Cluster Project 2 report on Improving the New York Times

“ All The News That's Fit To Print” Redesigning the newspaper for a more Reliable tomorrow PREPARED FOR: PROFESSOR CARTER DR. KEIFER DR. MATTA PROFESSOR WRIGHT PREPARED BY TEAM 5 PM: DOWNEY, KEVIN IRWIN, SARAH JONES, KRISTOPHER SNYDER, JEFFREY ZAHEDI, REZA The New York Times

Executive Summary Introduction Company and Industry Analysis Recommendation: Advertising Recommendation: Education Future Outlook Recommendation: Internet The New York Times has been known as the pinnacle news source of all United States publishing companies. Delivering first-class news since 1851, The New York Times has created loyal customer base and high brand equity. However, since the turn of the century The New York Times and the publishing industry as a whole, has faced declining circulation and revenue due to the technological wave and the declining economy. The New York Times has been doing many things to boost sales and increase revenue through online capabilities but there is much room for improvement. By implementing a way in which to increase advertising revenue, The Times will gain a higher profit margin and maximize shareholder’s wealth. The New York Times can gain higher advertising revenue by maximizing capacity on their interface for advertisements, decreasing current advertising costs by 10%, and boosting inside sales to enhance client base. Expanding the growth of The New York Times current market is an excellent way to increase sales and circulation. Creating a more proficient way to enhance education and values by utilizing The New York Times paper in education will establish a higher market share and heighten sales. With the installment of a trained sales team, advertisements, and new online features, the use of The New York Times in education will be a must-have entity. The New York Times offers many free user capabilities which in turn has dropped revenue. The NYT website is available anywhere in the world free of charge. This has caused many people to discontinue their printed paper. Creating a NYT insider monthly account, consumers will pay a small fee for access to the full daily newspaper online and have the capability to download the paper as well. The website will still be available on a limited basis for free, however to gain full usability an insider subscription must be purchased. Implementing this feature will maintain high customer relations and boost revenue. The New York Times has a great opportunity to implement strategies to achieve higher revenue while still maintaining high brand equity. Assuring top-notch news in an efficient manner has always been the New York Times first priority. Utilizing these recommendations to increase advertising revenue, amplify market share, and development of an insider account online will maximize net income and shareholders wealth.

Table of Contents Executive Summary…………………….………………………………………….............................................2 Table of Contents………………...…………………………………… ….……………………………………..3 Company Analysis………………..…………………………………………………………………………….………….......4-7 Industry Analysis………………………………………………………………………………………………......8-10 Recommendation 1: Advertisements Advertisement Problems……………………………………………………………………....11-12 Newspaper Advertisement Revenues………………….………………………………….…13 Increasing Advertisement Revenues………………………………………………….…...…14 Recommendation 2: Newspapers in Education Mission Statement……………………………………………………………………………..15-16 Advantages and Problems…………………………………………………………………….17-18 Recommendation and Implementation……………………………………………………....19-20 Recommendation 3: Increasing Internet Revenues Current Offers…………………………………………………………………………………..21-22 Disadvantages for the Online Paper………………………………………………………...23-24 Internet Increases…………………………………………………………………………..…..25 Pay-Per View……………………………………………………………………………………26 Future Outlook…………………………………………………………………………………………………..…27-28 References…………………………………………………………………………………………………….......29-30 Appendices…………………………………………………………………………………………………………31-33 Introduction Company and Industry Analysis Recommendation: Advertising Recommendation: Education Future Outlook Recommendation: Internet

Company Analysis

A Strong and
Growing Audience
One of the leading newspapers in the world (New York Times Company, 2009)
The print edition reaches 4.8 million readers each weekday and 6.3 million on Sunday.
NYTimes.com had 17.9 million unique visitors in the U.S. in 2008 (New York Times,2009)
Strong Market Position
The newspaper had a 50% market share in 2007 , ranking first , in advertising revenue and margins (service, 2008)
The company's strong market position in the newspaper publishing market would provide the company with strong bargaining power.
Competitive Advantages- NYT Mission Statement and Core Purpose “ To enhance society by creating, collecting and distributing HIGH quality news , information and entertainment.” Introduction Company and Industry Analysis Recommendation: Advertising Recommendation: Education Future Outlook Recommendation: Internet Source: Google Images

Competitive Advantages- NYT
Strong and Respected
Brand Name
Ranked SECOND i n the industry
Had the LARGEST circulation of all seven daily newspapers (NYTimes, 2009)
High Quality Content
Highly respected for the quality of its reporting and integrity.
The newspaper achieved fame in the 1970s for its bold investigation of the Watergate Scandal.
Winner of multiple Pulitzer Prizes
Internet revenue has been INCREASING 2% from year to year as part of total company revenue Introduction Company and Industry Analysis Recommendation: Advertising Recommendation: Education Future Outlook Recommendation: Internet
Problems Arising
There is limited advertisement within the website
The Newspapers in Education program is not generating enough revenue
The online paper is FREE and no pay-per-view method now

Segmentation of The New York Times
Revenue is derived from advertising sold in its newspapers and other publications.
Divides advertising into three basic categories:
National, Retail and Classified
Advertising revenue also includes preprints
The New York Times is a standard-size daily and Sunday newspaper, which commenced publication in 1951
The New York Times Media Group The About Group
One of the web's leading producers of online content
One of the top 15 most visited web sites in 2007 (PEJ Rountable,2006)
Has 36 million average monthly unique visitors in the US and 53 million average monthly unique visitors worldwide.
It generates revenues through display advertising relevant to the adjacent content, cost-per-click advertising
The New York Times Media Group is the focus of The New York Times and therefore the company tries to gain the most revenue with this sector
By trying to expand the About.com group it will help differentiate The New York Times franchise as a whole
The New York Times Segmentation Introduction Company and Industry Analysis Recommendation: Advertising Recommendation: Education Future Outlook Recommendation: Internet Source: NYTCO.com

Industry Analysis

The reasons for the slight dip in percentage from 2007 to 2008 could be from a decline in Net Income, or an increase in Sales. Based on The New York Times financial statements, net income has severely declined from 2007 to 2008; from $208.7 to -$57.84 million, causing this decline in Profit Margin. (Jesdanun,,2009) Profit Margin Leverage ( Equity Multiplier ) Gannett News Corp. Industry Analysis The equity multiplier is a way of examining how a company uses debt to finance its assets. A higher equity multiplier signifies the use of more DEBT , and more RISK . Throughout 2008, along with their competitors, The New York Times has significantly decreased their equity , increasing leverage and financial risk. Introduction Company and Industry Analysis Recommendation: Advertising Recommendation: Education Future Outlook Recommendation: Internet Source: Market Watch Source: Market Watch Market Cap (millions) 2007 2008 New York Times 2326 767 Gannett 7940 1440 News Corp. 70000 5810 The overall VALUE of these firms has been DECLINING since 2007. (MetaPrinter,2008)

"Natural societal things are going on," said Steve Lerch, a newspaper advertising buyer for Campbell Mithun of Minneapolis. "You can't take a half-hour to read the newspaper and eat a bowl of cereal in the morning .” People aren't eating cereal anymore, either. I know -- I have General Mills as a client. People are eating yogurt bars on the way in to work.“ (NYTimes,2009)
Newspaper companies are seeing a decline in sales due to the lack of consumers.
Generation Y is not responding well to print due to technological wave.
Due to the updated news of television and the internet, the newspaper is becoming yesterday’s news.
With the fast pace of society people do not have the time to sit down and read the newspaper (Frank Ahrens, 2005 ).
Industry Analysis- SWOT
Strengths
Newspaper is available
online
Strong brand names
Weaknesses
“ Print is Dead”
Baby boomers are not being replaced
The newspaper is bulky
Opportunities
Revenue through promotions and advertisements
Newspapers in Education expansion
Internet Revenue
Threats
Internet capabilities
News broadcasting
“ Free” news through other sources
Digital Video Recording
Introduction Company and Industry Analysis Recommendation: Advertising Recommendation: Education Future Outlook Recommendation: Internet

Recommendation 1: Advertisements and Promotions

Advertising revenues dropped dramatically since 2007 (Jesdanun, 2009)
Fewer corporations buying advertising spots due to economic RECESSION
Classified advertising decline due to lack of automobile and real estate sales
National advertising revenue is accountable for over 50% of total revenue for New York Times Media Group. Focusing more attention to retail and classified will diversify their portfolio and increase total revenue . ( Marketing Charts,2009) Current Advertising Revenue Advertising Distribution Advertising Problems Introduction Company and Industry Analysis Recommendation: Advertising Recommendation: Education Future Outlook Recommendation: Internet Source: NYTCO.com Source: NYTCO.com

Projections show a constant decrease in advertising revenue for Newspaper Corporations
Crucial that the New York Times implements a direct competitive advantage over competitors
"The disruptions of the global economy are affecting all businesses and industries , especially companies, such as ours, that generate a significant portion of their revenues from advertising," -Janet Robinson, chief executive (Jesdanun, 2009) Newspaper Advertising Revenues Introduction Company and Industry Analysis Recommendation: Advertising Recommendation: Education Future Outlook Recommendation: Internet

Increasing Capacity
Allowing more room for advertisements on the home
page while still maintaining effective news segments
allows for optimal advertising spots and consumer
usability. Creating better marketing schemes and
developing the best technique to advertise such as a
‘ text link’ will optimize advertising space and allow
for proficient results.
Recommendation- Increase Advertising Revenue Recommendations
#1 in online hits for print media websites
Increase DEMAND for advertisement
Increase advertising capacity on interface
Allow room on margins for ad space while maintaining strong brand equity
Decrease online advertising costs by 10%
Generate higher client base
Utilize interactive advertising
Visual stimuli will guarantee a high return on advertisement
Enhance inside sales to promote advertisements
Increasing sales calls allows for higher volume of advertisements
“ For over a century, the nation’s most sophisticated readers have trusted The Times for its integrity and sound judgment. And is it the influence that made The Times the most effective vehicle an advertiser can find. Whether you simply want a place a classified ad or you’re an advertising professional overseeing a large campaign, you can expect unparallel results when you advertise in The New York Times.” - The New York Times
Costs involved
Hire additional sales and marketing personnel (refer to app. A)
Redesigning the website
Introduction Company and Industry Analysis Recommendation: Advertising Recommendation: Education Future Outlook Recommendation: Internet

Recommendation 2: Newspaper in Education

"The New York Times is the most comprehensive source available to my global studies students for accessing current international issues. No other source (print or electronic) comes close to The Times. The writing is superb." -- Dr. Robert Kovach, global studies teacher, Schreiber High School, Port Washington, N.Y. Source: New York Times The Foundation maintains a nationwide system of cooperation between newspapers and schools designed to enhance student achievement and appreciation of the First Amendment in a variety of subject areas through the use of newspapers and other media. The Foundation provides resources and training on using newspapers in schools and helps newspapers develop strategic plans for providing NIE services to educators. (Newspaper Association of America Foundation,2009). Mission Statement This chart shows the difference in standardized testing with students that were involved in journalism and students that were not. Students who were not involved in journalism also were the students who did not have newspaper programs in their schools. Newspapers in Education Source ACTNAA Foundation Introduction Company and Industry Analysis Recommendation: Advertising Recommendation: Education Future Outlook Recommendation: Internet

Founded by the National Association of America Foundation in 1961. (Templon, 2008)
Brings the newspapers into grades 3-12.
More than 910 Programs are being implemented in the United States (Frank Ahrens, 2005)
Positive correlation between writing skills and students involved in the program.
Students tests scores on standardized testing were higher (National Association of American, 2008)
Students are learning real world news and applying it to their everyday life (Moore, 2006).
Helps to promote literacy and responsible citizenship.
Helps schools to save money by reduction of textbooks.
Current Program Advantages Newspaper in Education Program
Stronger brand name over competitors in the program
Saves school districts up to 50% on the paper (Frank Ahrens, 2005)
Comes with the Times Reader
The New York Times can be applied to any subject and used in everyday curriculum.
Teachers receive a curriculum guide for the classroom.
Have a program for grades K-12
The paper has a sponsorship program to help schools fund what they need so that costs will be lower for the district
The website offers activities , guides, and quizzes for the teacher usage .(Brill,2009)
Current NYT Advantages Source: Nytimes.com/learning Introduction Company and Industry Analysis Recommendation: Advertising Recommendation: Education Future Outlook Recommendation: Internet

Current NYT Problems Newspaper in Education Program
Poor job of advertising the program
The website is not user friendly
Only about 1/5 of the program is being used by the New York Times. ( Newspapers in Association of America Foundation, 2009)
The website is not easy to navigate and becomes frustrating to people who do not understand the internet capabilities
The program does not make a simpler version of the paper for younger students who have a lower comprehension rate
Not explaining the violent articles in the paper well enough (PEJ Roundtable, 2006)
Only had one curriculum book for all grade levels
The chart above is showing how violence is prevalent in the newspaper . This is a reason why people are becoming hesitant to have their young children read the paper. Creating a positive reason why children should obtain this knowledge parents and teachers would become more open to the ideas of newspapers in education. Introduction Company and Industry Analysis Recommendation: Advertising Recommendation: Education Future Outlook Recommendation: Internet

Expanding the NYT program’s market
After reading about the Newspaper in Education and the strong benefits that correlate the current
program needs revamped:
Redesign a curriculum book for K-3, 4-6, 7-8, and 9-12. Having these various levels of text will help to ensure a better understanding of the newspaper.
Use advertisements within The New York Times newspaper to help market this program for free.
To encourage this program ‘s sale employees must promote this program in different markets.
Redesign the current website for a more user friendly interface
Recommendation Implementation
If these recommendation are implemented some changes need to be made, which include:
Production of a younger newspaper and the jobs that will need to be emplaced
The costs to make and design a new curriculum book
The use of advertisements within the main paper for the program
Advertisements within school districts
A web developer to better insure the navigation for customers
The costs involved with implementing this program will be $595,350 (refer to appendix A)
The revenue it will gain will be $2,520,000 over five years
(refer to appendix a)
Source: NYT.com Introduction Company and Industry Analysis Recommendation: Advertising Recommendation: Education Future Outlook Recommendation: Internet

Introduction Company and Industry Analysis Recommendation: Advertising Recommendation: Education Future Outlook Recommendation: Internet Recommendation
The coupon below will be offered to all high school seniors as they are about to enter into college
Offering students this coupon will increase brand loyalty. Studies show that people who grow up with a certain product continue to use that product as an adult
By gaining this age gap the company will gain revenue and they will continue to maintain customers
College Coupon

Recommendation 3: Increasing Internet Revenues

Current Offers Each form has advantages and disadvantages
The Online Paper
Advantages
Free
Quick and easy
Available at 12 a.m. daily
Disadvantages
Available only online
Unfamiliar to traditional readers
The Printed Paper
Advantages
Delivered to you
Easy to transport
Traditional
Disadvantages
Uses up natural resources
Miss delivered issues while traveling
The Times Reader
Advantages
Downloads to computer
Available offline once downloaded
Easy to save articles to computer
Easy to email articles to others
Disadvantages
Not exact same as printed copy
Source: Google images The Times Online The Printed Paper The Time Reader Introduction Company and Industry Analysis Recommendation: Advertising Recommendation: Education Future Outlook Recommendation: Internet

Disadvantages for the free Online Paper
Online advertisement sales down ( Times, 2009)
Unable to generate enough profit from advertisements alone
Online news dependent on advertising money
Not receiving enough money from ads
Need to generate money elsewhere
Solution
The online sector needs to make more profit
Stop offering the paper for free online
Offer a monthly or annual subscription
Provide a pay-per view method where customers can choose to read articles at a time or the whole paper
"With the current model of free online content, newspapers have essentially turned themselves into shoppers — but, ironically, still with great quality, created by the same culture and people whose work consumers used to pay for. This is complete suicide. Newspapers should, in fact, be more profitable online — because it gets rid of the cost of paper, printing and delivery. This should be the golden age of journalism, delivered without the trucks.” (Brill, 2009) “ Source: Google Images Introduction Company and Industry Analysis Recommendation: Advertising Recommendation: Education Future Outlook Recommendation: Internet

Recommendation- Internet Increases
Keep offering all three forms of the paper
Start charging for a modified online paper with the best of all
Stay close to the customer
Focus attentions towards advertisement revenue
New online subscription offer
Keep the online paper the same for subscribers
Free Times Reader for internet subscribers
Change the Times Reader to exactly the same as the printed paper by adding what it leaves out from the paper
Automatic download of the Times Reader every morning at 12a.m. and available to read offline at own leisure
Available to non-subscribers
Still have limited website access
Access to archives, old crosswords, previous papers, and article headlines
Also available will be a pay-per view for people who do not wish to subscribe for the whole paper
Customers can create an account with their credit card to read articles individually or buy the whole paper for that day
This allows pay-per view customers to only read what they want to on the days they want to
Source: Time magazine Increase Internet Revenue Introduction Company and Industry Analysis Recommendation: Advertising Recommendation: Education Future Outlook Recommendation: Internet

Prices for different subscriptions “ The Times’s site has about 13 million unique visitors each month, according to Nielsen/NetRatings, far more than any other newspaper site.” Plan to charge the same amount for online subscriptions as done in 2006 and 2007. Introduction Company and Industry Analysis Recommendation: Advertising Recommendation: Education Future Outlook Recommendation: Internet Subscriptions costs projected to grow 5% annually Source: NYTimes.com Source : NYTimes.com 7 day Monday-Friday Friday-Sunday Saturday-Sunday Online Times Reader 12 week subscription $63.60 $33.60 $34.20 $41.40 N/A N/A weekly 5.30 2.80 2.85 3.45 $3.99 N/A Monthly N/A N/A N/A N/A 7.99 14.95 Annual N/A N/A N/A N/A 49.99 174.95

Introduction Company and Industry Analysis Recommendation: Advertising Recommendation: Education Future Outlook Recommendation: Internet Pay-per View offers Pay- Per View Pay-per viewers
Can purchase individual articles online
Can purchase whole paper at discounted rate online
Prices for articles and papers based on chart to the left
Billed for views at the end of the month
$3.50 projected averae money spent by customers each month
$42/year expected from average pay-per viewer
Number of visitors is expected to grow 2% each year after 2010 as it becomes more popular
Price Per Article 0.02 Mon-Friday entire paper 0.50 Sat-Sunday entire paper 0.75

Future Outlook

Introduction Company and Industry Analysis Recommendation: Advertising Recommendation: Education Future Outlook Recommendation: Internet Future Outlook As seen in our company and industry analysis, there are problems arising in the newspaper industry, and more specifically for The New York Times. Their problems include: Looking into the future, we have developed specific recommendations to conquer these problems:
Limited advertisement within the website
The Newspapers in Education program is not generating enough revenue.
The online paper is free and not generating much revenue
Advertising
Increase advertising capacity on interface
Decrease online advertising costs by 10%
Utilize interactive advertising
Enhance inside sales to promote advertisements
Newspaper in Education
Redesign a curriculum book
Use advertisements within The New York Times newspaper
To encourage sales people to promote this program
Redesigning the website
Increasing Internet Revenue
Start charging for a modified online paper with the best of all
Pay-Per-View version of The New York Times
Focus more on advertisement revenue
Pay for full usage of the online paper

Brill, S. (2009). 'Culture of Free' Is Suicide. Battle Plans for Newspapers. Factiva. (2009). New Times Company Analysis. Retrieved february 5, 2009, from Factivia.com: http://global.factiva.com/pcs/default.aspx Frank Ahrens. (2005, February 20). Hard News. Retrieved February 9, 2009, from washingtonpost.com: http://www.washingtonpost.com/ac2/wp-dyn/A37138- 2005Feb19?language=printer Hoover's. (2009). New York TImes Co. Report. Retrieved February 5, 2009, from Hoover's Online: http://premium.hoovers.com/subscribe/co/factsheet.xhtml?ID=rtrxcffryrhjry Isaacson, W. (2009, February 5). How to Save Your Newspaper . Retrieved February 9, 2009 from www.time.com: http://www.time.com/time/business/article/0,8599,1877191- Jesdanun, A. (2009, January 28). NY Times advertising revenue fell in December. Retrieved February 6, 2009, from CNews: http://cnews.canoe.ca/CNEWS/MediaNews/2009/01/28/8176321-ap.html 1,00.html Marketing Charts. (2009, January 30). Top 10 Print Media Websites - December 2008. Retrieved Febraury 5, 2009, from Marketing Charts: http://www.marketingcharts.com/print/top-10-print-media -websites-december-2008-7754/ Mergent. (2009). New York Times Co. Retrieved February 5, 2009, from Mergent Online: http://www.mergentonline.com/compdetail.asp?company=6012 Metaprinter. (2008). Newspaper Industry Market Cap 2007 vs. 2008 . Retrieved February 13, 2009, from Metaprinter: www.metaprinter.com/?p=822 Moore, E. (2006). Newspapers In Education . Retrieved February 9, 2009, from MakeKidsCount.com: http://images.google.com/imgres?imgurl=http://www.lubbockonline.com/mkc/nie/images /NIElogo.jpg&imgrefur National Association of American. (2008). Students who work on high school newspapers and yearbook:. Arlington: Newspaper Association of America Foundation. New York Times. (2007). Annual Financials for New York Times Company . Retrieved February 1, 2009, from Market Watch: http://www.marketwatch.com/tools/quotes/financials.asp?symb=nyt&sid=0&report=2&fr eq=1 New York Times. (2009, February 9). Student Connections . Retrieved February 9, 2009, from The Learning Network: http://www.nytimes.com/learning/index.html

New York Times Company. (2009). NEW YORK TIMES CO (NYSE: NYT) | Balance Sheet. Retrieved February 3, 2009, from Forbes.com: http://finapps.forbes.com/finapps/jsp/finance/compinfo/FinancialIndustrial.jsp?tkr=N YT&period=qtr Newspaper Association of America Foundation. (2009). Newspaper in Education . Retrieved February 9, 2009, from Newspaper Association of America Foundation: http://www.naafoundation.org/NewspaperInEducation.aspx Nytimes . (2009). Retrieved February 11, 2009, from http://www.nytimes.com/2007/09/18/business/media/18times.html?_r=1 PEJ Roundtable. (2006, July 24). Challenges to the Newspaper Industry . Retrieved February 9,2009, from Journalism.org: http://www.journalism.org/node/945 service, t. c. (2008). Frequently Asked Questions . Retrieved February 10, 2009, from www.Nytimes.com: http://www.nytimes.com/membercenter/faq/timesreader.html#timesreaderqa1 Templon, J. (2008, November 18). Indicator confirms crisis in newspaper industry. Retrieved February 12, 2009, from Medill Reports Chicago: http://news.medill.northwestern.edu/chicago/news.aspx?id=105983 The Day. (2009). What is NIE? Retrieved February 12, 2009, from TheDay.com: http://www.theday.com/theday/nie.aspx The New York Times Company . (n.d.). Retrieved February 11, 2009, from nytco: www.nytco.com Time . (2009). Retrieved February 11, 2009, from www.time.com: www.time.com

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Cluster Project 2 report on Improving the New York Times

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Cluster Project 2 report on Improving the New York Times — Presentation Transcript