Category: New York Times

Company Overview

The New York Times Company (NYT), formed on 1896, is a diversified media company that has stake in newspaper, Internet business, paper mills, and others (NYT, 2010). In 14 January 1969, NYT’s stock was first listed on American Stock Exchange (NYT, 2011).

Throughout the 1980 to 2010 NYT expanded aggressively through series of mergers and acquisitions a few prominent of which are 2002 investment in Discovery Times Channel, 1991 acquisition of International Herald Tribune, 1981 acquisition of New York Time Daily Cable TV, acquisition of Times Daily, Daily World, The Messenger, etc. in 1982, and many others. The Boston Globe was launched on 30 October 1995. More recently in 2006, it acquired Baseline Studio System and Calorie-Count.com.

In 2007, NYT formed a strategic alliance with Monster Worldwide for recruitment advertisements and acquired ConsumerSearch.com and UCompareHealthCare.com. Therefore, the company has undergone a series of changes within its businesses and strategy as it shifted its focus from the more print oriented media business to Internet based media as it started acquiring more of the .com companies with the advent of twenty-first century.

Business Overview

NYT is a diversified media company that has operated in the Unites States of America. In 2009, the revenue of the company was $2.4 billion. Broadly, it has two operating segments – News Media and the About Group (Yahoo Finance, 2011).

The Media segment of the business has New York Times Media Group, Regional Media Groups, and New England Media Groups (Yahoo Finance, 2011; NYT, 2011). The New York Times Media Group comprises of the New York Times (a daily newspaper), International Herald Tribune (a daily newspaper), and NYTimes.com.

The other areas of business under the group are Digital Archives Distribution, New York Times Index, and New York Times News Service Division. The New York Times New Service transmits photographs and news articles for The Times, the Globe, and other newspaper publications. It also delivers content for Epsilen, LLC, etc which are websites that provide education solutions.

It also distributes content for social networking websites, mobile applications, digital platforms, and owns the Baseline StudioSystem, which is a website that provides database and research services to its subscribers (Yahoo Finance, 2011). The Regional Media Groups consists of 14 regional newspapers being printed and distributed under its wing (Yahoo Finance, 2011).

It operates in the state of Alabama, California, Florida, Louisiana, North Carolina, and South Carolina. The New England Media Group operates the Boston Globe (a daily newspaper) and Boston.com (Yahoo Finance, 2011) and it has one newspaper under its wing i.e. the Herald Tribune (NYT, 2011). Figure 1 presents a more elaborate description of the business segments of NYT.

The About groups of the company operates other segments like the online business of the company that includes UCompareHealth.com, ConsumerSearch.com and CalorieCount.about.com, etc. other than these the company also holds stake in Canadian newsprint company, Metro Boston LLC that publishes daily newspaper, New England Sports Network, etc. (Yahoo Finance, 2011).

Figure 1: Business Segment of New York Times Company

The News Media Group Segment’s revenue is derived mostly from advertisements in newspapers and other online media (NYT, 2010). In 2010, the overall revenue of company was $2.39 billion (Yahoo Finance, 2011). The quarterly revenue fell by 2.9 percent in 2010 (Yahoo Finance, 2011).

There was a gross profit margin of $1.42 billion (Yahoo Finance, 2011). The profit margin of the company was 4.5 percent in 2010 and operating margin was 10.72 percent (Yahoo Finance, 2011). The source of revenue of the company has been dramatically diversified as compared to the 2005.

In 2005 the revenue earned was mostly from the print advertisements and circulation that comprised of 61 and 27 percent of the revenue respectively. However, that of digital advertisement was just 5 percent. In 2010, the share of print advertisement and circulation in revenue fell to 39 and 40 percent while that of digital advertisement increased to 14 percent (NYT, 2010).

There was an increase in digital revenue as a percentage of total revenue that increased from 12 percent in 2008 to 14 percent in 2009 to 16 percent in 2010 (NYT, 2010).

From the above overview, it is clear that the NYT belongs to the newspaper publishing services industry. the performance of NYT as compared to the industry is it ranks 71 in the industry (Yahoo Finance, 2011). The main competitors of NYT are Gannett Co. Inc. (GCI), News Corp. (NWS), and Washington Post Company (WPO).

As compared to its competitors, the revenue earned by NYT in 2010 is much less than that of GCI that is at $5.44 billion, NWS at $33.08 billion and WPO at $4.9 billion (Yahoo Finance, 2011). The number of employees working with NYT is 3,222 (NYT, 2010), and that with NWS is 51,000 and WPO is 21,500 (Yahoo Finance, 2011). The net income of NYT therefore is much less than its competitors that were $107.69 million in 2010 (Yahoo Finance, 2011).

NYT is headquartered in Midtown Manhattan in New York City. The main strategies followed by the company are to diversify its revenue with increased focused on online and digital business segment. It also aims to increase and leverage the strength of the New York Times brand and increase profitability of the circulation revenue. Further, the company aims at increasing their performance on cost and strengthens the core business areas of the company. (NYT, 2011)

Figure 2 shows the performance of the NYT’s stocks in the financial market in 1986 through 2010. The stock prices increased throughout the 1990s. it peaked in 2004. Since 2005, there has been a fall in the prices of the stock. The figure clearly shows that the prices of the company stock increased significantly in May 2010 after which it fell considerably. The stock prices hit rock bottom in 2009 due to the recession.

Figure 2: Stock Prices of NYT, source Yahoo! Finance

The New York Times is one of the leading media companies of the US. Though compared to its competitors it lacks the scale and revenue of the giants, still it is competitive to them in terms of gross and operating margin. The company has not been performing too well due to its declining stock prices since 2005.

That is why in 2009 when the stock prices fell to the maximum limit, the company adopted a strategy to diversify and therefore concentrated more on the digital revenue than on print-based revenue. This strategy reaped some success as indicated through the increasing stock prices.

References

NYT. (2011). About the Company. Web.

NYT. (2010). Annual Report 2009. Web.

NYT. (2010, December 7). UBS 38th Annual Global Media and Communications Conference. Web.

Yahoo Finance. (2011, February 14). The New York Times Company (NYT). Web.

Executive Summary

The company is an icon of press freedom. The New York Times masthead is instantly recognizable around the world. It is a trusted brand when it comes to journalism. It is highly valuable source of reliable news information. However, print publication is in decline. It is due the existence of non-traditional media competitors. Advertisers have found an alternative means of delivering advertising content and it is negatively affecting the profitability of The New York Times.

In order to survive these trying times the company must learn to embrace digital technology as well as collaborate with established companies like Google and Facebook in order to interact with hundreds of millions of users that would be impossible to accomplish using traditional means.

Mission

The purpose of the newspaper is written confidently in each daily issue and it says: “All the news that’s fit to print” (Hitt, Ireland, & Hoskisson, 2009, p.237). It is a statement that encapsulates the commitment to print news and to inform the public of the important things that the public needed to know.

It provided differentiation from other newspaper publishers because it is easier to sell newspapers rather than to adhere to strict journalistic standards. This explains the steady rise of The New York Times from a fledgling company into a globally recognized brand.

External Analysis

Using the 5 forces model the problems of The New York Times can be understood in a more scientific way. Looking at the first factor one can see the significance of the tough competition that the company faces in the newspaper publishing industry. The presence of three giant media companies like Gannet Co, Inc., The Washington Post Company and News Corporation is enough to take a major slice of the market share.

In addition these three companies are capitalized much better than The New York Times and as a result the company owned by the Ochs-Sulzberger cannot mount a serious counter-attack to recoup losses and increase its circulation and of course the advertisers willing to pay significant amounts of money for publishers with millions of subscribers.

The only positive thing that reduces the impact of The New York Times’ problems is the fact that it is difficult for new entrants to complicate the competition even further. It is extremely difficult for competitors to set-up a traditional publishing company.

It is cost-prohibitive. Based on the significant decline of the earning potential of print publication, it would be close to impossible to find investors willing to spend money on this kind of enterprise.

When it comes to the bargaining power of suppliers the company has to worry about the quality of the writers and editors under its employ. The New York Times has the bargaining power over writers and editors because of the economic downturn and the difficulty of making money in this industry means that the publishers can negotiate with writers and editors for lower pay.

However, this is the only silver lining left for The New York Times because when it comes to the bargaining power of customers the company has no counter offer. The customers have the capability to choose the source of information and there is very little leverage for the company to force the customers to choose their products over that of the competition. It is not only the readers that the company has to worry about.

The bulk of the profit comes from advertisers and the same story goes because advertisers have alternative means to connect with their target market. Gone are the days when most people can only access news from reading the newspapers.

This brings the discussion to another problematic area for the publishing industry – the threat of substitute products. This comes in the form of non-traditional media competitors that can offer advertisers a more cost-efficient way of bringing advertising content to their target audience.

According to experts, “the advent of the Internet created news opportunities for other companies beyond The New York Times Company and traditional competitors… the second generation of the Internet brought with it new online mediums such as blogs, social networks and online communities that allowed for anyone to self-publish for the world to see” (Hitt, Ireland, & Hoskisson, 2009, p.243). This is a problem that has to be dealt with soon.

The presence of non-traditional media competitors is an obvious threat to The New York Times Company because it draws away rich advertising clients into alternative forms of mass media communication.

On the other hand the presence of non-traditional means of broadcasting information is an opportunity for the company to evolve into non-print media and transform itself into a digital company that can connect to its target market via digital technology. It is possible for company to partner with Google.

As of the moment Google is making money by simply pointing users to the news content found in The New York Times online news.

Internal Analysis

Circulation unit sales are down as well as well as advertising related revenue (Hitt, Ireland, & Hoskisson, 2009, p.244). This is the lifeblood of a typical newspaper publishing company and when the well has dried up, then there is nothing that can be done except to post losses and the value of the company plummets. The money for newspaper subscription has been diverted to pay for Internet connection.

If the decline in revenue is not enough The New York Times Company made unforced errors when it began to acquire companies that are nonperforming. For instance the company has unprofitable holdings in The Boston Globe. The company spent $500 million to acquire mediocre companies and there is no need to explain that these are ill-advised acquisitions because the company is heavily in debt.

Competitive Advantage

The New York Times Company is not without options. At first glance it seems that everything went wrong for the company when the second generation Internet technology was embraced by the general public. The remaining competitive advantage of this company can be found in its reputation as well as the quality of writers and editors under their employ.

This is a trusted brand and people will not complain if they can get access to news reports from this company as compared to blogs and amateur reporters. This is an asset that the company cannot afford to misuse.

Strategic Alternatives

The company can leverage its talented pool of writers and editors to provide high-quality content that cannot be matched by non-traditional media competitors. This simply means that when a news item is released from The New York Times website it carries more weight as compared to the information that can be gleaned from blogs and social networking sites.

The company can forge alliances and business partnerships with established names like Google and Facebook in order to have access to millions of users are beyond the subscription list of The New York Times.

Recommendations

One of the major keys to success is in the ability of corporate leaders to use what the company possess that non-traditional media competitors do not have access to. It is a rich pool of talent that can go after news worthy information, write it down and publish it.

Although the idea of publishing has been redefined after the digital revolution it must be pointed out that computers and even amateur writers cannot reach the level of competence that The New York Times writers and editors are able to produce on a consistent basis.

Therefore, the company must find ways to publish news in a digital format. By collaborating with companies like Google and Facebook while at the same time improving the quality of their website the company can leverage what it has and connect to hundreds of millions of people all over the world. This is easier said than done.

The next key to success is to persuade established Internet based companies that they must focus on what they do best and leave the content to The New York Times. This will free up Google and Facebook to develop applications that can increase the number of users while they are assured that the quality of news content remains high because they have full access to The New York Times.

The ability to leverage their talented pool of writers and editors is a sustainable competitive advantage because the company has been doing research, news reporting and writing for close to a hundred years. The company knows how to hire reporters, writers, and editors and train them and keep them.

This is the company’s major competitive advantage and if this can be used through the collaboration of another organization then The New York Times is on the right path to profitability and respect.

Time is running out for the company and therefore it would be best to execute these alternative strategies in the next four years. By 2015 digital technology can be transformed into something that investors can no longer recognize. For instance news information can be easily accessed through mobile devices.

There will come a time when newspapers are no longer made of paper but plastic that has micro-circuits and microprocessors that enable it to receive and transmit data. The New York Times Company must begin its strategic alignment with established companies that are experts in digital technology before the year 2015.

Exhibit A

Table 1. SWOT Analysis

Reference

Hitt, M., Ireland, D., & Hoskisson, R. (2009). Strategic Management Competitiveness and Globalization: Cases. OH: Cengage Learning.

The New York Times market and financial performance depends on how the publishing company conducts its marketing, value creation and customer service. The proprietor of the publishing company has a choice to ensure that marketing becomes a core philosophy in achieving organizational goals.

In this regard, the company’s new perspective on marketing should refocus in understanding the fundamental concepts of effective management. Already, the New York Times is perceived as a household name among other mainstream media companies (The Future of the New York Times, 2005, para. 2).

In this regard, an effective marketing strategy should aim to achieve an appealing effect among its target markets. Using a competent marketing staff to complement the research and development outfit in creating the company’s marketing mix is necessary (McDonald & Wilson, 2011).

Understanding marketing fundamentals like the target market is critical when avoiding wastage. In this regard, establishing a target market and learning the consumer behavior provides an input when strategizing on customer service and product development.

Moreover, understanding the target market in relation to developing a marketing mix is essential for a publishing company that is reviving its financial capabilities.

The marketing mix provides information required for the publishing company when respond to uncontrollable factors such as the economy, technology, diverse cultures and politics (Gilligan & Hird, 2012). Many activities in marketing requires much research and input before a real decision making process is initiated.

For example, an environmental and consumer analysis precedes product and price planning. In addition, products cannot be promoted before planning on physical distribution channels.

The New York Times requires a new approach towards identifying opportunities and identifying market potential. In this regard, the use of PEST analysis plays a crucial role in understanding and predicting the company’s performance when subjected to prevailing, political, economic, social and technological issues.

In this context, the New York Times involvement with political issues requires a redress. Perhaps, reporting on issues that do not cause a political outrage can uplift the company’s sales, as well as profits.

Constant reviewing of the company’s budget against the prevailing economic situation is paramount as it helps in preventing a possible financial bankruptcy.

Assessing social issues and technological changes is vital in a company striving to improve on its financial stability. In general, marketing management should focus on reducing wastage, creating value and making profits.

As indicated earlier, creating a culture of customer service in the communication industry is necessary. For a company to become competitive in the market with many players, distinction through customer service is considered an advantage.

From this perspective, the New York Times customer service requires rebranding (Kietzmann, Hermkens, McCarthy & Silvestre, 2011). A competitive customer service requires an inquest on how clients perceive value. In this regard, delivering of products and services that appeal to customers is crucial.

For example, rebranding the brand image of the New York Times newspapers and magazines cover page can achieve the customer perceived value. Another strategy of creating value is through product pricing. A comparative study on what customers consider a fair price should be initiated.

Moreover, using psychological pricing tactics has always been considered effective. It is important to note that customer service is best achieved through total quality management. In this context, total quality management will involve production and delivery of quality material content.

Moreover, the delivery of value-added products and services requires the value chain analysis. Precisely, this is to determine cost-benefit analysis as it relates to the existing core competencies in order to accrue profits.

As indicated earlier, The New York Times is considered part of the mainstream media companies. Therefore, competing with rising digital media is difficult and challenging. However, with the right structures in place, the New York Times can still make an impact and compete with digital media.

The need to conduct a benchmark in what entails new practices can be considered a proactive reaction towards digital media competition. The company’s management understands the loss accrued due to stiff competition from digital media.

In this regard, establishing an online-based news application can refocus the company’s media practices. However, this initiative would lead to loss of jobs in the company. Consequently, this means that the company loses its stature as a reputable media company with competent journalists.

It is important to note that digital media does not concentrate on quality, as emphasized by the New York Times. However, the company can control the competition by merging with one of the digital media companies (Kietzmann, Hermkens, McCarthy & Silvestre, 2011).

The New York Times is renowned for its market tactics of acquiring aspiring companies. The initiative would ensure that the company benefits from digital media without losing on revenues collected from advertisements.

In conclusion, the New York Times remains one of the most respected media companies in the world. In fact, the shift from mainstream media practices to digital platforms as evidenced from online newspapers indicates that the company continues to survive the test of time.

In this regard, it is evident that strong leadership that understands evolution of industrial trends, markets, technology and customer service is imperative.

References

Gilligan, C., & Hird, M. (2012). International marketing (RLE international business): strategy and management. New York, NY: Routledge.

Kietzmann, J. H., Hermkens, K., McCarthy, I. P & Silvestre, B. S. (2011). Social media? get serious! understanding the functional building blocks of social media. Business horizons, 54(3), 241-251.

McDonald, M & Wilson, H. (2011). Marketing plans: How to prepare them, how to use them. Hoboken, NJ: John Wiley & Sons.

The Future of the New York Times. (2005). Web.

Executive Summary

This case study evaluates the market alignment challenge of the New York Times, through the introduction of the paywall platform, as a strategy to stay relevant in the digital marketplace. It evaluates the types of market changes that contributed to the company’s operational problems. In line with this analysis, this case study also shows the customer expectations, market trends, and possible tactical responses that the company could use to overcome its operational challenges.

What was the Market like?

The involvement of Apple in the problems of the NY Times happened in a market that was experiencing an unprecedented decline in subscribers and sales numbers for physical newspapers. The move from traditional to online reading preempted this decline. Consequently, the New York Times was having trouble maintaining its profitability and subscriber base. As a strategic response, it created a paywall for online digital consumers, but this strategy failed because the company had trouble attracting new readers to the new digital platform, and having them pay for reading online content in the first place (Kumar, Anand, Gupta, & Oberholzer-Gee, 2013).

Customer Expectations

The growing trend towards digital media consumption saw customers acclimated to consuming digital content freely. In other words, in a fast-paced world where information moves fast, and people develop and share new content, freely, customers do not see the need for paying for newspapers, which cannot keep up with the fast-paced nature of information flow. Partly, this reason explains why the New York Times started recording declining sales numbers and online traffic a few weeks after setting up its paywall. This outcome alone reveals that the main customer expectation was to consume free digital content (Kumar et al., 2013).

Marketing Trends Influencing the Company

Use of New Media by Customers to Consume Information

According to the case study, customers stopped buying newspapers to get information. Instead, they used digital media to get the same information. This trend meant that traditional media outlets would have fewer subscribers.

Customers Became Browsers, as Opposed to Readers

Traditionally, customers were readers. However, with the development of digital media communications, they became browsers. This trend meant that they were less engaged in the information consumption process. Consequently, it becomes harder for the NY Times to make them pay for the information (Kumar et al., 2013).

Increase in the Number of Substitute Products

The proliferation of online sources of digital communication has increased the number of substitute products in the market. Traditionally, the main substitute products for the New York Times were television, radio, and magazines. However, online digital marketing space has introduced bloggers, vloggers, and social media websites as new information drivers.

Resource Scarcity

Declining profitability of newspaper companies meant that they had fewer resources to sustain their traditional business model. Furthermore, they could not afford more mistakes in the online digital marketing space; otherwise, they would not have any more resources for research and development (Kumar et al., 2013).

Cheaper Forms of Communication

The digital market space has eliminated most of the production costs associated with information distribution. For example, instead of producing physical newspapers (buying paper) and employing workers to distribute them, newspaper companies could simply have their subscribers log on to a website and consume the same content.

Customers Finding Alternative Sources of Advertising

Traditionally, advertisers thronged newspaper companies to advertise their products. However, the advent of new communication channels eliminated the newspaper companies as an intermediary between advertisers and customers. For example, GM and Ford made their websites and advertised their products directly to customers without having to involve newspaper companies. Similarly, Craigslist emerged and “stole” most of the business for classified ads from newspaper companies (Kumar et al., 2013). This trend affected the profitability of the NY Times.

Large Media Companies Dominate the Digital Space

Although new digital content developers are coming up today, the NY Times still has many resources in developing well-researched and professional content (better than smaller competitors can do). This is why such companies continue to dominate the digital marketing space.

Customers Are not Seeing the Need of Paying for Information Anymore

The unwillingness of customers to pay for information could erode the revenue model of digital media advertising because content developers would have trouble looking for ways to generate revenue.

SWOT Analysis of Market Trends

What are the Risks of not addressing each of the Trends?

Failing to address the above-mentioned trends could easily lead to the reduction in sales numbers and the overall reduction in profitability for traditional media companies. For example, an increase in the number of substitute products and the introduction of new forms of advertising could potentially lead to this outcome. Resource scarcity and the failure of customers to recognize the need for paying for information could also decrease the competitiveness of media companies in the global marketing space. Based on these potential risks, the NY Times needs to adopt new strategies for overcoming these challenges.

Tactical Responses to the Opportunities and Strengths Identified in the SWOT Analysis

NY Times needs to exploit the opportunities and strengths identified above by adopting innovative strategies. Some possible proposals appear below

• Provide content freely and focus on advertisement revenue, as opposed to requiring users to pay for information
• Provide Niche Content
• Expand International reach

What are the less desirable Options and why are they not Attractive?

The less desirable options from the above list of proposals are providing niche content and expanding the company’s international outreach. These proposals are unattractive because the NY Times would be entering a new space dominated by other players if it adopts any of the two strategies. For example, it is unlikely that the company would not find new competitors if it provided niche content. Similarly, if it expanded its international outreach, it would find new competition. Therefore, the most desirable strategy is providing content freely and focusing on advertisement revenues.

Conclusion and Recommendations

Part of the mandate of the NY Times is to promote social, political, and economic development. By providing free information, it would be fulfilling this mandate. To maintain a successful revenue model, the company should focus on improving customer traffic to its digital platforms by providing free information. Afterward, it should charge advertisers for marketing on this platform. This would be a new revenue model. Some of the most successful tech companies, such as Google, Facebook, and YouTube have used this strategy successfully.

References

Kumar, V., Anand, B., Gupta, S., & Oberholzer-Gee, F. (2013). The New York Times Paywall. Harvard Business School Case, 512-077.