Stop the Presses

Illustration by Nana Rausch

In a week’s time, the New York Times Company will report another dismal quarter, one that will show decreased cash flow and total chaos in the New England region (thank you, Boston Globe) and reflect the admission, however tacit, that the company, despite recent deep job cuts, still has too many mouths to feed. Oh, the Times Company’s management, chairman Arthur Sulzberger Jr. and CEO Janet Robinson, will attempt to put a smiley-face on the numbers, in the same way that some editor wrote TIMES COMPANY REPORTS MIXED AD RESULTS when the company preannounced abysmal first-quarter results a couple of weeks ago. If it hadn’t been the Times but a rival operation (and if the writer hadn’t aspired to continue to work at the Times), the headline would have read NEW YORK TIMES REPORTS QUARTER SUBSTANTIALLY BELOW EXPECTATIONS, BLAMES EVERY DIVISION SAVE ONLINE AND REAL-ESTATE ADS. Alas, that would be a far more honest depiction of the Gray Lady’s dire situation than what the company is apparently willing to offer its Business-section readers.

Yet, there’s hope. Hope from an ironic source, but hope nonetheless. This week, the Times will drop its stock-market tables, the hallowed small-agate-type section that used to be the mainstay of every newspaper that aspired to have a legit business section. The move, which follows similar initiatives by some other majors, including the Los Angeles Times, is meant to save newsprint costs while simultaneously driving traffic to the Times’ excellent Website. You can’t miss the logic: In a world where stocks trade around the clock and the closing price is pretty meaningless, static stock tables don’t cut it anymore, especially when the Web allows for live pricing. Plus, who cares about all of those stocks; you only care about the ones you already own or want to buy or sell. Just plug those into any one of the dozens of free portfolio trackers out there; set youre-mail, cell phone, or BlackBerry for instant alerts; and you just about have the same tools as I had when I ran my multiple-hundred-million-dollar hedge fund during the previous decade. These pages are deadweight; they generate no ads and can’t pay the freight.

One could be tempted to write off the whole New York Times as a similar dinosaur. If all we care about is what we want to customize, who needs all the other filler? Why not preselect everything we need from the Times via Google and be done with the paper entirely? While we’re at it, why not write the obituary of the whole company? After all, it’s been the worst-performing newspaper stock in America for the past five years. The stock’s down 30 percent in the last year and 50 percent from just three years ago. Portfolio managers despise the thing and know that, unlike the just-sold Knight Ridder, the family owners at the Times have created a dual class of stock that makes a takeover simply impossible (the other class has all the voting power). To Wall Street, despite the unassailable brand name, the company’s got a real Sartre thing going, a total Huis Clos: static circulation, uneven ads, and a cost structure that, despite giant cuts to every division save online, can’t be right-sized without gutting the operation. A new generation is hooked on Google, and that $100 billion information-accessing behemoth has cut into the value of every bit of intellectual property produced by the Times’ vaunted newsroom.

There’s one way out of this mess for the Times. It is a bold, gutsy, and, some would say, foolish way, at least initially: The Times—here’s the irony—should go all-digital. That’s right. It should abandon newsprint and force everyone to the Web. It should make a stand against Google, using its division—something with real growth, and which is actually working out despite the $410 million in debt taken down to buy the thing—to lead the way. Maybe it should even take the revolutionary step of blocking Google from accessing its content, something no one else is willing to do. Or maybe it should at least say, “This is the deal: You want our stuff, you must share much more with us than you are willing to share with others.” It is worth it to preserve value for the future, to make it so our kids don’t think, Let me go to Google for all the news that’s fit to print. Heck, in another couple of years they won’t even know that the New York Times exists as anything but private-label news source for an Internet portal.

The Sulzbergers know what has to happen. Why delay the inevitable? C’mon, make the move!

Okay, don’t dismiss this out of hand, especially those of you who love the hard copy. The Times needn’t change overnight. But the stock-table deletion may be a fantastic template for the paper (and all papers); the Web is not just better for stock quotes, it is better for everything. Web ad rates are soaring, the growth on the Web is staggering—the only impediment to more Times on the Web is, frankly, psychological: a fear of destroying a legacy business, a fear that has no place in a world where the Times is worth only $3.7 billion and Google nearly 30 times that. The idea that cutting down huge Canadian trees and shipping giant wheels of newsprint south so it can be made into antediluvian broadsheets delivered door-to-door by expensive carriers is, alas, positively uneconomical, if not totally insane, in an era when anyone younger than 30 doesn’t want the thing in that package. The next generation wants it on PCs, they want it on Treos, they want it on iPods, for Heaven’s sake, but certainly not on newsprint.

Now, there are segments of this idea that don’t work yet. The Arts section generates big money with display ads. And Travel and Real Estate still make sense, but I don’t think they will for long, what with the proliferation of easy-to-use book-’em-on-site travel competitors, and in a world where the vast majority of home buyers now start their search on the Web. It’s the sellers that keep real-estate sections alive, and the real-estate ad numbers are up now because sellers are struggling with too much inventory in the region (a euphemism for the fact that homes aren’t selling that well anymore). I think that real-estate ads, as well as most classifieds, will go away as soon as Google rolls out its local editions of such things. Why pay for a full day’s listing when you can advertise on the Web for a fraction of the cost because you can take the ad down the moment the car, apartment, or summer home gets bought or rented? It is up to the Times to make a stand, now, to preserve the future of all of these sections before they are taken away by the local Google initiatives that must come for Google to keep its market cap growing and its stock price high.

Given the Times Company’s capital structure—notably the gigantic and soon-to-be-downgraded debt position that the company currently has, courtesy of ill-fated buybacks (most of the stock was purchased at much higher levels) and the big buy—a radical shift to the Web could be fiscally impossible. But the brand itself, by near-universal consensus, is worth a ton more than is reflected by the company’s stock price. The family’s insulated structure may not allow it to cede full control, but 49 percent of the company could be sold for several billion dollars to help the company make the transition to being the first digital enterprise that used to be all-print. Then it would be positioned to make itself the ultimate news-and-information portal, challenging Google at its own game.

Before dismissing this outrageous proposal, however, consider the future for this company as well as all newspapers. The whole contingent gets valued as a wasting asset, where the worth will be smaller each year, and the only real buyers are the other companies themselves. That endgame runs out, eventually, too, because the McClatchys of the world, the buyer of Knight Ridder, have only so much firepower. Why not seize the moment, rather than waiting for the inevitable oblivion that all newspapers seem to be headed into? After all, how long can you just hope for a cyclical recovery in ads, as the New York Times has been praying for the last decade, when the economy has already boomed around it and is now facing more bustlike conditions? Endless declines in earnings estimates await the company, so what is the point of maintaining the status quo?

I am sure the company will laugh at this proposal. But consider how, in a very short time, its division, despite its 1 percent of revenues, now generates 3 percent of profits. Is there any real question what the driver will be ten years from now? Why not just jump it and become the international paper of record, rather than just a cumbersome local paper with some national brand? The Times could become, say, the No. 1 news source in China.So, when you see the tables gone and you hear about the dismal earnings, remember, it doesn’t have to be this way. The Sulzbergers all know what has to happen. Why delay the inevitable? Digital’s not the way of the future; it’s already the present. Come on, Times , make the move!

James J. Cramer is co-founder of He often buys and sells securities that are the subject of his columns and articles, both before and after they are published, and the positions he takes may change at any time. At the time of this writing, he owned Halliburton and Altria.


Stop the Presses