By Seth Mnookin
Two weeks ago, I went to the New York Times’ gleaming, modernist, Renzo Piano–designed headquarters on Eighth Avenue in Manhattan to discuss some good financial news with Arthur Sulzberger Jr., the paper’s publisher and the chairman of the New York Times Company. Good news has been in short supply in the world of dead-tree media, and for the Times in particular.
For much of Sulzberger’s nineteen-year tenure, the paper that his family has controlled for more than a century has been embroiled in one crisis or another, ranging from the Jayson Blair fiasco, which led to the overthrow of Howell Raines, the hard-charging editor who had been handpicked by Sulzberger, to the paper’s reporting on the phantom WMDs in Iraq, which some believed had even helped propel the U.S. into war.
Then there were the paper’s financial troubles, which appeared to have pushed it to the brink of extinction. For well over a decade, the Internet had been relentlessly consuming the paper’s business model. On the web, the saying went, information wants to be free; this left institutions like the Times, which invest huge sums in reporting the news, in an existential quandary. In the months after the collapse of the credit market in the fall of 2008, the company was forced to take drastic measures to stay afloat: In January 2009, it granted Mexican telecom mogul Carlos Slim Helú purchase warrants for 15.9 million shares of Times Company stock for the privilege of borrowing $250 million at essentially a junk-bond interest rate of 14 percent. Two months later, in a move redolent with uncomfortable symbolism, the company raised another $225 million through a sale-leaseback deal for its headquarters—which had been built only two years earlier and which, in its understated, environmentally conscious, progressive, user-friendly way, was supposed to be the emblem of the paper’s 21st-century identity. Add on double-digit declines in both circulation and ad pages and the trend lines looked increasingly clear: The New York Times was doomed.
But a funny thing happened on the way to the graveyard. Though the Times’ circulation dipped during the crash years, much of the lost revenue was made up for by doubling the newsstand price, from $1 to $2—evidence, the paper insisted, that its premium audience understood the value of a premium product. In March, after several years of planning and tens of millions in investments, the Times launched a digital-subscription plan—and the early signs were good. In fact, less than 48 hours before my interview, the Times announced it would finish paying back the Carlos Slim loan in full on August 15, three and a half years early. When they were released last week, the company’s second-quarter financial results showed an overall loss largely owing to the write-down of some regional papers, but they also contained a much more important piece of data: The digital-subscription plan—the famous “paywall”—was working better than anyone had dared to hope.
Meanwhile, a phone-hacking scandal was engulfing Rupert Murdoch and News Corp. This was not in itself relevant to the Times, but it carried its own symbolism. Murdoch had made a point, after his purchase of The Wall Street Journal, of suggesting that the Times was vulnerable. “Let the battle begin,” he wrote in a note to Sulzberger. Sulzberger would not be quite human if he didn’t take some satisfaction in his rival’s troubles, especially because an aggressively reported investigation the Times published in its magazine last September was critical in bringing the scandal to light.
The bottom line for the paywall is more than the bottom line: The Times has taken a do-or-die stand for hard-core, boots-on-the-ground journalism, for earnest civic purpose, for the primacy of content creators over aggregators, and has brought itself back from the precipice. And if that does indeed end up being the case, there’s one unlikely person who deserves most of the credit: Arthur Ochs Sulzberger Jr.
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Two weeks ago, I went to the New York Times’ gleaming, modernist, Renzo Piano–designed headquarters on Eighth Avenue in Manhattan to discuss some good financial news with Arthur Sulzberger Jr., the paper’s publisher and the chairman of the New York Times Company. Good news has been in short supply in the world of dead-tree media, and for the Times in particular.
For much of Sulzberger’s nineteen-year tenure, the paper that his family has controlled for more than a century has been embroiled in one crisis or another, ranging from the Jayson Blair fiasco, which led to the overthrow of Howell Raines, the hard-charging editor who had been handpicked by Sulzberger, to the paper’s reporting on the phantom WMDs in Iraq, which some believed had even helped propel the U.S. into war. Then there were the paper’s financial troubles, which appeared to have pushed it to the brink of extinction. For well over a decade, the Internet had been relentlessly consuming the paper’s business model. On the web, the saying went, information wants to be free; this left institutions like the Times, which invest huge sums in reporting the news, in an existential quandary. In the months after the collapse of the credit market in the fall of 2008, the company was forced to take drastic measures to stay afloat: In January 2009, it granted Mexican telecom mogul Carlos Slim Helú purchase warrants for 15.9 million shares of Times Company stock for the privilege of borrowing $250 million at essentially a junk-bond interest rate of 14 percent. Two months later, in a move redolent with uncomfortable symbolism, the company raised another $225 million through a sale-leaseback deal for its headquarters—which had been built only two years earlier and which, in its understated, environmentally conscious, progressive, user-friendly way, was supposed to be the emblem of the paper’s 21st-century identity. Add on double-digit declines in both circulation and ad pages and the trend lines looked increasingly clear: The New York Times was doomed.
But a funny thing happened on the way to the graveyard. Though the Times’ circulation dipped during the crash years, much of the lost revenue was made up for by doubling the newsstand price, from $1 to $2—evidence, the paper insisted, that its premium audience understood the value of a premium product. In March, after several years of planning and tens of millions in investments, the Times launched a digital-subscription plan—and the early signs were good. In fact, less than 48 hours before my interview, the Times announced it would finish paying back the Carlos Slim loan in full on August 15, three and a half years early. When they were released last week, the company’s second-quarter financial results showed an overall loss largely owing to the write-down of some regional papers, but they also contained a much more important piece of data: The digital-subscription plan—the famous “paywall”—was working better than anyone had dared to hope.
Meanwhile, a phone-hacking scandal was engulfing Rupert Murdoch and News Corp. This was not in itself relevant to the Times, but it carried its own symbolism. Murdoch had made a point, after his purchase of The Wall Street Journal, of suggesting that the Times was vulnerable. “Let the battle begin,” he wrote in a note to Sulzberger. Sulzberger would not be quite human if he didn’t take some satisfaction in his rival’s troubles, especially because an aggressively reported investigation the Times published in its magazine last September was critical in bringing the scandal to light.
The bottom line for the paywall is more than the bottom line: The Times has taken a do-or-die stand for hard-core, boots-on-the-ground journalism, for earnest civic purpose, for the primacy of content creators over aggregators, and has brought itself back from the precipice. And if that does indeed end up being the case, there’s one unlikely person who deserves most of the credit: Arthur Ochs Sulzberger Jr.
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