Just as its hard for newspaper publishers to figure out the magic combination of technology, shoe leather and business practices, it was hard for me to figure out how to classify Ken Doctor’s article on the economics of the New York Times Company. In parts, it is a report of some – very selective – figures from its recent earnings report. In other parts it is a commentary on the state and fate of the newspaper industry as a whole. In my response, I will try to deal with both parts.
Doctor's rough explanations of what the numbers on The New York Times Company's balance sheet mean, he quietly points toward a suggestion that has been gaining traction in many other circles and one that public broadcasting has used its entire life -- sponsored journalism.
As a former business reporter, one of the few things I know is how to read earnings reports. Quarterly results don't say much; especially for analyses of industry trends, the whole really is greater than the sum of its parts. Zero, as Doctor notes, is an “unsexy digit,” but financial data is rarely as clear as that.
Total adjusted advertising revenue was down 7.5 percent in 2012 compared to the same yearlong period in 2011; Doctor’s writing shows that he is impressed that the loss was contained to the single digits, though he does not take the time to explain why that feat is so impressive. Total adjusted circulation revenue was up 2.2 percent during the same period, bringing the total combined adjusted revenue to 0.3 percent. That’s a total revenue of $1.95 billion dollars.
According to the New York Times Company's press release on its fourth quarter 2012 earnings and about its fiscal year 2012, "annual circulation revenues surpassed those from advertising." Digital subscriptions between the end of the third quarter and end of the fourth quarter saw an increase of 13 percent with a total of 668,000. Doctor, however, doesn’t think that that rate of increase is sustainable even in the near future. The print subscription base is declining and, as a result, those who remain are subjected to higher prices. Those who are leaving the print subscription product behind do not seem to be exchanging it for the digital version; they are likely going to other outlets.
Looking at the characterization of Mark Thompson in this article (and a brief skim of some of the other pieces Doctor has written) it is clear that Doctor is unimpressed by the leadership potential of the CEO.
While Doctor does put more optimism in the Times Co.’s ability to increase circulation (or at least gently prods it to focus on that rather than advertising), he misses a crucial element of the story: content. Doctor makes vague prescriptions (no pun intended) about “innovation” and “digital products” but he doesn’t elaborate here. I understand that the article is about “newsonomics” but there still has to be some discussion of the news when talking about it. He brings up paywalls (a strategy he supports), but doesn’t explain what kinds of material should be behind those paywalls. Providing suggestions for ways generating content or making content more salient for the consumer might be a way to solve the “core problem” of a widening gap between loss of ad revenue and increase in circulation revenue.
Numbers are wonderful. When they represent financial figures, numbers are especially wonderful and equally precarious. Covering financial data -- from experience – is one of the easiest ways to paint a company or industry (say, the future of print) in a particular light.