October 19, 2009

Crisis, Crisis Read All About It!

The New York Times is living in crisis.

The paper announced at 2:49 today that it will cut 100 newsroom jobs.  This comes on the heels of significant cuts elsewhere in the organization, and on top of previous scale-backs and pay cuts in the newsroom already in 2009.

This mass lay-off is just one more sign that the once storied-company has failed to face reality.  The Times in dealing with a cyclical decline in advertising has ignored that its business model has changed.  The advertising losses are a secular trend.  Sales will not rebound once the economy bounces back.  Instead of investing heavily in new markets (like the Washington Post), The Times built a fancy new headquarters business.

What was Sulzberger thinking?  Mark Bowden’s piercing Vanity Fair piece suggests he wasn’t.  The Times’ fall from grace is painful to watch.  Management has never gotten in front of the significant advertising and revenue declines.  Management went on a spending spree at exactly the wrong time (a reason that in January the Times had no choice but to take a $250 million loan from Mexican media mogul Carlos Slim).  And all of this on top of having been forced to sell part of its newly constructed headquarters, the construction of which was the ultimate act of hubris. 

The Times is a weak pulse away from an all-out flat-line, and the newsroom cuts are certainly a symptom—not a cure.  Where were the bold investments in emerging media?  Where was the prudent pull-back from an overly aggressive capital structure?  Where was management’s judgment then? 

Where is management’s judgment today?

For years the Times has refused to face their crisis-stricken reality and dig deep for the root causes of their ills.  Now Rupert Murdoch is going on offense and making significant investments in the Wall Street Journal.  The Gray Lady sits back on her heels. 

We are watching how a giant tumbles.  We are witnessing another great institution imploding.  Where is the leader she needs?