THIS has been Rupert Murdoch week in New York, which has only added to the many difficulties of Arthur Sulzberger junior. Ordinarily, given that he has just slashed the dividend paid by the increasingly troubled New York Times Company, which he has run since 1997, Mr Sulzberger might have been grateful that everyone’s attention has been on another media mogul. But “The Man Who Owns the News”, a new biography that has made Mr Murdoch the talk of the town, contains a savage critique of Mr Sulzberger and describes in convincing detail Mr Murdoch’s ever-stronger desire to acquire the New York Times.
The New York Times is Mr Murdoch’s “favourite train wreck”, writes his latest biographer, Michael Wolff, who had unprecedented access to the tycoon, his family and his employees. (This is not an authorised biography, but Mr Murdoch is said to be broadly pleased with a book that celebrates his acquisition in 2007 of Dow Jones, owner of the Wall Street Journal.) “I’ve watched [Mr Murdoch] go through the numbers, plot out a Times merger with the Journal’s backroom operations,” writes Mr Wolff. “He has conjured, too, how in Murdoch style, he might convince the Sulzbergers to let him in, if he promises to leave Arthur in charge—and how he could then make Arthur his puppet.”
Until recently, Mr Murdoch’s dislike of Mr Sulzberger—the feeling is said to be mutual—could be attributed mostly to a right-winger’s visceral dislike of the Manhattan-liberal journalism of the New York Times. But, if Mr Wolff is to be believed, in recent years Mr Murdoch’s young wife, Wendi Deng, “has turned him into…well, almost a liberal.” Instead, it seems, Mr Sulzberger strikes Mr Murdoch as a frightening case-study of how a newspaper dynasty can go wrong. Mr Sulzberger took over his father’s newspaper business, and Mr Murdoch would like one of his children to inherit the reins of his firm, News Corporation. Ailing newspaper dynasties may offer a cautionary tale to Mr Murdoch, but they also present him with a commercial opportunity. The Bancroft clan that controlled Dow Jones (but no longer had a management role) was another example of a newspaper dynasty that had lost its way. Mr Murdoch saw them off, against the odds, so why not repeat the trick with the Sulzbergers?
So far, the Sulzbergers have remained unwaveringly loyal to their latest son to run the family firm, though he gets more embattled by the day. He has had to give board seats to two activist investors who had loudly criticised him. Circulation has been eroding bit by bit, to an average of 1,077,000 per weekday in the six months to March. Advertising revenues fell by 13.7% in the third quarter, as the recession caused companies to slash marketing. The New York Times Company’s share price has fallen by almost 60% this year, to its lowest in 24 years, taking the firm’s market capitalisation to $1 billion. Mr Sulzberger’s decision on November 20th to cut the firm’s quarterly dividend by three-quarters, in order to conserve precious cash, could cost family shareholders $18m a year—though he had the full support of the controlling Ochs-Sulzberger Trust.
Ultimately, the Bancrofts lost the Journal because the family was torn apart by intergenerational warfare: the younger family members, who had no real connection to the newspaper business, were keen to sell and thus bank their inheritance. There are reports that the fifth generation of Sulzbergers is similarly restless, though as Mr Sulzberger has pointed out, the eight-member family trust that controls the company is much less exposed to this pressure than the many Bancroft-family trusts were. That said, an obvious heir has yet to emerge to Mr Sulzberger—nicknamed “Pinch”—who took over as chairman from his father, Arthur “Punch” Sulzberger, who had in turn succeeded his father. The fate of the Bancrofts has reinforced the belief of many observers that once the Sulzbergers cease to be practically involved in running the business, it will be only a matter of time before it is sold. That said, because Mr Sulzberger is only 57, succession is not yet an urgent question.
Grey days for the Gray Lady
Mr Murdoch apparently blames Mr Sulzberger for the New York Times Company’s many problems. For a start, trying to make the Times a national newspaper loosened its essential ties with New York. Mr Sulzberger’s excessive chumminess with some journalists contributed to two scandals that hurt the paper’s reputation: the invented stories of Jayson Blair and the jailing (over her refusal to disclose sources in the Valerie Plame affair) of Judith Miller, a reporter who, the Times later said, it had protected too much. And although Mr Sulzberger talked about the need to evolve from being a newspaper into an internet brand, it was Mr Murdoch who became the new-media titan by acquiring MySpace.
Well, up to a point, Mr Murdoch. Mr Sulzberger’s problems are largely those of the newspaper industry as a whole, the business model of which has been knocked sideways by the rise of the internet. News Corp’s shares have actually fallen by more this year than those of the New York Times Company. And it is only Mr Murdoch’s diversification many years ago into television and the internet that has camouflaged what a poor financial investment it was to buy the Journal. Moreover, the Times has done a better job than almost any other paper (except perhaps the Journal) in moving online. It now boasts the most visited American newspaper website, and on November 5th, the day after the presidential election, it had an impressive 61.6m page views. Mr Sulzberger’s acquisition of About.com, a search engine, was a decent buy, though he could certainly have done more to develop it.
Yet the harsh fact is that, his fault or not, Mr Sulzberger has yet to find a business model on the web that generates enough money to support the Times’s high-quality, but expensive, global network of reporters. He is running out of time to do so. Meanwhile, Mr Murdoch dreams of becoming his puppet-master.
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