Skip to comments.Today New York, tomorrow the world [New York Times Co. may buy the Financial Times]
Posted on 11/13/2002 4:49:38 PM PST by GeneD
Having bought the International Herald Tribune, the New York Times is rumoured to want to acquire the FT. Richard Siklos reports from New York
When the chairman of the New York Times and the publisher of the Wall Street Journal shared the dais on a media panel last week, it was inevitable that the discussion would turn to the Times' burgeoning global ambitions.
Karen Elliott House had overseen the launches of the Journal's European and Asian editions, and Arthur Sulzberger Jr. last month began a bold push to internationalise the Times by taking full control of the International Herald Tribune.
The moderator delicately inquired if the Journal had any advice for the Times. "Patience and humility," House offered. Without skipping a beat, Sulzberger replied: "I do patience."
Indeed, Sulzberger's power play - he rather aggressively persuaded his long-time partner in the IHT, the Washington Post, to sell its share for $70m - was only the latest in a series of carefully-executed expansionist moves by the 50-year-old scion of the media dynasty overseeing the leviathan boasting "all the news that's fit to print".
While other media businesses have been hit by the global economic downturn, the Times has been enjoying a rising stock price, in part due to snatching advertising market share from rivals, notably the Journal. Having transformed the Times into a national product in America over the past few years, executives are hunting for growth from the internet, television, and, now, the UK, Europe and elsewhere.
As a result, a high-stakes chess match is being played among some of the world's most powerful print news organisations, just as top-flight business journalism has never seemed more important - or less profitable.
So broad are Sulzberger's ambitions that before making its move on the IHT it was rumoured that the New York Times made quiet inquiries about buying the Financial Times, as part of a series of strategic talks between the two companies.
Dame Marjorie Scardino, Pearson's CEO, had previously said the FT would be sold "over my dead body" when it was reported that Journal owner Dow Jones made similar overtures. Scardino stands by her statement.
Asked about his interest in the FT, Sulzberger said only "I talk to Marjorie, I talk to Dow Jones, I talk to the Washington Post."
Officially the Times says its plan is to continue to run the IHT under its current management and format. The money-losing Paris-based paper has 260,000 subscribers spread among 80 countries. The subject of change is sensitive because the Times must deal with French unions before completing the takeover, expected late this year or early next.
After that, the betting is that the Times will go international, either by scrapping the IHT brand, incorporating the two mastheads in a single product, or launching a new Times edition alongside the IHT.
The Times is making its move at a time when global recession and the collapse in financial, technology and recruitment advertising have made it practically impossible for prestige business dailies to eke out a crust while devoting reporting resources to such seismic events as corporate scandals and the global war on terrorism.
Although the Journal and the FT are closer head-on competitors than the Times, all three papers are increasingly chasing the same up-market readers.
In the US, for instance, the Times has increased its circulation over the past decade to the point where nearly half its weekday sales of 1.2m copies and 1.8m on Sunday is outside greater New York, and the bulk of its advertising is national. Business coverage has expanded, including a separate "world business" section that appears to mimic aspects of the FT.
In order to broaden their advertiser bases, the Times and the Journal have also been competing with new soft-feature sections about leisure activities that evoke USA Today. "They've conquered the US with the national edition, so they've targeted Europe and, who knows, Asia may be next," says John Morton, who heads the newspaper consultancy Morton Research.
Neither the Journal nor the FT is likely to take any fresh challenge lightly. Given the Times' liberal proclivities and the Journal's staunchly conservative editorial bent, there is not much love lost between them. In America, the Journal sells 1.8m copies Monday to Friday, second in size only to USA Today.
And it is the global leader in getting print readers to pay for online content, with 664,000 subscribers. (The Times also boasts a major online effort, though it doesn't charge for access to stories from its print edition.)
Per House's advice, a European edition of a newspaper with "New York" on its banner might face a considerable slog trying to win over readers or advertisers. Introduced in 1983, the Wall Street Journal Europe has a circulation of just over 100,000 and is believed to be running at a loss, though readership is growing.
While continuing to plough new resources into their operations, both the Times and the Journal have also had to impose tough cost-cutting programmes (mostly in non-editorial functions), resulting in the Times shedding 1,700 jobs last year and Dow Jones reducing its headcount by more than 1,000.
Peter Kann, the Dow Jones CEO, recently announced 230 more jobs cuts, following an 85 per cent drop in the company's third-quarter earnings and a warning that the fourth quarter would also be down sharply from a year ago.
At the FT, layoffs have not been as severe, but morale has been hit by a hiring freeze and a clampdown on expense account dining and travel. The paper remains profitable, though at greatly diminished levels.
To her credit, Scardino has reduced the importance of the FT to Pearson's overall results, which have seen improvements from its education and consumer books divisions. And despite its plucky upstart stature State-side, the FT maintains a somewhat stronger position in Europe, with 316,000 subscribers split roughly between the UK and the continent.
This week the FT will mark the fifth anniversary of its US edition; the paper has trebled American circulation to 130,000 subscribers. However, ploughing in more investment to attain Pearson's ultimate goal of 200,000 US subscribers might be tricky while advertising remains at 50 per cent of 2000 levels.
Recent talks with the Times about taking over distribution of the FT in the US led to rumours of the Times' interest in a takeover. More concretely, the two papers recently began to share articles on their respective websites.
"We're happy with the relationship with the New York Times and expect it to develop and flourish," Pearson spokesman John Fallon said when asked if the IHT acquisition could have an impact.
In part, Sulzberger may be emboldened because he possesses something that has become increasingly rare among media businesses: satisfied shareholders, including his own family. While Dow Jones' shares have fallen 34 per cent since the beginning of 2001 and Pearson's have slumped by half, the New York Times' equity has risen 20 per cent.
When the IHT buyout was announced, Washington Post executives angrily claimed the Times had bullied them into it, threatening to cut off funds to the IHT in favour of launching its own edition. Clearly Sulzberger is determined to do what it takes to serve what he calls "the quality knowledge audience" worldwide.
Despite his affable mien, the Times chairman takes his position seriously. "Deep in Arthur's soul," a colleague told Alex Jones and Susan Tifft for their book on the Sulzberger dynasty, The Trust, "he believes that if he blows this, he will burn in hell."
I would SO love to be his investment banker.