NY state of mind

The New York Times Company scoops up the Worcester Telegram & Gazette and protects its investment in the Boston Globe. But will the T&G become a better paper under Times ownership?

by Dan Kennedy

Bill Kovach says the key to understanding the New York Times Company's purchase of the Worcester Telegram & Gazette last week lies in suburban Atlanta, of all places. It was there that the Sulzberger family, the principal owners of the Times Company, learned a vital lesson in protecting the bottom line: don't get into a war with an aggressive, well-funded competitor.

Kovach is the curator of Harvard's Nieman Foundation, but 10 years ago he was the editor of the Atlanta Journal-Constitution. A former Washington-bureau chief for the New York Times, Kovach was presiding over a renaissance in Atlanta newspapering. His peskiest rival was the Gwinnett Daily News, which served Atlanta's affluent, rapidly growing northern suburbs, and which had been acquired by the Times Company in 1987.

The Cox chain, owner of the Journal-Constitution, launched an all-out blitz to win the war of Gwinnett County. It started a special Gwinnett County edition. It cut the newsstand price and slashed advertising rates. The measures worked. In 1992, the Sulzbergers waved the white flag, shut down the Daily News, and sold the remaining assets to Cox.

Zip ahead to October 14, 1999, when the Times Company announced -- after several weeks of speculation -- that it would purchase the Worcester Telegram & Gazette for $295 million. By itself, the move was certainly not unimportant: the T&G is the third-largest daily newspaper in Massachusetts, and it has an ironclad monopoly in the state's second-largest city. Far more important, though, is that the Sulzbergers have insured themselves against the possibility that a newly awakened T&G will begin battling the Times Company's Boston Globe in the western suburbs and exurbs.

"I guess once you buy the Globe for $1 billion [actually a reported $1.1 billion, in 1993], you have to protect your investment, because their goal is to dominate the Northeast," Kovach says of the Times Company. "If a strong, tough competitor took that newspaper [the T&G], it could serve as a roadblock against that regional dominance. So you remove that competitive challenge."

Which underscores the most important element of the T&G's sale: this is a business story far more than it is a journalism story.

Until the paper was sold for the first time, in 1986, it was owned by the old-line, conservative Stoddard family (long-time publisher Robert Stoddard was an enthusiastic member of the ultra-right John Birch Society), a clan accustomed to having its way in the community. Bob Stoddard died in 1984; the T&G was acquired two years later by Chronicle Publishing, owner of the San Francisco Chronicle, for nearly $200 million. The T&G then followed a well-trod path for chain newspapers: it downsized, not just merging the morning Telegram and the Evening Gazette, but shrinking the news hole and eliminating reporting positions as well. "They bought us in the middle of the Massachusetts Miracle, and the Miracle died two years later," observes T&G State House reporter Brian McNiff. Though today's T&G may be a more professional product than its family-owned predecessor, it is also thinner, blander, more generic.

T&G staffers contacted by the Phoenix say they are pleased that their paper went to the Times Company rather than to one of such profit-obsessed chains as the Journal Register Company or MediaNews Group, which reportedly made strong bids, or to Fidelity's Community Newspaper Company (CNC), which has not won kudos -- to put it mildly -- for the way it has managed its flagship, the MetroWest Daily News.

"My reaction is favorable," says political reporter Tim Connolly. "The reaction of everybody I know at the paper is sort of relieved that it finally came through, and that it was the New York Times and not one of the other companies." He adds, laughing, that "people I run into on the street say, 'You finally made it to the New York Times.' And my reaction is that this is the only way a hack like me could ever wind up with the New York Times unless I go out to buy a paper."

But those who think the Times Company is going to rush in and start publishing Worcester County's version of All the News That's Fit To Print are expecting more than the Sulzbergers are likely to deliver. The T&G's own coverage of the sale emphasized the paper's eye-catching 30 percent cash-flow margin. You can be sure that Times Company president and CEO Russell Lewis will not be calling up T&G publisher Bruce Bennett (assuming he survives the transition) and ordering him to hire more reporters and lower that margin.

Students of the Sulzbergers say they try to strike a balance with their smaller regional papers (the T&G will be the 22nd acquired by the Times Company), insisting on higher profit margins than the New York Times itself earns, but not turning the screws so tightly that good journalism becomes impossible. The Times Company's most recent annual report reflects those priorities perfectly: at the Times, the pre-tax profit margin is in the low 20s; at the Globe, it's in the mid 20s; and at its regional papers, it's in the high 20s. But even though the smaller papers could clearly spend more on news coverage if the Sulzbergers didn't insist on such high profits, Times Company ownership is still relatively benign -- especially when compared with chains such as Gannett, which has been known to demand margins in excess of 40 percent.

Indeed, in the new biography of the Sulzbergers, The Trust (Little, Brown), wife-and-husband co-authors Susan Tifft and Alex Jones reveal that Lance Primis lost his job as Times Company president in 1996 in part because several of the regional publishers complained to the Sulzbergers about Primis's heavy-handed efforts to cut costs and drive up profits. "The Times has a different standard for its flagship than for its other newspapers, but it's not a draconically different standard," Jones said in a Phoenix interview. "The Sulzbergers don't want to have a newspaper owned by the New York Times that makes them feel embarrassed to come into town. They want it to be a paper that they can be proud of. But that's not to say that they operate it with the same obsessive care and open pocketbook as the New York Times itself."

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In the hierarchy of the $2.9 billion New York Times Company, there is the Times and there is the Globe, and then there is everyone else. The Times and the Globe both operate as separate divisions. The 21 regional papers, clustered mainly in Florida, Louisiana, the Carolinas, and California, constitute a third division. For the six-month period ending on June 27, the Times' revenues were a reported $864 million, and the Globe's $295 million; the 21 regionals' total revenues were $225 million. (The company owns several television stations and magazines as well.)

Though it's not yet clear exactly where the Telegram & Gazette will fit into the corporate hierarchy, it's a safe bet that it will be stuck in the "everyone else" category, except that it will share some expenses and business functions with the Globe. Indeed, in a statement issued to announce the sale, the Times Company's Lewis talked about pursuing a "clustering" strategy in which the Globe and the T&G will cooperate on printing, purchasing, circulation, and various back-office functions.

"There will be some opportunities, obviously, for cost-saving," says media analyst John Morton, president of Morton Research, based in Silver Spring, Maryland. "When there are newspapers in fair proximity, you can often combine some of the administrative functions. And, of course, the Times Company, being much larger than Chronicle Publishing, gets better prices on everything from paper clips to newsprint." Overall, Morton is bullish on the deal, saying, "I think it will increase the Telegram's competitiveness. The Times has deep pockets and doesn't mind spending money."

The lifeblood of any newspaper is advertising, and it is here that a relationship with the Globe could make a real difference, not just to the T&G's profitability, but to the Globe's and the Times Company's as well. "The company's ownership of the Boston Globe and the Telegram & Gazette will enable us to better serve readers and advertisers in the eastern half of Massachusetts," Lewis said in his statement. "While the papers serve two very different markets, we see good revenue opportunities and clustering efficiencies."

Translation: the Times Company is going to make it possible for advertisers to buy space in the Globe and the T&G at one rate. The two papers sell a combined 571,000 copies on weekdays and 872,000 on Sundays. It gives the Times Company a huge competitive advantage, and you can be sure that other newspaper companies are worried about the impact -- perhaps none more than Fidelity, which, after all, had wanted to add the T&G to its own roster of 100-plus community papers. Kirk Davis, president of Fidelity's CNC subsidiary, admitted in an interview with the Boston Herald that the Times Company's move was "inconvenient," adding: "We can only focus our organization on competing, and we're great competitors." Then, too, the combined advertising strategy isn't exactly good news for the Herald, New England's largest independently owned daily. After trying and failing to purchase the Brockton Enterprise, the Lowell Sun, and the Quincy Patriot-Ledger in recent years, Herald publisher Pat Purcell finds himself losing circulation and being hemmed in by competitors.

But the threat posed to CNC and other newspapers by any sort of Globe-T&G advertising alliance shouldn't be exaggerated. Business commentator John Ellis, a former Globe columnist, says CNC won't be hurt because its papers have more of what surveys show readers want most: local news. And Sally Stitt, president of Star Media, an advertising agency in Natick, says media buyers won't change their advertising strategy because the T&G circulates mainly in Worcester County, whereas CNC is concentrated in Greater Boston, MetroWest, and Cape Cod.

The potential collaboration that everyone wonders about, but that no one in a position of authority will discuss, is on the editorial end. Some speculate that the Times Company will intervene to make the T&G's conservative editorial pages more closely reflect the views of the liberal Times and Globe. Others suggest a more direct collaboration: the company could cut costs by having the T&G share (to cite three possible examples) the Globe's State House, regional news, and sports coverage.

It's a disconcerting prospect. Though the T&G's coverage is often undistinguished, dumping it in favor of Globe stories would turn the paper into just another edition of the Globe and rob the T&G of its identity.

"I think it's pretty important for an area of this size to have its own daily newspaper that has its own editorial independence and publishing independence," says former Worcester mayor Jordan Levy, CEO of Parker Affiliated Companies and a talk-show host on WTAG Radio. "I guess they can run the business office, but I just hope they leave the nuts and bolts of the newspaper alone."

Will that happen? The likely truth is that no one yet knows. Lewis's statement offered not a hint. T&G publisher Bennett could not be reached for comment; in a prepared statement, he said, "At this early time, more is still unknown than is known." Times Company spokeswoman Nancy Nielsen has said that details of how the merger will be carried out will not be announced until the sale is complete, a process that could take several months.

There are, though, some signs, and they are mostly favorable. For one thing, the Times Company's other regional papers operate more or less independently, and are not forced to share coverage. For another, the company has yet to lay a finger on the Globe's editorial operations, more than six years after the sale.

But that could change. After all, the company's five-year agreement not to mess with the Globe's internal operations expired only last October -- and this past July company chairman Arthur Sulzberger Jr. replaced Globe publisher Ben Taylor, a descendant of the paper's founding family, with Richard Gilman, a veteran Times executive. Then, too, Gilman, in an interview with the Phoenix, pointedly refused to rule out the possibility that the Globe and the Times would share coverage at some undetermined point in the future (see "Don't Quote Me," News and Features, July 16).

New Yorker staff writer Ken Auletta, who has covered the Sulzbergers and the Times for years, says he "would have said no" if he'd been asked before Taylor's abrupt dismissal whether the company would impose any sort of cost-sharing on the editorial side. Now he's not so sure. "The Times, to their credit, is a company that cares about newspapers and the news hole and all those good things that they like to extol," Auletta says. "And they're gentlemen. But in this case they were not gentlemen in the traditional way."

In the end, the Times Company will probably not force shared coverage on the T&G or, for that matter, on the Globe -- not out of any sense of journalistic noblesse oblige but, rather, because it would be bad for business, demoralizing the staffs and pissing off the papers' most affluent, best-educated readers.

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The story of the T&G's transition from independent newspaper to part of a small newspaper company to, now, a cog in a large media conglomerate is the story of the declining influence of hometown publishers. But it is also the story of once-isolated Worcester, now a high-tech and medical center, opening up to the world.

Frank Connolly, a political consultant with Boston's Kiley & Company, got to know Worcester when he was a writer for Worcester Magazine in the 1980s. He recalls that, in those days, Robert Stoddard and his family owned not only the city's two daily papers, but a radio station and Wyman-Gordon, a major defense contractor, as well. "It's hard to imagine now the power that that paper, and through that paper Bob Stoddard, exercised in the city of Worcester," says Connolly. "It was just extraordinary."

Although that kind of influence is long gone, the T&G under Chronicle Publishing ownership has remained largely under the control of the city's old elite. Publisher Bruce Bennett and editor Harry Whitin are both long-time, well-connected T&G employees, and San Francisco bean counters let them run things the way they liked -- as long as they hit their numbers. Jake Powers, a professor of urban studies at Worcester State College, describes the T&G as "essentially a Republican newspaper in a Democratic city, a white-Anglo-Saxon-Protestant newspaper in an ethnically diverse city, a management newspaper in a labor, blue-collar city." Powers is hoping that will now change.

Kathleen Shaw, the religion/police/general-assignment reporter who heads the T&G's six-year-old union, was in the newsroom the night of Sunday, October 10, when she received unofficial word that the sale to the Times Company had, at long last, been finalized. "I got up and I just kind of walked around the room and told a few people," Shaw says. "I remember a copy editor getting up and telling me, 'I want to tell you I'm as responsible as anyone for the paper being sold to the New York Times.' " Shaw expressed puzzlement, and the copy editor explained, "Because I was wishing so hard."

Be careful what you wish for. The Times Company's focus is going to be firmly fixed on the balance sheet, just as it was under Chronicle Publishing ownership. Those who work at -- and read -- the Telegram & Gazette are going to learn that their paper now has a dual purpose: to serve the community, yes, but also to subsidize the Times by running up high profits for the benefit of the Mother Ship.

The T&G will not get any worse under Times Company ownership, which is no small thing in the current media environment. But there is little reason to believe that the wishes of those who hope for significant improvements will be answered.

Dan Kennedy can be reached at dkennedy[a]phx.com.

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Dan Kennedy's work can be accessed from his Web site: http://www.shore.net/~dkennedy

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Dan Kennedy can be reached at dkennedy[a]phx.com

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Articles from July 24, 1997 & before can be accessed here

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