(Corrects trillion to billion in paragraph 2)
* First time Thompson dealing with full-on commercial
pressure
* Mandate is to grow business in video, digital,
international
* Effective at getting BBC to perform with reduced resources
By Jennifer Saba
NEW YORK, Aug 15 (Reuters) – The tasks that now confront
Mark Thompson, the newly appointed chief executive of The New
York Times Company, are essentially the same ones he
faced at the BBC: usher a storied, but staid brand into an
increasingly digital and global world while navigating a
delicate balance between often competing political power
centers.
The only difference is that now he must do it in a
commercial enterprise where building advertising and content
sales is paramount, rather than a government-protected one where
the vast majority of revenue comes from viewers paying license
fees. The BBC’s commercial revenue was, for example, only
$348.44 million according to its annual report for 2011/12
published in July, against $5.66 billion from licensing fees.
“This is the first time that Mark Thompson has been
seriously exposed to full-on commercial pressure,” said Steve
Hewlett, a media consultant and BBC broadcaster. “Doing digital
development at the BBC when you don’t have to make a return is
one thing; doing it when you’ve got shareholders breathing down
your neck and a deteriorating business is another.”
That’s not to say that Thompson isn’t up for the task.
Sources say the Oxford-educated executive isn’t scared of making
tough decisions, from cost-cutting measures like canceling
beloved shows and instituting layoffs to joining the fight to
stop Rupert Murdoch’s News Corp from taking control of
satellite broadcaster BSKyB.
Thompson, 55, spent his entire career at the BBC, rising
from a trainee in 1979 to stints on shows such as ‘Newsnight’
and the ‘Nine O’Clock News’ by age 30 before eventually becoming
Director General, which is regarded as the U.K. television
industry’s most powerful post.
He joins the New York Times Company during a period of
unprecedented change at the media group and in the wider U.S.
newspaper industry, which has seen big declines in print
circulation and advertising, and little sign that online revenue
can make up much of the difference.
Readers are increasingly getting their news from smartphones
and tablets, prompting a mass loss of advertising dollars from
the printed product. Print advertising revenue at the Times Co
fell 8 percent in the second quarter, while digital advertising
slid almost 2 percent.
Indeed, sources said one of the biggest question marks
surrounding Thompson is whether he will be able to apply his
skill at cajoling British lawmakers and taxpayers to pony up
money to getting Madison Avenue, a constituency with which he
has limited experience, to buy advertising on behalf of its
clients.
The Times Co was once a sprawling media conglomerate with TV
and radio stations, magazines, dozens of newspapers, and stakes
in sports franchises like the Boston Red Sox baseball team and
Liverpool soccer club. But over the years it has been shedding
its assets – last week, the company said it was in discussions
to sell its Internet property About.com for a reported $270
million and in December it sold its regional newspaper group for
$143 million.
As a result, the company has dwindled to its flagship paper,
the New York Times — still one of the most prominent newspapers
in the world – and three sister publications, the Boston Globe,
the International Herald Tribune and the Worcester Telegram &
Gazette.
The Times Co’s revenue and share price have shrunk along
with its asset base. Revenue for the first half of the year is
down 30 percent from the same period four years ago and stood at
$1 billion. Its share price has plunged from a high of $53 to
below $10 currently.
By contrast, according to its annual report published in
July, the BBC generated a total of $6.52 billion from licensing
fees, commercial operations and its world and monitoring
services.
The business challenges would be enough to deal with for any
new CEO, but Thompson must also navigate the internal politics
of the controlling Ochs/Sulzberger family.
Sources say that though he is CEO, Thompson will actually
serve as a lieutenant to Chairman Arthur Sulzberger Jr., who has
firm control over the company. Thompson’s predecessor, Janet
Robinson, abruptly left the company in December after a 28-year
career amid what sources described as clashes with Sulzberger
over direction and other matters.
“It’s a company that’s run by the family,” said Doug Arthur,
an analyst with Evercore Partners. “To me the question is why
did he take it?”
One possible explanation for why Thompson took the job could
simply be location. Thompson is married to American writer Jane
Blumberg and has three children, and according to a former
associate they vacation every year at her family’s home in the
states. This source added that Thompson’s wife wanted to be
closer to her family.
And analyst Arthur also noted that, despite being family
controlled, as CEO Thompson will have some degree of autonomy to
operate the business and prove that he is capable of running a
publicly traded company.
A Times Co representative declined comment for this story.
DIGITAL AND INTERNATIONAL
In hiring Thompson, Sulzberger is getting an executive who
respects journalistic integrity, but isn’t afraid to make tough
decisions to bring spending on news gathering in line with
economic reality.
While Sulzberger, who is also the publisher of the New York
Times, has resisted the deep newsroom cuts that have hit most
major dailies, Thompson was forced to undertake austerity
measures that included large-scale layoffs at the BBC.
“He has actually been very effective getting organizations
to perform well with reduced resources,” said Emily Bell, a
former Guardian news executive and current director of digital
journalism at Columbia University.
Thompson also brings to the Times Co established credentials
in growing digital and international businesses. He is credited
with helping to develop the iPlayer, an application that enables
viewers to catch up on missed programs for free online. It is
widely considered a huge success.
He has also helped grow BBC.com into a major global web
portal, attracting 57 million unique monthly visitors worldwide
in June, according to comScore.
Last year, the Times Co rolled out a pay model for its
digital products that has so far proved convincing in getting
readers to pay for news. Total paid digital subscriptions for
NYTimes.com and BostonGlobe.com climbed 13 percent to 532,000 at
the end of the second quarter.
Thompson’s deal-making with other media outlets,
specifically a joint venture with ITV, and successful efforts
with BBC America and other for-profit international offshoots of
the public broadcaster dovetail with Sulzberger’s view that the
Times Co’s future is in video and social media and mobile global
expansion.
A source inside the New York Times’ newsroom told Reuters on
Tuesday that the biggest question being asked about Thompson’s
hire was “whether this is a signal that we are going to be
getting more into the TV business, or is he just going to take
what we do already and distribute it more broadly globally.”
But some sources echoed the opinion of U.K. media analyst
Clare Enders, who thinks that Thompson is going to have a
difficult time replicating his BBC success at the Times Co.
“This is not an appointment that is crying to you: ‘This is
the man who is going to transform the costs of the organization,
alter the business model beyond recognition so the organization
survives, maximize cash,’ all the things public company
shareholders would typically be looking for,” said Enders.
($1=0.6371 British pounds)
(Additional reporting by Yinka Adegoke in New York and Kate
Holton and Paul Sandle in London; Writing by Peter Lauria;
Editing by Leslie Gevirtz)
