Strategy and Strategic Alliances for the New York Times
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Discussion of strategy and competitive analysis of the New York Times within the context of Strategic Alliances.

Discussion of strategy and competitive analysis of the New York Times within the context of Strategic Alliances.

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Strategy and Strategic Alliances for the New York Times Presentation Transcript

  • 1. Wu
Tang
Risk
Management
(SEB)

  • 2. 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

  • 3. 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)
 • 
  • 4. The
Problem

  • 5. 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?

  • 6. 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.”

  • 7. 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.”


  • 8. 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
  • 9. 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

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

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

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

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

  • 14. Strategy
Rela=ve
to
Compe=tors?

  • 15. Compe==ve
Posi=on

  • 16. Round
3
Analysis……
 Process
 Structure
 Func=on

  • 17. 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

  • 18. News
Company
Comparisons
 Wu
Tang
Risk
Management
(BHR)

  • 19. 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

  • 20. 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
  • 21. 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

  • 22. 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
  • 23. “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

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

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

  • 26. 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!

  • 27. NYT
In
Technology

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

  • 29. 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.

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

  • 31. 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
 • 
  • 32. 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

  • 33. 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
  • 34. 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

  • 35. Backup
Slides