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The New York Times Won't Skimp on the Cost of Journalism -- Even if That Means Selling Itself

The Times' digital business is growing nicely, but not fast enough to keep it fully stocked with world-class journalists.

Andrew Burton / Getty Images North America

The New York Times has long been the pinnacle of journalism, and whether or not you’re convinced of its investigative mettle, there’s no doubting the Times’ impact, like when a 10,000-word, two-part feature on nail salons prompted the passage of a new state law.

It’s that kind of expensive-to-produce, influential reporting that makes the Times the Times, and the family owners, the Ochs-Sulzbergers, know that better than anyone. If — and here’s the kernel if — the business ever diminished to the point that required significant cuts to its editorial staff, the family, led by publisher Arthur Sulzberger, would seriously consider a sale to preserve it, multiple sources say. Curtailing the talent would destroy the paper’s very reason for being, the thinking goes.

“Arthur knows that’s everything,” said one insider, characterizing a sensibility that’s rare among media proprietors. At a time when the news business is thoroughly formulated by armies of bloggers in the service of low-cost aggregation, it’s remarkable.

There isn’t a magic number of journalists the Times needs in order to keep its mojo, but sources suggest the publisher doesn’t want to go too far below 1,000 — the newsroom currently supports 1,300 journalists and was once as low as 1,100. The board has “obstinately stuck with the idea of a really, really large-scale, properly invested-in newsroom,” CEO Mark Thompson said in a recent interview with Public Editor Margaret Sullivan, adding that “it would be self-defeating to change that.”

But he disputes that there’s any threshold to a sale, saying in an emailed statement to Re/code, “I am in regular conversation with members of the Ochs-Sulzberger family and have never heard a whisper of a newsroom size — or frankly, any other calculation — that would cause them to consider a sale. The family’s focus is not on arbitrary numbers but on maintaining the quality and editorial independence of The New York Times.”

The Times, however, has been shrinking each quarter, its revenue slowly seeping away in a torturously restrained bloodletting. Total sales in the first half of the year dropped 1.5 percent to about $767 million, worse than the same period a year ago when it rose 1 percent to $779 million. The Times has lost a fifth of its revenue since 2004.

Thirteen hundred journalists is a healthy number — it’s precisely how large the Times was in 2008, just before the recession decimated the industry. Its makeup today, however, has changed largely to reflect its digital needs. In addition to the usual reporters, editors and news clerks, there’s a growing cadre of digital product specialists who are doing some pretty cool things.

(Not surprisingly, Arthur Gregg Sulzberger, the publisher’s son and heir apparent to the Times, is playing a large role in its digital reinvention and was recently promoted to associate editor. He was also the principal author of its Innovation Report.)

Despite its consistent size, however, the cost of maintaining the staff has ballooned. In 2008, the newsroom cost about $200 million a year. Today, it’s $300 million, according to Sullivan’s reporting. The newsroom’s accounting has changed in recent years and the two figures may not entirely compare, but it’s undeniable that the cost to produce the paper’s content is higher.

Simply put, the business is shrinking while the price of its journalism is rising. The ending to that story isn’t hard to imagine. The game is determining when.

The Times, if it had to, could cut larger swaths of its editorial staff and still produce great journalism, but then it would be a very different paper. As a former insider put it, “the Sulzbergers don’t want to do the Los Angeles Times thing,” meaning a reshaped ambition under a smaller newsroom.

Bright side: The New York Times’ digital business is growing much faster than many anticipated. It rose 13 percent in the first half of this year, slightly better than in 2014. Downside: It’s nowhere near the velocity of other digital publishers. BuzzFeed, for example, which operates its business within profit margins similar to the Times, has more than doubled revenue in the past year and looks to be keeping up that pace. The other key difference, of course, is that many of the Times’ loyal readers, about 1.1 million digital subscribers and an additional 900,000 or so print readers, pay to access its content online.

What if the Times decides to become an entirely digital property, potentially making it more valuable? It’s got a healthy business. Online revenue totaled $348 million in 2014 and is on pace to reach about $394 million this year. But a $300 million newsroom would eat the lion’s share of those sales. After overhead, paying for a sales staff and its ongoing pension costs, they’re losing money.

It explains why the publisher is still holding on so dearly to its print business despite its clockwork decline: Print pays for the newsroom. It also explains why the watchful angst that dominates conversation around the Times today no longer concerns the perceived liberal tyranny of its op-ed pages or collusion with Washington sources or even the self-evident observations in its culture coverage — it’s the fate of the business itself.

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