Feel the Pinch! Sans CEO, New York Times Stock Slumps, Labor Battle Grinds On

While newsroom angst and stockholder discontent fester, Arthur Sulzberger, Jr., takes a hike.

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Sulzberger. (Getty)

Last Friday, New York Times executive editor Jill Abramson addressed the newsroom troops in a town hall meeting. The semi-annual event, known as “Throw Stuff at Bill” under her predecessor Bill Keller, had been rebranded: “Grill Jill.”

“The past few months have been a time of tremendous creative energy in our newsroom, sadness and some tension,” her remarks began.

No kidding.

Times reporters have been without a contract for more than a year and some of them say morale is an historic low. The Newspaper Guild that represents them is engaged in a protracted and contentious battle over the company’s pension plan—a crucial retention incentive and a staggering legacy cost—that has dialed up the normal grumblings of know-it-all newsmen to an impassioned fever pitch.

Reporters signed open letters criticizing chairman, publisher, Ochs heir and acting CEO Arthur Sulzberger, Jr., and were filmed protesting the sacrosanct Page One meeting. Pulitzer Prize-winners Amy Harmon, Dan Barry and Kevin Sack appeared in a video put out by the Guild that publicly reminded management that Bloomberg, Reuters and the Huffington Post pay competitively and—having already lured an unprecedented number of Times reporters to their digital shores—win fancy prizes now too.

Before that, a long-simmering e-mail chain among a couple hundred senior reporters bubbled over into Gawker’s pages. The site published one especially vivid installment in which science reporter Don McNeil accused Mr. Sulzberger of dilettantish leadership, citing his Himalayan excursion with leadership guru Michael Useem.

“We put out a great newspaper every day,” the kicker went. “But outside the newsroom, at the corporate level, we’re sailing on a ghost ship.”

To some, the slow pace and hostile tenor of the company’s contract negotiations reflect discordance and disorganization on its executive level. A spokesperson for the Times declined to comment (except to say that they look forward to reaching a full and fair agreement with the guild), but Ms. Abramson addressed the concerns head-on to the newsroom.

“Worries about the current state of The Times and our industry are natural,” Ms. Abramson said, according to a transcript of her remarks shared internally. “But you need to know that Arthur and the company have a vision and strategy to return us to a path of growth.”

Mr. Sulzberger did not hold his own “State of the Times” meeting this year (it might have gotten a little too “Lynch Pinch,” perhaps), nor was he in the newsroom for the Pulitzer celebration. But Mr. Abramson articulated his vision and strategy.

The plan, according to her remarks, is to “expand from our core.” That is, to harvest profits organically from the quality work they’re already doing. Some staffers have been put in working groups to find ways to expand and monetize key areas like mobile, engagement, social media, video and international. The Times will also branch into international native-language editions with special news of regional importance, independent of the International Herald Tribune.

“It’s an exhilarating vision,” she said, “and I’m excited.”

The Times has been without captain since December, when CEO Janet Robinson (a schoolteacher turned advertising exec who was once a favorite of Mr. Sulzberger’s) was pushed out, amid rumors she had clashed with Times Co. vice chairman Michael Golden (a Sulzberger-Ochs cousin) over the sale of the company’s Regional Media Group, then in Mr. Golden’s portfolio. Mr. Sulzberger became interim CEO as headhunting firm Spencer Stuart were brought in to conduct the search for Ms. Robinson’s successor.

Since then, Times Co. stock, already battered by the recession, slipped below $7 per share and has not recovered, despite promising news about the performance of the company’s one-year-old digital subscription model, the sale of its assets and the early repayment of its debt to Carlos Slim.

Douglas Arthur, an analyst at Evercore Partners, attributed the slump to the the so-called leadership vacuum.

“The market has spoken,” he told The Observer.  “The stock has tanked and other stocks with similar issues have not gone down.”

In the early spring, rumors circulated that Mr. Sulzberger would become CEO permanently. Anyone brought in, after all, would just answer directly to Mr. Sulzberger. He’s known to be a hands-on defender of the newsroom, the high operating costs of which are hard to justify to investors amid contracting advertising revenue. And he’s under pressure from family members on the Times Co. board of directors, who stand to cash in if the Times reinstates its stock dividends, which have not been paid since 2008.

Oh, and the new CEO’s first order of business would be to take care of that volatile and emotional labor battle going on downstairs.

Is Times CEO a job only an Ochs heir could love?

According to Capital NY, Mr. Sulzberger dodged the question when posed to him by an analyst on an earnings call.

“I have no doubt that we will find the right candidate, and I’m looking forward to that,” he reportedly said.

Shareholders are looking forward to it too.

“The market is very eager to see a new CEO,” Mr. Arthur said. “An outsider who can bring in a digital perspective, who’s got some knowledge of the newspaper business.

“It’s important to have some independence from the family,” he went on. “It is still a decent size company and its got this huge build-up in cash.”

Earlier this month, the company sold its remaining stake in the Boston Red Sox for $63 million, having already sold a third of its shares for $30 million in February. In December, the sale of the Times Co.’s Regional Media Group yielded $143 million.

“It’s burning a hole in their pocket,” Mr. Arthur said. “Who’s going to make a decision about it? If you’re going to be a growth company, you need a growth CEO.”

To others, the cash influx, akin to a dowager selling her pearls, was less reassuring.

In Ms. Abramson’s remarks, she offered the “sobering” fact that The New York Times Media Group revenues had dropped by $500 million since 2006. The operating profits of individual media companies within the group—whose members have changed since 2006—are not reported.

One thing is certain, though: the company made money available to pay Ms. Robinson a generous exit package, galvanizing newsroom dissent.

A widely passed-around Columbia Journalism Review infographic showed what Ms. Robinson’s $21 million “Golden parachute” could buy the paper of record: 230 starting reporters’ salaries, 14 years of Baghdad bureau operations, or Tom Friedman’s fantasy travel budget. (Bloomberg News later reported that her severance package was closer to $23.7 million.)

Ms. Abramson reminded staff that while the bullpen is about as big as it was ten years ago, the business side continues to take haircuts, most recently with 50 layoffs across finance, human resources and legal.

“I think all of you know that Arthur has fought like a tiger to protect newsroom jobs,” she said.