is clearly looking for a change agent, and for a pretty dramatic transformation away from print."
Yet he will have more challenges even than just getting New York Times reporters to strap a video camera to their press hats. Chief among those is whether it is time to stop shrinking.
The parent company has sold off a slew of other assets, including local papers, television interests and a stake in the Boston Red Sox. It is about to sell About.com, a disappointing digital add-on. It still owns the Boston Globe, but a dispute over whether to sell that was one of the factors behind the sudden dismissal of Mr Thompson's predecessor, Janet Robinson, last December. That and the fact that the Ochs-Sulzbergers are no longer getting a dividend.
"My strong sense is that the Sulzberger family is not looking to take big risks," says independent media analyst, Craig Huber, of Huber Research Partners, pouring cold water on those who see Mr Thompson's arrival as heralding a transformation. "Rather they want a good caretaker, someone who will continue to streamline the company and invest back into digital. The priority is to maintain the long term solvency of the flagship paper, to get the digital paywall right, and to manage The New York Times' transition from print to digital."
For years, the family has lived well on the income from dividends, but that stopped in 2009, as the company had a near-death experience brought on by excessive debt (and a splurge on a new building just off New York's Times Square). Some members of the family have been forced to sell shares instead to maintain their lifestyles, stoking a new round of palace intrigue about whether some will eventually push to sell the paper entirely.
Michael Bloomberg, billionaire mayor of New York, waits in the wings for his moment to pounce, but such a sale will have to be over the dead body of Mr Thompson's boss, Arthur Sulzberger.
Navigating such intrigue, and working with Mr Sulzberger, will require as much political skill as negotiating with successive British governments on behalf of the BBC. And no biting, please.
What's the story? Two big-hitters
Key people The director-general is chief executive of the world's largest broadcaster. Mark Thompson will be replaced by George Entwistle, head of the Beeb's television arm. The DG is overseen by the BBC Trust, chaired by Lord Patten.
Ethos Motto is "Nation shall speak peace unto nation". Reithian principles of impartiality and universality remain powerfully entrenched.
Size 23,000 staff. 230m people a week tune into a BBC News programme. BBC Online attracts 43m browsers a week. Annual revenue is £4.1bn.
The New York Times
Key people All roads lead to the descendants of Adolph Ochs, who bought the NYT in 1896. His great-grandson, Arthur Sulzberger Jnr, is chairman. His family still exercises a lot of control.
Ethos Ochs created the slogan "All the news that's fit to print" that still appears on the NYT's masthead. It has struggled to turn its reputation for journalistic excellence into profitability in the digital age.
Size 7,400 employees. Papers include the International Herald Tribune and Boston Globe plus 16 regional titles, eight TV stations and 40 websites. NYT has 1.6m daily sales. Company revenue for 2011 was £1.47bn.
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