New York Times Co.’s Pointless CEO Search

by Jonathan Berr | June 27, 2012 8:00 am

New York Times Co.’s Pointless CEO Search

New York Times Co. (NYSE:NYT[1]) Chairman Arthur Sulzberger Jr. should immediately scrap the company’s pointless CEO search and give himself the job he’s been doing since last year’s ouster of Janet Robinson.

Sulzberger and his family have controlled the New York-based publisher since Adolph S. Ochs acquired the company’s flagship newspaper in 1896. Following the death of Ochs’ daughter Iphigene Ochs Sulzberger in 1990, control of the company passed to her four children, including Sulzberger’s father, Arthur Ochs Sulzberger, who preceded him as publisher of The New York Times. The family controls the company through a trust established in 1997 that, according to the latest proxy, holds 738,810 shares of Class B stock and 1,400,000 shares of Class A stock.

“The primary objective of the 1997 Trust is to maintain the editorial independence and the integrity of The New York Times and to continue it as an independent newspaper, entirely fearless, free of ulterior influence and unselfishly devoted to the public welfare,” the proxy says[2].

Sulzberger is a trustee of the 1997 trust, along with several cousins, including Michael Golden, who is also a board member and the company’s vice chairman. As of February 27, the Ochs-Sulzberger family controlled about 15% of New York Times Co.’s total equity. As Robinson found out, the chief executive title at a family-owned business doesn’t carry much authority if you aren’t also a family member.

A recent New York magazine[3] story argues that Robinson was shown the door because she didn’t get along with Sulzberger’s girlfriend, Claudia Gonzales, even though Robinson had proven to be an invaluable aid to the chairman. Robinson was further hamstrung by the fading fortunes of the Ochs-Sulzberger clan — three years ago, the company suspended quarterly dividend payments that had flowed into the family coffers. Robinson also was a far savvier businessperson than Sulzberger.

”When he paid about $30 million for a software company called Abuzz Technologies that quickly imploded, or when he spent $2.7 billion to buy back company shares that then went down precipitously, or built a new headquarters that was worth half the present-day value of the company, he could appear arrogant and out of touch,” the New York article noted[4].

Given the challenges of running a newspaper under any circumstances and a family business where you aren’t a family member, plus the peculiarities of the Times, it’s hard to see how any competent executive would want the CEO job.

For one thing, what happens if the company’s corporate leader is dissatisfied with the performance of the flagship newspaper? He or she would have to address those concerns to the publisher, who happens to be his boss and a member of the family that has controlled the company for generations. Of course, that would never happen.

According to Bloomberg News[5], the Times is looking for a tech-savvy miracle worker to reverse a six-year-long sales slump and navigate the often-treacherous terrain of the information superhighway.

Akamai Technologies Inc. (NASDAQ:AKAM[6]) CEO Paul Sagan; outgoing BBC Director General Mark Thompson; and Gordon Crovitz, ex-publisher of The Wall Street Journal, are reportedly in the running. Google Inc. (NASDAQ:GOOG[7]) Chairman Eric Schmidt reportedly withdrew his name from consideration. Several internal candidates are also vying for the position.

In the end, the most important skill any new NYT CEO can have is the ability to let Sulzberger do whatever he wants, regardless of the consequences. If Sulzberger were named CEO, he would have no one to blame but himself for the company’s failure. Maybe that’s why he’s eager to hire someone to take the CEO title — so he’ll have a scapegoat when things go wrong.

Endnotes:
  1. NYT: http://studio-5.financialcontent.com/investplace/quote?Symbol=NYT
  2. the proxy says: http://www.sec.gov/Archives/edgar/data/71691/000007169112000007/def14a.htm
  3. recent New York magazine: http://nymag.com/news/features/new-york-times-2012-6/index2.html
  4. the New York article noted: http://nymag.com/news/features/new-york-times-2012-6/index2.html
  5. Bloomberg News: http://www.businessweek.com/news/2012-06-22/new-york-times-said-to-seek-tech-savvy-ceo-for-comeback#p2
  6. AKAM: http://studio-5.financialcontent.com/investplace/quote?Symbol=AKAM
  7. GOOG: http://studio-5.financialcontent.com/investplace/quote?Symbol=GOOG

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