Is the clock ticking on a New York Times sale?

Thomas Lifson
Morale at the New York Times took a further blow when news broke of the sale of the Washington Post to Jeff Bezos. Inevitably, a potential sale of the Times to another mega-billionaire seeking prestige and political clout becomes a topic of conversation. Today, Politico, the Washington Post, and others are openly discussing the subject.  After enduring a series of cutbacks and very well aware that the company's business model has failed, the NYT's staff confronts the possibility of becoming a luxury plaything or worse.

Human nature being unchangeable, members of the Sulzberger/Golden clan are comparing their fortunes to those of the Graham clan that has just sold what was once the foundation of their wealth. They must have accumulated a lot of resentment, conscious or unconscious, over the inept performance of Pinch Sulzberger, the designated heir who squandered over a billion dollars of their wealth on the acquisition of Boston and Worcester newspapers just as the internet was poised to destroy the print newspaper business. Instead of successful diversification, as the Grahams managed, Pinch has drilled a series of dry holes, so bad that the profitable business have now all been sold, and the company is down to two primarily newsprint operations, the New York Times and the International Herald-Tribune, which (Pinch threw money into, buying out the Grahams, who had been equal partners in the overseas-based newspaper). Whatever value the IHT brand name holds (it has been an iconic symbol of the expatriate American presence for decades) is to be trashed, as the paper will become the "International New York Times" soon enough.


Family members also have to be upset over the company's failure to pay any dividends since early 2009. Not only did Pinch squander cash on bad acquisitions, he actually increased the dividend steadily and substantially since the year 2000, doubling it from 11.5 cents a share in 2000 to 23 cents a share in 2007. That experience had to make the slash to 6 cents a share for one quarter in 2008, and then bang! Nothing. That's gotta hurt. Meanwhile, the one family that could rival them for power, prestige, and influence, those Grahams down in DC, are about to cash some impressive checks.

Even academics see the handwriting on the wall. Paul Farhi of the WaPo:

"I can see scenarios where it could happen," said Rick Edmonds, a media-business analyst for the Poynter Institute, a school for professional journalists. "The Times has a lot of strengths. But I think there is some pressure there, too."

Farhi presents the family's presumed reaction a bit more diplomatically than I have been presenting it:

In addition to external pressures, Sulzberger probably has some from within. Much like the Washington Post Co., the Times Co. has a dual stock structure that ensures control remains among family members, not public shareholders. Edmonds estimates that two dozen Ochs descendants own these shares. And, he notes, demands for dividends and continued profits have split family-owned newspaper companies before, most recently the Bancroft clan that owned Dow Jones & Co., parent of the Wall Street Journal. Those pressures led the family to sell the company to Rupert Murdoch's News Corp. in 2008. "It can make newspapers quite vulnerable," Edmonds said.

Needless to say, the company is denying any contemplation of a sale:

Eileen Murphy, a Times spokeswoman, reiterated the company's intent to remain independent. She said Tuesday that the company sees "lots of potential" to increase advertising and subscription revenue at its remaining papers.

What else can she say? As it happens, Eileen was a student of mine at Harvard Business School, and she is smart.

I don't know any of the Sulzberger heirs. But I do know human nature, and I have also known a few heirs of wealthy families. The Sulzberger cousins are not a happy bunch today; the mind inevitably draws comparisons with peers. Stopping the decline of their fortune has to be a concern, and they can't help themselves from calculating what their share of a sale might be and comparing it with the prospect of further deterioration of their patrimony.

Oh, and one more thing: they need a scapegoat.  Pinch should see what is headed his way, but I suspect he doesn't. He hasn't been very good at predicting the future.

Morale at the New York Times took a further blow when news broke of the sale of the Washington Post to Jeff Bezos. Inevitably, a potential sale of the Times to another mega-billionaire seeking prestige and political clout becomes a topic of conversation. Today, Politico, the Washington Post, and others are openly discussing the subject.  After enduring a series of cutbacks and very well aware that the company's business model has failed, the NYT's staff confronts the possibility of becoming a luxury plaything or worse.

Human nature being unchangeable, members of the Sulzberger/Golden clan are comparing their fortunes to those of the Graham clan that has just sold what was once the foundation of their wealth. They must have accumulated a lot of resentment, conscious or unconscious, over the inept performance of Pinch Sulzberger, the designated heir who squandered over a billion dollars of their wealth on the acquisition of Boston and Worcester newspapers just as the internet was poised to destroy the print newspaper business. Instead of successful diversification, as the Grahams managed, Pinch has drilled a series of dry holes, so bad that the profitable business have now all been sold, and the company is down to two primarily newsprint operations, the New York Times and the International Herald-Tribune, which (Pinch threw money into, buying out the Grahams, who had been equal partners in the overseas-based newspaper). Whatever value the IHT brand name holds (it has been an iconic symbol of the expatriate American presence for decades) is to be trashed, as the paper will become the "International New York Times" soon enough.


Family members also have to be upset over the company's failure to pay any dividends since early 2009. Not only did Pinch squander cash on bad acquisitions, he actually increased the dividend steadily and substantially since the year 2000, doubling it from 11.5 cents a share in 2000 to 23 cents a share in 2007. That experience had to make the slash to 6 cents a share for one quarter in 2008, and then bang! Nothing. That's gotta hurt. Meanwhile, the one family that could rival them for power, prestige, and influence, those Grahams down in DC, are about to cash some impressive checks.

Even academics see the handwriting on the wall. Paul Farhi of the WaPo:

"I can see scenarios where it could happen," said Rick Edmonds, a media-business analyst for the Poynter Institute, a school for professional journalists. "The Times has a lot of strengths. But I think there is some pressure there, too."

Farhi presents the family's presumed reaction a bit more diplomatically than I have been presenting it:

In addition to external pressures, Sulzberger probably has some from within. Much like the Washington Post Co., the Times Co. has a dual stock structure that ensures control remains among family members, not public shareholders. Edmonds estimates that two dozen Ochs descendants own these shares. And, he notes, demands for dividends and continued profits have split family-owned newspaper companies before, most recently the Bancroft clan that owned Dow Jones & Co., parent of the Wall Street Journal. Those pressures led the family to sell the company to Rupert Murdoch's News Corp. in 2008. "It can make newspapers quite vulnerable," Edmonds said.

Needless to say, the company is denying any contemplation of a sale:

Eileen Murphy, a Times spokeswoman, reiterated the company's intent to remain independent. She said Tuesday that the company sees "lots of potential" to increase advertising and subscription revenue at its remaining papers.

What else can she say? As it happens, Eileen was a student of mine at Harvard Business School, and she is smart.

I don't know any of the Sulzberger heirs. But I do know human nature, and I have also known a few heirs of wealthy families. The Sulzberger cousins are not a happy bunch today; the mind inevitably draws comparisons with peers. Stopping the decline of their fortune has to be a concern, and they can't help themselves from calculating what their share of a sale might be and comparing it with the prospect of further deterioration of their patrimony.

Oh, and one more thing: they need a scapegoat.  Pinch should see what is headed his way, but I suspect he doesn't. He hasn't been very good at predicting the future.