TOUGH TIMES: Missteps in digital innovation development and slumping advertising sales are causing The New York Times to plan to slash about 100 jobs, which accounts for about 7.5 percent of its newsroom staff.
The news didn’t rattle Wall Street. Shares of the media company rose 9.6 percent to $12.30 at the end of trading Wednesday.
This story first appeared in the October 2, 2014 issue of WWD. Subscribe Today.
News of the proposed cuts came via a filing with the Securities and Exchange Commission and in a staff memo, in which publisher Arthur Sulzberger Jr. and chief executive officer Mark Thompson said the company needed to cut costs in order to invest in its “digital future.”
“We are reducing the cost base of the company to safeguard the long-term profitability of The Times, not because of any short-term business difficulties,” the filing said, explaining that the reduction in jobs will vary across the company to include the editorial side as well as “marginal” cuts to the business side, which had previously experienced steeper losses.
Buyouts will be offered to senior managers in the print, digital and ad divisions of the newsroom, but the company did not provide insight on which employees or sections.
The Times, which will report third-quarter earnings at the end of October, offered some insight into the decision, citing a “notoriously volatile” print advertising environment. Growth in paid posts, smartphone and video produced a 16 percent rise in digital advertising that counterbalanced declines in print, resulting in flat ad revenue for the quarter. Digital subscriptions grew by 40,000, and the paper expects “modest” circulation growth, as a result, but the problem is operating costs, which rose low- to midsingle digits in the quarter.
Those costs weighed down profitability, which is expected to be “lower than last year.” Last year, The Times swung to a $24.2 million loss, but operating profit totaled $12.9 million.
The Times said the job cuts would allow it to “invest heavily” in mobile, audience development and its digital product portfolio, advertising and targeted areas of print. But digital hasn’t been a windfall for The Times, which turned to some missteps it has made. It will “sunset” NYT Opinion due to a waning audience, and it will rejigger its strategy for NYTNow, a new app targeting younger readers and offering a lower-priced subscription. Instead of focusing on a multiplatform offering for NYTNow, it will focus on smartphone only. The latest app, NYTCooking, won’t charge for subscriptions, but instead try to build a following before it asks for payment.
As the executives tinker with the business formula, journalists in the newsroom have been asked to take buyouts by executive editor Dean Baquet, who sent out his own memo on Wednesday.
“While there are promising signs in digital advertising and digital subscriptions, the print business remains under pressure. And our new products are not achieving the business success we expected, even though they are journalistic sensations,” Baquet said, noting that he would look at the number of sections the paper produces and the amount the paper spends on freelance content, too.
Baquet outlined packages for Newspaper Guild members, as well as severance packages offered by The Times to non-Guild members, and said he would reserve the right to say no to those who are vital to The Times’ “mission.”
The Newspaper Guild told WWD that buyout packages will be sent out in the next week, and that employees will have a 45-day period to consider the offers. As a result, it will be a few weeks or months before the organization has a tally of those who have accepted the package.
The Guild said that The Times has 1,100 members, which include edit staff and few hundred business-side staff, who work on logistics such as payroll. The members are across all countries, implying that job losses could come from international bureaus, as well.
Baquet signed off his letter, offering: “There is no magic bullet for the current financial plight of the news business.”
The Times has experienced a similar number of cuts before in 2008 and then in 2009, as well as 30 senior jobs at the beginning of last year.
According to the company’s annual filing, its full-time employee base totaled 3,529 as of Dec. 29, down 54 percent from 2009 when it had a staff of 7,665. In 2012, The Times had a full-time staff of 5,363, which amounts to a 34.2 percent decline over 2013. But, it’s important to take into consideration that The Times sold off various media properties, including its Regional Media Group in 2011 and its New England Media Group, which included The Boston Globe, in 2013.