The New York Times: Pink Politics and Red Ink
By Gary North
The New York Times, along with all other print-based city newspapers, is slowly going bankrupt.
Specifically, Craigslist is killing them. Generally, the Web is killing them. They are all doomed. There are no exceptions. They are like mastodons caught in the tar pit. Some of them are sinking faster than others, but all of them are sinking.
What is killing them is the loss of advertising revenue in print editions. That is where the money is. That is where the money has always been. To make profits, they have to sell ad space on large pieces of paper — newsprint. But nobody over age 35 wants to read their pieces of paper any more. Only old people still hold on to these pieces of paper; nobody under 35 pays any attention. So, advertisers are departing in droves.
The Times has started a paid digital subscription operation. There are people who pay for this, but not nearly enough. In all of its quarterly reports, whatever spin specialist writes them tries to put lipstick on the obvious pig, but the bottom line always says the same thing: losses. Digital ad revenue per subscriber never equals ad revenue per newsprint subscriber.
The liberal press had secured for itself a nice monopoly by the end of the 20th century. That monopoly is not worth much any more. Matt Drudge has vastly more influence nationally than the New York Times does . . . and only three employees.
In the latest article on its quarterly report, the Times admits that the company had a $14 million loss. This had to do with pensions and falling ad revenue. Pensions are inescapable sources of losses. You do not get rid of these. They just keep adding up. The more people you have on your staff, the more people who will retire, and the more people who retire, the greater are your losses. This is not some one-time write-off. This is a permanent condition. This is terminal cancer.
Naturally, the Times wants to paint as pretty a picture as it possibly can. So, we read this: “But digital subscriptions continued to show solid growth, the company said Thursday, and digital advertising grew at a double-digit pace.” The newspaper added 47,000 new digital subscribers, for a total of 957,000. This is a 20% increase from the first quarter of 2014. This all sounds good. Digital subscriptions generated $46 million in revenue. This is up 14%. This also sounds good.
So, was total revenue up? No, it was down by 1.6%. Total revenue was $394 million. Circulation revenue dropped 1%. They hiked prices to offset this. Usually, it is not a good idea to hike prices when you are losing money.
Here is the killer.
Digital advertising increased 11 percent. But print advertising, which makes up a greater proportion of revenue, at a higher profit margin, dropped 11 percent. Overall advertising revenue was off 5.8 percent.
When advertising revenues are constantly falling, a newspaper is doomed. The only way that it can make this up this loss is to cut costs. The New York Times prides itself on having a staff of investigative reporters. There is no way to cut costs significantly, other than to fire more of these people, or else to cut their salaries.
I love this: “We got off to a solid start in early 2015,” said Mark Thompson, the company’s chief executive, “as our company maintained its digital momentum.” But the company also maintained its print edition momentum: downward. Revenues followed.
This is lipstick on a pig. The pig has cancer.
The mark of a dying operation is its replacement of key senior officers. This is taking place at the Times.