The New York Times company leadership, culture, and organizational structure

New York Times

Leadership and Culture

The New York Times has a corporate culture based around a tradition of excellence. As the "newspaper of record," the New York Times has long been considered a leader in the industry, capable of setting trends and innovating. At the same time, the Times Company is also fairly conservative, because of its tradition of excellence. There is an expectation within the company of being the best. Integrity is held in utmost regard. These philosophies are incorporated in the company's "Rules of the Road," which include the usual components of integrity, creating shareholder value, good corporate citizenship as core values. Innovation and collaboration are among the traits in the rules of the road, in addition to customer service, respect, challenging oneself -- basic frameworks enshrined in strategy to various degrees (New York Times website, 2010).

Culture is not, however, specifically cultivated at the company as a source of competitive advantage. There is no mention of corporate culture in the annual report, for example, where many firms trumpet their culture as something that sets them apart. In part, this is because the culture is long-established and well-ingrained. There is a proportion of union workers at the Times as well, and that creates a degree of separation between the workforce and management, perhaps contributing to a more conservative atmosphere.

As with every other company in modern America, the New York Times embraces diversity. This is inherent in the fact they are based on New York, where it would take a specific effort to reject diversity. The company maintains a diversity officer in order to promote diversity programs as well, and hires contributors from a wide range of backgrounds to lend diversity to their content offerings.

Organizational Structure

The executive team at the New York Times Company consists of Chairman A. Sulzberger Jr., President J. Robinson, Vice Chairman M. Golden, CFO J. Follo, Corporate Controller R. Benten, Corporate Development Senior VP J. Lessersohn, HR Senior VP T. McCarty, Digital Operations Senior VP M. Nisenholtz, CIO J. Siebert, General Counsel K. Richieri. S. Heekin-Canedy is the president and general manager of the New York Times; C. Mayer is the President of the Boston Globe and there are a handful of lesser vice-presidents as well (2009 New York Times Annual Report).

The structure is based around two core products, the New York Times and the Boston Globe. The digital component is integrated, since there are other properties such as About.com in addition to the online versions of the two papers. The other executive functions are overarching, and there is some indication of overlap between these functions and the New York Times newspaper itself, since that represents the bulk of the company's business.

Value Chain Analysis

There are several components to the value chain -- infrastructure, inbound logistics, operations, outbound logistics, sales and marketing, service and procurement. The New York Times excels at a number of these in order to maintain its leadership position. The infrastructure at the Times is a support structure, but beyond the corporate culture does not make or break the organization. The culture is the one component of the infrastructure from which the Times derives excellence. Despite the weak tone of the company's description of its culture in the "Rules of the Road," the commitment to integrity and excellence permeates the entire organization. Times employees are genuinely committed to upholding the company's position as the best. This attracts top talent, and it allows the Times to execute on strategies that are geared towards a leadership position. The Times' brand strength -- its reputation -- is another component of the company's infrastructure that has been built over the years. This lends the Times brand instant credibility in its endeavors, something that facilitates building out a leadership position.

The inbound logistics is perhaps the strongest component of the New York Times value chain. While newspapers come on newsprint or over the Internet, ultimately the product is the content. The New York Times has cultivated what is probably the best roster of reporters, writers, columnists and bloggers in the industry. As a result, the Times has assumed a leadership position in content, living up to the sobriquet of "the paper of record." This has driven strong growth, allowing the Times to be on a path to becoming not just the leading American newspaper but the global English-language standard in the industry. The content driver readership, which in turn drives advertising, and it puts the Times in the unique position of actually being able to charge for the news (Sherman, 2010).

Operations is geared towards efficiency at the Times. Despite its leadership position, the Times still operates in a struggling industry where cost control is a necessary element of survival. This is particularly true of the company's print business, but is also true online, where high traffic volumes may allow for economies of scale but they also create a high cost structure that must be controlled.

Outbound logistics is a unique opportunity for the Times. It has generally focused on two forms -- print and Internet. With the print format, there are two areas of strength. One is cost control in the New York area, where the paper circulates some 900,000 copies per day. The other is distribution beyond New York. Online outbound is more complex. The Times operates some 50 websites. It is going to begin charging for its flagship site in 2011. As well, the Times has in recent years increased the number of content partnerships, such a recent deal with Zagat and Foursquare to disseminate Times food-related content to a broader audience (Wortham, 2010) or their earlier deal to make forays into radio (Sanders, 2004). The use of such licensing and partnership arrangements helps the Times derive greater value from its content by improving distribution.

Sales and marketing remains critical to the Times, as it requires not only sales of its content, but sales of its readership as well to the advertising market. Whether sales is a unique competency of the Times or not is debatable, but the company has had significant success in sales due to the strength of its brand and the high level of circulation and online readership. Service in an ancillary function, from which the Times can derive some degree of customer satisfaction, but service is not an important part of the New York Times value chain. Procurement can give the company cost benefits. The importance of procurement to the Times is exemplified in the fact that they have a Vice-President of Forest Products. Clearly, obtaining a reliable supply of newsprint at a good cost is an important component of the Times' value chain.

Financial Analysis

The New York Times has not been immune to the newspaper industry's struggles in recent years. The Times has lost money is two of the past four years and seen its equity erode from $1.45 billion in 2005 to $604 million today. These struggles have come as the result of steadily declining revenue.

The firm's gross margin is currently 55%, up from 50% five years ago and 49% three years ago. The operating margin is a paltry 2.8%. Five years ago, it was 10.4% but the company has posted an operating loss twice in the past four years as it struggles to cut costs in the face of declining revenues.

As a result of the revenue declines and losses, the Times has seen its balance sheet health deteriorate. The current ratio is 1.0, which represents an improvement from 0.68 three years ago and 0.95 five years ago. However, the company is highly leveraged, with a debt ratio of 0.8 today, compared to 0.71 three years ago and 0.68 five years ago. With the increase in debt has also come a decrease in equity. The debt-to-equity ratio is now 4.11, compared with 2.55 three years ago and 2.14 five years ago. This represents a deterioration of the Times' financial position, despite what appears to be a restructuring of the term of its debt last year to alleviate some liquidity pressure.

Despite the profit fluctuations, the Times has been able to consistently generate positive cash flow from operations. This was $256 million last year, compared with $110 million three years ago and $294 million five years ago. The company has retired some debt in recent years in an attempt to shore up its balance sheet. In 2009, it retired $306 million debt and in 2007 it retired $217 million in debt.

It is difficult to gauge the Times' performance in comparison with its closest rivals, unfortunately. The Wall Street Journal and the New York Post are both owned by News Corp, an Australian conglomerate with a wide range of media holdings. As such, those firms do not report separately. Another rival, the New York Daily News, is privately held and again does not report publicly.

Overall, the New York Times is doing a decent job of adapting to the rapid pace of change in its core industry. It has developed some online competencies and despite having experienced some difficulty in the past searching for the ideal way to monetize its wealth of content and leverage its powerful brand, it appears to be finding the right path. This is likely to lead to more consistent profitability for the paper of record for the coming years.

Works Cited:

New York Times Company website. Various pages. (2010). Retrieved March 24, 2010 from http://www.nytco.com/careers/mission.html

2009 New York Times Annual Report. Retrieved March 24, 2010 from http://www.nytco.com/pdf/annual_2009/2009NYTannual.pdf