Creative disruption156
facing structural change they were simply buying more of the same
Two great American newspapers; two very different
The New York Times and Washington Post might well be peers in the
newspaper world but the companies that own them are very, very
different. And their performance in the torrid year of 2009 (see Table
6.2), and their prospects for the coming decade, are very different as
a result.
Table 6.2 2009 results for the New York Times Company and the Washington
Post Company
2009 results Total
Year on
year %
revenues ($m)
Year on
year %
New York Times
74 1,581
Post Company
193 679
*For NYT, Core newspaper 5 New York Media Group; for Washington Post Company,
core 5 ‘newspaper group’
After depreciation, amortisation and severance charges
The New York Times is one of the world’s great newspapers. Both in
print and online it is hugely respected creatively and commercially;
and newspaper executives from around the world beat a path to its
doors to get a glimpse of how it works. But the recession of 2008/09
proved that even a newspaper business with a great title at its helm is
still a newspaper business and vulnerable as a result.
The New York Times Company owns the Times, the Boston Globe
bought in 1991 for a staggering $1.1bn and a host of smaller titles.
These businesses with their accompanying websites and other content
Find big adjacencies
businesses account for 95% of the company’s revenues. Their one
signicant non-print business is bought for $410m in
2005. is a star in the making, with 40%1 margins, and
without its contribution in 2009, the business’s bottom line would
have looked particularly unhealthy.
As the recession hit, trading turned from bad to worse, the company
cut their dividend, and announced lay-offs. But there was also $400m
debt due in the spring of 2009, and they needed to renance no
small feat in the middle of a credit crunch. And so, in February 2009,
the company announced that they were taking a $250m investment
from the world’s richest man, Carlos Slim. Slim ended up with 17%
of the business, and a new class of shares that gave him a quite
spectacular 14% interest.
For all of the prestige of their core title, the combination of debt,
a downturn and disruption left the New York Times Company as
vulnerable as Johnston Press.
Two hundred miles down the road, the Washington Post had an even
more shocking nancial year in 2009, making an operating loss of
some $163m an effective loss of some $450,000 a day. It was a
terrible year for the newspaper; but as you can see from Table 6.2,
the company proved to be more resilient, for the simple reason that
they are no longer a newspaper company. As their website, and every
piece of corporate communications they offer reminds us, they are ‘a
diversied education and media company’.
The newspaper group at the Washington Post Company makes
up less than 15% of total revenues. The bulk 60% comes from
Kaplan, its education business; with another 15% coming from cable
television, Cable One. In 2009, these businesses generated operating
income of $194m and $164m respectively, wiping out the losses of the
newspaper group.
This performance is the result of two comparatively small moves
made some 20 years ago. Kaplan was acquired in 1984 for $33m;

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