Strategy and Strategic Alliances for the New York Times

Wu Tang Risk Management (SEB) 

quot;The basis of our governments being the opinion of the  people, the very ﬁrst object should be to keep that right;  and were it le> to me to decide whether we should have a  government without newspapers or newspapers without a  government, I should not hesitate a moment to prefer the  la@er. But I should mean that every man should receive  those papers and be capable of reading them.”  ‐‐Thomas Jeﬀerson to Edward  Carrington, 1787. ME 6:5 

Outline  Problem Statement (SEB)  •  Compe==ve Situa=on (AJP)  •  News Company Comparisons By The Numbers (BHR)  •  Technology/Innova=on (SEB)   •  NYT Strategic Alliances and Management (BHR)  •  Conclusion (SEB)  • 

The Problem 

Problem  •  NYT (and other newspapers) circula=on dropping  •  Revenue streams dropping  –  Adver=sing  –  Subscribers  –  Newsstand   •  But NYT is widely considered to have good content  •  Why give it away for free on the web?  •  How to mone=ze content OTHER than increasing  circula=on? 

By Staci D. Kramer ‐ Fri 13 Mar 2009 05:13 PM PST  The New York Times Company (NYSE: NYT) is once again looking at  serious ways beyond adver=sing to make its content pay—and this  =me the news comes from the highest source, Chairman Arthur  Sulzberger, Jr..   Sulzberger raised the subject in a carefully planned keynote on  media literacy at Stony Brook University Thursday, explaining:   “Today, in the face of the economic downturn, we have renewed our  analysis of how paid content can augment our core adver9sing  business. The trick, of course, is to garner incremental revenue from  the user without signiﬁcantly cannibalizing the high rate ad pages  that now account for a very signiﬁcant amount of money.” 

By Staci D. Kramer ‐ Fri 13 Mar 2009 05:13 PM PST  (con=nued…)  But Sulzberger raised other issues as well:   “Most of our thinking revolves around the fact that we have almost  uniquely achieved substan9al scale throughout the world and have  become part and parcel of the global discourse.   This achievement has significant journalis9c and financial  ramifica9ons and we do not want to take any steps that significantly  reduces our presence on the Web. Other prominent news‐gathering  sites may be less interested in scale and that might give them the  flexibility to pursue an even more aggressive paid content strategy.   What we have learned over the last decade and half is that the Web  has very few generally accepted rules for financial success, and they  are inevitably overturned by the next digital cycle and next  breakthrough algorithm.”  

New York Times Company Purpose      The New York Times Company, a leading media  company with 2008 revenues of $2.9 billion, includes  The New York Times, the Interna=onal Herald Tribune,  The Boston Globe, 16 other daily newspapers, WQXR‐ FM and more than 50 Web sites, including  NYTimes.com, Boston.com and About.com.       The Company’s core purpose is to enhance society by  crea=ng, collec=ng and distribu=ng high‐quality news,  informa=on and entertainment.  Note: No stated Mission or Vision in 10k or NYT Co website

From NYT Ethical Journalism  “Reporters, editors, photographers and all members of  the news staﬀ of The New York Times share a common  and essen9al interest in protec9ng the integrity of the  newspaper. As the news, editorial and business  leadership of the newspaper declared jointly in 1998:   ‘Our greatest strength is the authority and reputa9on  of The Times. We must do nothing that would  undermine or dilute it and everything possible to  enhance it.’ ”   Guidelines on Our Integrity, May 1999 

Compe==ve Situa=on  Wu Tang Risk Management (AJP) 

Round 1 Analysis……  Process  Structure  Func=on  NY Times is compe=ng with Washington Post, USA Today, Wall Street Journal….. 

NY Times is compe=ng with Washington Post, USA Today, Wall Street Journal….. 

Round 2 Analysis……  Process  Structure  Func=on  NY Times is compe=ng with Web, Radio, iPods, Television, periodicals…. 

Strategy Rela=ve to Compe=tors? 

Compe==ve Posi=on 

Round 3 Analysis……  Process  Structure  Func=on 

quot;The railroads did not stop growing because the need for  passenger and freight transporta9on declined. That grew.  The railroads are in trouble today not because that need was  filled by others (cars, trucks, airplanes, and even telephones)  but because it was not filled by the railroads themselves.   They let others take customers away from them because they  assumed themselves to be in the railroad business rather  than in the transporta9on business. The reason they defined  their industry incorrectly was that they were railroad  oriented instead of transporta9on oriented; they were  product oriented instead of customer oriented.”  ‐‐Harvard Professor Theodore LeviE  MarkeGng Myopia, 1960 

News Company Comparisons  Wu Tang Risk Management (BHR) 

In thousands 2008 2007 2006 Revenues: $2,948,856  $3,195,077  $3,289,903  Adver=sing  $1,672,159  $1,950,021  $2,077,542  Proﬁtability ($57,839)  $208,704  ($543,443)  Circula=on 1,248227  1,321,426  1,384,204 

In thousands 2008 2007 2006 Revenues: $4,461,580  $4,180,406  $3,904,927  Adver=sing  $1,083,084  $1,234,643  $1,358,739  Proﬁtability $65,776 $287,655 $323,478 Circula=on 639,724 657,918 681,510

Newspaper and Info Services In thousands 2008 2007 2006 Revenues  $6,248,000  $4,486,000  $4,095,000  Opera=ng Income  $767,000  $653,000  $517,000 

In thousands 2008 2007 2006 Revenues $6,767,650  $7,439,460  $7,847,613  Proﬁtability ($544,310)  ($202,019)  ($222,509)  Circula=on  2,255,295  2,300,400  x  USA TODAY only

“Today, in the face of the economic downturn, we have renewed  our analysis of how paid content can augment our core adver9sing  business. The trick, of course, is to garner incremental revenue  from the user without signiﬁcantly cannibalizing the high rate ad  pages that now account for a very signiﬁcant amount of money.”  Organiza=ons?  Consumers?  Periodicals  Technology  Radio  Adver=sing  Television  Subscrip=on  Internet 

From Print to Pixels: Technology  Wu Tang Risk Management (SEB) 

Wonder how NYT might reduce COGS?  Source: NYTCo 10‐K and 17 Mar 09 interview with Nick Bilton, New York Times 

More on NYT COGS distribu=on costs….  COGS  EsGmates  Prin=ng/Distribu=on  $644M  Newsroom Salaries  $161M  NYT Subscribers  830,000  Kindle 2 Retail Price  $359  PrinJng the New York Times costs over twice as  much as sending every subscriber a free Kindle 2! 

NYT In Technology 

Strategic Alliances for the NY Times  Wu Tang Risk Management (BHR) 

Recommend that the NY Times   •  Pursue a non‐equity, vendor rela=onship alliance  •  Preserve the NYT brand and reputa=on  •  Fund $200k per tranche, 8 tranches total   –  Television (3)  –  Periodicals (3)  –  Radio (2)  •  This includes rela=onship manager, T&E  •  Exploit/expand success, shutdown failures  Our greatest strength is the authority and reputaJon of The Times. We must do  nothing that would undermine or dilute it and everything possible to enhance it. 

NYT Alliance Oﬃce  (constella=on strategy)  Television  Periodicals  Radio  Discovery  New  CNN  MSNBC  Economist  Atlan=c  XM/Sirius  HD Radio  HD  Yorker 

Managing the NYT Alliances   Establishing Licensing Objec=ves for NYT Content  •  Deﬁning a strategy for NYT focus  •  Managing the message: print/broadcast/Internet  •  Developing process for metrics management  •  Acknowledge/Accept organiza=onal tradeoﬀs  • 

Poten=al Vendor Alliance ROI   (grow content distribu=on in all media)   Television  Periodicals  Radio  $$$  $$  $  • CNN  • Economist  • Sirius/XM  Radio  • MSNBC  • New Yorker  • HD Radio  • CNBC  • Harpers  • Clear  • Discovery  • Vanity Fair  Channel  HD 

NY Times Co Growth Projec=ons  (based upon new Strategic Alliances)  In thousands 2009 2010 2011 Revenues   $3,336,511  $3,670,162  $4,037,178  (10% increase) COGS  $2,178,438  $1,960,594  $1,764,535   (reduce by 10%)  Gross Proﬁts $1,158,073  $1,709,568  $2,272,644  Subscribers (all media)  954,500  1,097,675  1,262,326  15% growth

Conclusion:  The New York Times should….   •  Capitalize their premium “nice to have” content  •  Broaden content distribu=on beyond tradi=onal  subscriber base  •  Get other individuals and organiza=ons to “pay” for NYT  content, regardless of medium  •  Reduce COGS by moving from print to pixels  •  Build/enhance brand through strategic alliances  –  Television  –  Broadcast  –  Periodicals  –  Radio 

Backup Slides 

Strategy and Strategic Alliances for the New York Times

by Stephen Bates

Accessibility

Categories

Upload Details

Usage Rights

2 Embeds 17

Statistics

Strategy and Strategic Alliances for the New York Times Presentation Transcript

http://www.slideshare.net	10
http://www.linkedin.com	7