The New York Times: Pink Politics and Red Ink
The New York Times, along with all other print-based city newspapers, is slowly going bankrupt.
Specifically, Craigslist is killing them. Generally, the Web is killing them. They are all doomed. There are no exceptions. They are like mastodons caught in the tar pit. Some of them are sinking faster than others, but all of them are sinking.
What is killing them is the loss of advertising revenue in print editions. That is where the money is. That is where the money has always been. To make profits, they have to sell ad space on large pieces of paper -- newsprint. But nobody over age 35 wants to read their pieces of paper anymore. Only old people still hold on to these pieces of paper; nobody under 35 pays any attention. So, advertisers are departing in droves.
The Times has started a paid digital subscription operation. There are people who pay for this, but not nearly enough. In all of its quarterly reports, whatever spin specialist writes them tries to put lipstick on the obvious pig, but the bottom line always says the same thing: losses. Digital ad revenue per subscriber never equals ad revenue per newsprint subscriber.
The liberal press had secured for itself a nice monopoly by the end of the 20th century. That monopoly is not worth much any more. Matt Drudge has vastly more influence nationally than the New York Times does . . . and only three employees.
In the latest article on its quarterly report, the Times admits that the company had a $14 million loss. This had to do with pensions and falling ad revenue. Pensions are inescapable sources of losses. You do not get rid of these. They just keep adding up. The more people you have on your staff, the more people who will retire, and the more people who retire, the greater are your losses. This is not some one-time write-off. This is a permanent condition. This is terminal cancer.
Naturally, the Times wants to paint as pretty a picture as it possibly can. So, we read this: "But digital subscriptions continued to show solid growth, the company said Thursday, and digital advertising grew at a double-digit pace." The newspaper added 47,000 new digital subscribers, for a total of 957,000. This is a 20% increase from the first quarter of 2014. This all sounds good. Digital subscriptions generated $46 million in revenue. This is up 14%. This also sounds good.
So, was total revenue up? No, it was down by 1.6%. Total revenue was $394 million. Circulation revenue dropped 1%. They hiked prices to offset this. Usually, it is not a good idea to hike prices when you are losing money.
Here is the killer.
Digital advertising increased 11 percent. But print advertising, which makes up a greater proportion of revenue, at a higher profit margin, dropped 11 percent. Overall advertising revenue was off 5.8 percent.
When advertising revenues are constantly falling, a newspaper is doomed. The only way that it can make up this loss is to cut costs. The New York Times prides itself on having a staff of investigative reporters. There is no way to cut costs significantly, other than to fire more of these people, or else to cut their salaries.
I love this: "We got off to a solid start in early 2015," said Mark Thompson, the company's chief executive, "as our company maintained its digital momentum." But the company also maintained its print edition momentum: downward. Revenues followed.
This is lipstick on a pig. The pig has cancer.
The mark of a dying operation is its replacement of key senior officers. This is taking place at the Times.
The Times, like most legacy news media organizations, is trying to offset dropping print advertising revenue with increases in digital and other revenue. It recently promoted Kinsey Wilson to executive vice president, product and technology, to oversee strategy and innovation, and Meredith Kopit Levien to chief revenue officer, overseeing the generation of advertising and subscription revenue.
Any time that a firm gets a brand-new person to oversee strategy and innovation, this means that the person who had been running this operation before has either failed, quit, or died. A firm does not voluntarily get rid of a successful person in strategy and innovation. The replacement sends a message: the previous guy's strategy and innovation produced losses, so they dumped him. I do not know who he was, but if he had been any good, he would not have been replaced.
The other replacement is the person in charge of advertising revenue. This is the heart, mind, and soul of the whole operation. If the previous guy blew it, why are we to believe that the new person is going to be successful?
Here is a newspaper in which the two central officers -- the person in charge of technology, strategy, and innovation, and the person in charge of finances -- got replaced in the same quarter.
This business is floundering, big time. Next, they admit that the previous strategy has gone kaput: the mobile app.
In a call with investors Thursday, company executives reiterated that the NYT Now mobile app would change from subscription to free next month, saying they felt it might be a more successful proposition in terms of broadening The Times's audience.
In other words, they did not know what they were doing before, so the new strategy is to give it away. How will they make any money by giving it away? They have no idea. "Now, Mr. Thompson said, to build an audience before seeking to monetize a product." So far, the Times is not making a profit. It has not found a way to make a profit in the digital age. The newspaper, like that mastodon, is sinking into the digital tar pit. The article ends with this:
On Wednesday, The Times announced that Clifford J. Levy, a Pulitzer-prize-winning reporter and one of the architects of the NYT Now mobile app, would join the newspaper's masthead as an assistant editor, to oversee the presentation of the report on all digital platforms.Let me get this straight. He won a Pulitzer Prize, so they are not going to let him write articles from now on. Instead, they are going to put them in charge of reporting, not to the public, but to management, regarding all digital platforms.
What is his experience in digital platforms? He was in charge of the mobile app project that charged money. That strategy just got scrapped. It did not work. So, one of the men who devised it is now being put in charge of reporting on all the other digital platforms.
This pig needs a lot of lipstick.