New York Times Case Study

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Case 1-2 New York Times

Since 1896, four generations of the Ochs-Sulzberger family have guided The New York Times through wars, recessions, strikes, and innumerable family crises. In 2003, though, Arthur Ochs Sulzberger Jr., the current proprietor, faced what seemed to be a publisher's ultimate test after a loosely supervised young reporter named Jayson Blair was found to have fabricated dozens of stories. The revelations sparked a newsroom rebellion that humiliated Sulzberger into firing Executive Editor Howell Raines. "My heart is breaking," Sulzberger admitted to his staff on the day he showed Raines the door. It turns out, though, that fate was not finished with Arthur Sulzberger, who also is chairman of the newspaper's corporate parent, New York Times Co. (NYT). The strife that convulsed The New York Times's newsroom under the tyrannical Raines has faded under the measured leadership of his successor, Bill Keller, but now its financial performance is lagging. NYT Co.'s stock is trading at about 40, down 25% from its high of 53.80 in mid-2002 and has trailed the shares of many other newspaper companies for a good year and a half. "Their numbers in this recovery are bordering on the abysmal," says Douglas Arthur, Morgan Stanley's (MWD) senior publishing analyst. Meanwhile, the once-Olympian authority of the Times is being eroded not only by its own journalistic screw-ups -- from the Blair scandal to erroneous reports of weapons of mass destruction in Iraq -- but also by profound changes in communications technology and in the U.S. political climate. There are those who contend that the paper has been permanently diminished, along with the rest of what now is dismissively known in some circles as "MSM," mainstream media. "The Roman Empire that was mass media is breaking up, and we are entering an almost-feudal period where there will be many more centers of power and influence," says Orville Schell, dean of the University of California at Berkeley's journalism school. "It's a kind of disaggregation of the molecular structure of the media. The pride that Sulzberger takes in his journalistic legacy is palpable, his knowledge of the Times's august history encyclopedic. Yet "Young Arthur," as he is still known to some at age 53, exudes a wisecracking, live-wire vitality more typical of a founding entrepreneur than of an heir. He began an interview for this article by picking up a big hunk of metal from a conference room table and brandishing it menacingly. "Ask any question you'd like," he growled and then deposited the object in a less obtrusive spot. "It's an award," he added softly. Sulzberger, who succeeded his father as publisher in 1992 and as chairman in 1997, already rescued The New York Times from decline once. With the help of then-CEO Russell T. Lewis, he reinvented the "Gray Lady" by devising a radical solution to the threat of eroding circulation that had imperiled the Times and other big-city dailies for years. Sulzberger changed the paper itself by spending big money to add new sections and a profusion of color illustration. At the same time, he made the Times the first -- and still the only -- metro newspaper in America to broaden its distribution beyond its home city to encompass the entire country. Today, nearly 50% of all subscribers to the weekday Times live somewhere other than Gotham.

The Sulzbergers who preceded him were newspapermen; Arthur Jr., by his own description, is a "platform-agnostic" multimedia man. In the mid-1990s, NYT Co. became one of the first Old Media companies to move into cyberspace. Times reporters also began experimenting with adapting their newspaper stories to another medium new to them -- television. Today, NYTimes.com consistently ranks among the 10 most popular Internet news sites, and New York Times Television is one of the largest independent producers of documentary programming in the U. S. "Within our lifetimes, the distribution of news and information is going to...
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