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Nightmare on 43rd Street

By John Ellis - June 5, 2003 12:00 AM

Editor's note: Just a few hours after this column was published, Howell Raines and Gerald Boyd resigned from their positions at The New York Times.

The New York Times Corporation has long been a different kind of media enterprise. Just as there are two classes of NYT stock, there are two classes of companies that comprise the whole. In a class by itself is The New York Times newspaper. It is the raison d'etre of the larger enterprise. Everything else falls into the general category of "cash cow," there to feed 43rd Street. Much of the managerial dysfunction of The New York Times Company is a direct result of this corporate bias.

The Jayson Blair scandal was, on one level, a non-event. He lied, he got caught, he got fired. But because the New York Times Company's brand equity is almost wholly derived from The New York Times newspaper, it quickly mushroomed into a crisis of the regime.

And oh what a crisis it has been. The blogs have talked of nothing else. The right-wing has been over the moon with happiness. The commentariat has decreed that the executive editor, Howell Raines, be hanged and that his posse be dispersed. New York Times staffers themselves aver that Mr. Raines has lost the "confidence of the newsroom." Among the deeply disgruntled, the charge is made that Mr. Raines has "hijacked" the paper.

The sins of Mr. Raines are many, no doubt, but he didn't win his job in a lottery. He was chosen to lead the enterprise's flagship operation precisely because he best reflected the worldview of his boss, Times Publisher and CEO and Chairman and Crown Prince Arthur Sulzberger Jr. Jayson Blair was a by-product of Sulzberger Jr.'s "deep commitment" to "diversity." The overt ideological slant of the news pages is derivative of Sulzberger Jr.'s belief in liberal causes and dogma. The tedious political correctness that has infected every section of the paper is as much about Sulzberger Jr. as it is about Howell Raines. It isn't a hijacking if management hands over the keys.

The crisis of the regime is not Howell Raines, it's Arthur Sulzberger Jr. And the emblem of that crisis is the moose. The moose is a stuffed animal that gets thrown on the executive conference table when an obvious problem that no one wants to talk about must be addressed. Some management consultant sold Sulzberger Jr. on the moose idea at one of the company's too frequent "retreats." Sulzberger Jr. brought the moose to the big employee gripe-fest immediately following the Blair debacle. It wasn't just embarrassing, it was embarrassing and pathetic.

But, of course, Sulzberger Jr., the moose, can't be fired. He's family and all that that entails. So the Board and the strategy group are obligated to make him successful despite himself. In the wake of what's transpired, this has become an urgent task. The question is: what to do?

The immediate need is to change the subject. The ongoing debate about journalistic practices and ethics at The New York Times is a complete loser of a story-line. It only leads to more grief (and rightly so). It needs to be subsumed into a bigger, more important script and the only one that is immediately available is the creation of The National and International New York Times.

Sulzberger Jr. has actually moved this ball somewhat, with his hostile takeover of the International Herald Tribune and by his diplomatic openings to Knight-Ridder and Media News. By announcing the acquisition of or merger with Knight-Ridder (ideally it would be Knight-Ridder, since it's an almost perfect fit from a distribution standpoint), Sulzberger Jr. would be able to credibly say that he had truly nationalized the paper.

A swarm of McKinseyites could then sweep in and rationalize the editorial content processes. Savings garnered from the downsizing of non-essential Knight-Ridder operations could be reinvested to beef up the New York Times's business coverage, its cultural criticism and its Washington and foreign bureaus. This would not only feed the 43rd Street beast, it would (with the proper financial engineering) increase the company's cash flow. And it would afford the paper a wealth of new journalistic expertise and experience, particularly in the realm of technology, where the Times has been stretched thin.

By doing a deal with Knight-Ridder, the Times could then quietly jettison its sad television venture, initiated by Sulzberger and now overseen by former Washington Bureau Chief Mike Oreskes, and commit itself to the integration and expansion of the merged entity's on-line properties, which are formidable. Like other media businesses, success in the on-line world is largely dependent on size. Combining all of the NYT and Knight-Ridder on-line properties under one roof would create a content-providing Internet behemoth. With the number of broadband users now reaching critical mass, owning such an asset would offer all manner of possibilities for profitable strategic partnerships and joint ventures.

The New York Times remains, despite all evidence to the contrary, the strongest brand name in media. The Howell Raines-Gerald Boyd-Jayson Blair-Rick Bragg debacles, as they have come to be known, have yet to cause any diminution of that brand equity. But the longer they remain center stage, the more likely it is that damage will be done.

Changing the composition of the company makes it possible to protect that brand equity while simultaneously making the company larger and more important. Once the deal is done, the necessary personnel changes can be made quickly and in a different context. Raines can be shipped off to the International Herald Tribune. Boyd can be put in charge of regional papers. Banished reporters can be hired back. You get the idea.

The critical point is that this crisis of the regime is real. With Sulzberger Jr. and, to a lesser degree, Raines largely responsible for what has transpired, the time has come for the Board to step in and fix the mess. The best way to do that is to jump-start and re-invent the company with a major acquisition.

This article is the first installment of "Elsewhere in the News", a column that will appear twice a month by John Ellis. Ellis is a writer and editor for Fast Company Magazine.
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