The New York Times Company is certainly to blame. The bigger villain, though, is Wall Street and its unrealistic profit demands.
BY DAN KENNEDY
INSIDE THE CAVERNOUS Dorchester headquarters of the Boston Globe, word that the economic squeeze was about to go from bad to worse came in early April, in the form of a webcast over the New York Times Company’s corporate intranet. Starring in the live video feed were the Times Company’s top two officials, chairman Arthur Sulzberger Jr. and president Russell Lewis.
Sulzberger and Lewis’s message was unpleasant and to the point. Advertising revenue was down substantially. Newsprint prices were up. The economy was softening. And the Times Company’s newspapers — including the Globe, the Worcester Telegram & Gazette, and the Times itself — would soon be employing fewer people.
“They looked like they had proctologists bent over behind them giving them exams,” quips a staff member who was on hand for the viewing.
The goal, Sulzberger and Lewis said, was to reduce staff through voluntary buyouts — that is, financial incentives aimed at persuading veteran employees to retire early. But Globe publisher Richard Gilman refused to rule out layoffs if the staff-reduction targets couldn’t be met.
As the June 15 buyout deadline approaches, the worst-case scenario appears to be receding. Management sent offers to about 800 of the Globe’s more than 2000 employees — everyone with 10 or more years of experience, from editorial to the pressroom to the advertising department. Though the paper has not publicly announced how many employees need to take the buyout in order to avoid layoffs, Gilman — in two interviews with the Phoenix during the past week — said the 200 to 250 that’s being bandied about on the rumor mill is “way on the high side.” Both Gilman and editor Matt Storin say they now believe layoffs will not be necessary.
But though the incredible shrinking newsroom has led to more than the usual amount of hand-wringing and head-shaking at 135 Morrissey Boulevard, it is only a small part of some wrenching changes that are affecting not just the Globe, but the newspaper business as a whole.
The newspaper industry is a cyclical one. And there’s no doubt that, so far, it’s having a phenomenally bad year. At the Globe and the Telegram & Gazette (the Times Company reports those two papers’ financial results together, as the New England Newspaper Group), ad revenues were down 12.1 percent through April 30 when compared with the first four months of 2000 — and it’s been getting progressively worse, with April’s revenues in isolation down a heart-stopping 20.9 percent from last year.
The Globe’s numbers are not atypical of what’s going on nationally, says newspaper analyst John Morton, who calls the downturn “the sharpest decline in newspaper advertising in recent memory” — steeper, even, than the advertising recession of the early 1990s, though Morton is hopeful the current slump will not last as long. To make things worse, newsprint costs are up about 20 percent over last year.
But the problem isn’t that newspapers are losing money — far from it. Rather, the problem is that most of our largest and most important metropolitan newspapers are now owned by huge, publicly traded companies whose investors have become addicted to profit margins of 20 percent and more. Thus, the Globe, like every other publicly owned newspaper, is reducing its work force, shrinking its news hole, and slashing sections — not to avoid losing money, but to keep giving Times Company stockholders the high margins they demand.
“Wall Street is unsentimental about the newspaper business,” says Morton. “They only care about what happens this quarter or this year.” Thus, paper after paper (not to mention broadcast and cable news organizations, which have also been hit by the advertising drop-off) has embarked on downsizing crusades in the past few months. Indeed, to scan Jim Romenesko’s MediaNews.org site these days is to encounter one tale of woe after another, as layoffs and other cutbacks roil the industry.
New Yorker media writer Ken Auletta, a frequent chronicler of the Times Company, says cutbacks have to be made when ad revenues are declining — “otherwise you lose your shirt.” But, he adds, “the culture that’s increasingly infecting journalism is that we have to worry more about Wall Street than we do about journalism.”
Even the Times Company, whose voting stock is controlled by the Sulzberger family rather than outside investors, can’t risk pissing off Wall Street. Otherwise, its stock price will plummet and it won’t be able to raise the money it needs to invest in its own future.
The downsizing moves at the Globe have been startling — the most serious being the recent decision to fold the stand-alone Sunday Books section into Focus, slashing Books from four pages to three and Focus from five pages to two. Other moves have included the elimination of the Sunday New England and Home & Garden pages, and the pending disappearance — slated for later this month — of New Hampshire Weekly, a Sunday supplement of long standing.
State House bureau chief Frank Phillips, one of the Globe’s most respected reporters, accuses the Times Company of engaging in “Wall Street journalism” by squeezing profits out of the Globe even during an economic downturn. Phillips says that during bad times the Taylor family — who owned the Globe for more than 120 years before selling out in 1993 — would operate the paper at a lower profit margin, or even a loss, rather than let the Globe wither.
“There are a number of us who came into journalism in the ’70s and ’80s when the Globe was a great newspaper. And it makes us very sad to see the New York Times Company diminish the newspaper,” says Phillips.
And Phillips makes it clear where he believes the blame lies. Of Storin, he says, “Matt’s a real newsman, but I think it’s beyond his control. It’s New York. When you’re told by your boss that you’ve got to cut back, you’ve got to do it. It’s sad to see, and I think the New York Times Company and Mr. Gilman owe us an explanation.”
THE CROWD at the Harvard Faculty Club on May 16 was respectful to the point of reverence. The speaker that evening was Jay Harris, who, as publisher of the San Jose Mercury News, had been one of the highest-ranking African-Americans in the newspaper business. Had been, that is, until earlier this year, when he resigned rather than accede to Knight Ridder chairman Tony Ridder’s demands to cut the Mercury’s budget so drastically that, in Harris’s view, it would have seriously harmed his paper’s news-gathering mission.
“News and readers’ interests do not contract with declining advertising,” Harris told the Harvard crowd, guests of the Kennedy School’s Joan Shorenstein Center on the Press, Politics, and Public Policy. “Nor,” he added, “does our responsibility to the public get smaller as revenue declines or newsprint becomes more expensive. That is where the balancing act comes in. It is in times such as these, when tough choices are made, that a company’s core values and priorities are evident; and character, courage, and vision are required of leaders.”
For all Harris’s lofty rhetoric, his most specific proposal — a blue-ribbon commission, possibly to be chaired by former White House chief of staff Leon Panetta — was underwhelming. But that didn’t detract from the seriousness of his concerns.
Among those listening and applauding that evening were a handful of the Globe’s top editors, including Matt Storin, editorial-page editor Renée Loth, and deputy managing editor Ben Bradlee Jr. No doubt Harris’s speech gave them plenty to think about.
The New York Times Company’s ultimate intentions for the Globe have been the subject of intense speculation in Boston since 1993, when then–Globe publisher William Taylor announced the paper was being sold for a stunning $1.1 billion, half the Times Company’s market value. As part of the deal, Taylor was able to negotiate five-year contracts for the Globe’s top management, which postponed the day of reckoning. When Taylor retired and handed off the publisher’s reins to his second cousin Benjamin Taylor in 1997, it appeared that the Sulzbergers were comfortable with Taylor management well into the foreseeable future.
The foreseeable future ended in July 1999. Reportedly disturbed by Taylor’s indifferent management style during a difficult period of falling circulation and ad revenue, Times Company chairman Arthur Sulzberger Jr. summarily removed Taylor and replaced him with Richard Gilman, a veteran Times Company executive who had specialized in circulation and internal operations. It was a shocking move, with Times Company–watchers saying that Sulzberger’s father, the courtly Arthur “Punch” Sulzberger, never would have acted so coldly.
Then again, it was around the same time that Arthur Jr. dismissed his cousin and best friend, Dan Cohen, as senior vice-president of advertising at the Times. Cohen's tenure had reportedly been a troubled one. Even so, his departure sent a clear signal that this new breed of Sulzberger was not about to let perceived problems fester. In such an environment, Ben Taylor never had a chance. He lingered for a few months in the largely ceremonial position of Globe chairman before moving on.
(Earlier this year, Bill Taylor, through a spokeswoman, declined a written request for an interview to talk about the way the Times Company has managed the Globe. Ben Taylor did not respond to a telephone request for an interview. And there’s no question that, despite relinquishing the reins of power, the Taylors have enjoyed an enriching relationship with the Sulzbergers. The sale made Bill Taylor, Ben Taylor, and other family members major Times Company stockholders. As late as 2000, Ben Taylor was listed as controlling 5.1 percent of Times Company shares on behalf of the “Globe Voting Trust.” Taylor’s name does not appear in the 2001 proxy statement, which means the trust has sold enough shares that it no longer controls at least 5 percent of the outstanding stock.)
Gilman’s style has been decidedly low-key. He quietly signaled that he would keep Storin as his editor. Unlike Ben Taylor — a newsman who rose to become the Globe’s executive editor before moving over to the business side — Gilman is not a regular presence in the newsroom. Changes were introduced in the paper, but not of the dramatic or sexy sort. The West Weekly Sunday supplement was re-christened Globe West, beefed up with a new cadre of reporters who make less money than regular staffers, and published on Thursdays as well as Sundays. (The other regional weeklies — Northwest, North, South, and City — are supposed to undergo the same metamorphosis at some point, a goal Gilman says he hasn’t abandoned despite the recent downsizing.) Coverage of technology and biotechnology was increased, reflecting Gilman’s belief that the Globe should “excel where Boston excels.” The At Home section was replaced with the expanded, advertiser-friendly Life at Home. The drop-off in help-wanted ads was addressed through the introduction of the BostonWorks section and the BostonWorks.com Web site. In response to the rise in newsprint prices, Gilman — following the lead of most papers nationally, though not the Times itself — trimmed an inch off the Globe’s width. A redesign was introduced, criticized by some as too suburban-looking, but to my eyes, at least, a more readable improvement.
But being publisher is a lot easier when times are good than when things go sour. The downturn started last fall. A few newsroom positions were cut through a limited buyout program, the most prominent departee being Gerard O’Neill, the long-time editor of the Spotlight Team. Changes were made in the front office as well. Executive vice-president Stephen Taylor, the last member of his family to work at the paper, left. President William Huff departed to pursue the proverbial “other opportunities and interests,” and was replaced by veteran Globe executive Richard Daniels, a local product who’s a graduate of Boston Latin School, Northeastern, and Boston University. And the economy kept getting worse.
“It’s like A Tale of Two Cities,” says a newsroom source who’s sympathetic to Gilman. “The first year was great. The second year everything’s in the shitter.”
OF THE cuts that have been made so far, the most egregious have been the Focus/Books amalgamation and the elimination of New Hampshire Weekly. Focus — a Sunday compilation of analysis, opinion, and review — was the Globe’s equivalent of the Times’ Week in Review section, or the Washington Post’s Outlook. Focus may not have kicked ass every week (guess what: Week in Review doesn’t kick ass every week), but there was a level of seriousness and importance to it that the Globe shouldn’t have diminished, especially in an intellectual and cultural center such as Boston.
“I was really kind of shocked to see that,” says Atlantic Monthly senior editor Jack Beatty. “That had always been a pretty classy part of the paper, I thought.” Bill Fowler, director of the Massachusetts Historical Society, says he was impressed by Gilman when he met him in person, finding him to be engaged and a good listener. But Fowler says he was stunned by the downsizing of Focus and Books, commenting, “It’s the intellectual heart of the newspaper. It’s kind of the Herald-ization of the Globe, I guess.”
If Focus/Books represents a diminishment of the high end, then the pending elimination of New Hampshire Weekly is a retreat from the very sort of on-the-ground local reporting that newspaper-industry surveys show readers most want.
Issue Date: June 7-14, 2001