The New York Times, whose circulation and advertising revenue are declining at crisis levels, and which just halted payment of dividends to shareholders, reports on the troubles rival Rupert Murdoch has encountered with the newspaper holdings of News Corporation.
Tim Arango and Richard Pérez-Peña write a generally fair and highly interesting account of the trouble News Corp has had with its purchase of Dow Jones, publisher of the Wall Street Journal.
...his lifelong fondness for newspapers has become a significant drag on the fortunes of his company, the News Corporation.
The company recently took $8.4 billion in write-downs, including $3 billion on its newspaper unit, which includes The Journal's publisher, Dow Jones & Company. Meanwhile, the News Corporation's stock price has fallen by two-thirds in the last year, a sharper decline than at media conglomerate peers like Time Warner and Viacom.
Of course the reporters neglect to mention that the New York Times Company's stock is down 80% in the same one year period, and that it has taken massive writeoffs on its New England newspaper purchases. I am inclined to cut them some slack, however, since Pérez-Peña has produced excellent coverage of the problems facing NYTCo, and the company has made no secret of its woes. They are also quite fair in noting this: In another area, however, The Journal has outperformed almost all its competitors by maintaining its paid circulation of more than two million, in print and online, in the most recent reporting periods, while nearly every other major paper showed declines. Some of those subscribers receive only the online version, making The Journal one of the few papers to successfully make its online readers pay for content ....
With revenue falling, Mr. Murdoch has not followed through on his early talk of expanding The Journal's news staff. In fact, it recently laid off some journalists, but the reduction was minimal by recent industry standards.
The WSJ is challenging the national edition of the NYT for subscribers and advertisers, reportedly discounting heavily to attract both, pressuring the NYT as a result. The intrepid reporters also mention the other market in which the Times faces Murdoch competition, the New York metropolitan market, in which the New York Post has been gaining readers.
For years, Mr. Murdoch has stomached tens of millions of dollars in annual losses at The New York Post, in exchange for the power the paper afforded him. But given the economic times and the shift of his attention to The Journal, there is a sense of urgency in the News Corporation executive suite about stemming The Post's losses.
While the New York Times Company has sold non-newspaper operations, and invested heavily in acquiring the Boston Globe and other New England newspapers, News Corporation has maintained its strong position in other media, which is helping it weather the newspaper downturn:
The News Corporation still has significant strengths, including the Fox film studio, which appears poised for a better year than it had in 2008; cash reserves of $3.6 billion; and the Fox News Channel, whose revenue and profit are growing. The company's operating income in the last quarter, $818 million on revenue of $7.9 billion, was down 42 percent from a year earlier, but hardly anemic.
I congratulate the Times on the way it is reporting on its own industry. I strongly suspect that its own editorial staff, acutely aware of the company's declining fortunes and more possible layoffs ahead, demnds honest coverage of the company's own woes. If only the same standards applied to its political coverage....
Hat tip: Ed Lasky
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