The NY Times has been owned by the Sulzberger family for over 100 years. They took the paper public in the 1960s with a two tiered equity structure that lets them hold 88% of the shares in the class with prime voting rights. They are the chief priests of the newspaper industry. The Times owns many different properties so their guidance of the public debate affects not just NY public opinion but countless other regions through the authority of those media properties. The Sulzbergers are members of the unelected elite who hold power in our society. What they deem appropriate to discuss or say is what you may not agree with today, but your friends and family members of good taste and education will swallow. Sadly, the Sulzbergers thirst for money and the NY Times desire for acquiring properties allowed it to be compromised by both the FIRE economy and also Carlos Slim. This has changed their reporting, and removed the teeth in their reporting or any appearance of impartiality to immigration reporting. Through the ownership structure of their firm’s equity, the greed of the Sulzbergers is to blame here. They made the paper vulnerable to maintain a ridiculously rich lifestyle.
Take a look at the stock chart for the NYTimes; now go out to ‘all’ chart. They peak with the peak of the US equity markets in 2000 and steadily decline. The NYTimes never recovered like the S&P did in the 2000s reflationary period because of a threat to their advertising business model: craigslist. Craiglist has become a behemoth for classifieds. It has sucked advertising dollars away from print media that used to make up the backbone of its revenue. The online availability of news also destroyed the other pillar of revenue: subscription sales. If they lost ads they could raise subscription fees. Not anymore. Print media was at risk. This is part of the genius of the big banks and real estate (FIRE). They are huge advertisers. Wall St is an oligopoly. They share the pie and all enjoy the bonuses. They don’t need to advertise in print, but they do. The National Association of Realtors could set up an online system that was the only resource for viewing homes far superior to print and never advertise again in print, but they don’t. They do not because they want that leverage on the media. The mainstream media didn’t warn anyone of the housing bubble despite plenty of warning signs. The mainstream media has not called for a break up of the TBTF banks despite holding 77% of US financial assets and $250 trillion in derivatives. They would lose the advertising revenue. How much weaker would earnings be if they lost the advertising revenue gathered from the real estate listings or from bank advertisements? It would be crushing. That is a threat to the papers that keeps the focus soft on banking and real estate problems. Don’t look too closely or we’ll pull ads.
The second sword of Damocles that the banks have hanging over the NYTimes (and other big media corps) is their ownership stake in the equity. Look at the NYTimes (major holders). There is Carlos Slim as an 8% holder. Then the list is: T.Rowe Price at 7.6%, Contrarius at 6.15%, vanguard at 4.5%, Global Thematic at 3.8%, Kahn Bros at 3.1%, Blackrock at 5.7%, Citadel at 2%, Deutsche Bank at 1.7% and Goldman Sachs at 1.5%. Slim is an interesting case as he provided short term funding of $250 million for the Times in 2009 (after stock purchases) when liquidity dried up everywhere. That was huge as prior to the loan and after, they had a debt load of roughly $600 mil. The Times paid him back early with asset sales that included most of their Red Sox stake. He still owns 8% of the equity. This may influence coverage of Mexican immigration and Mexican-American issues like gun running for cartels by the Obama administration. If Slim could have that influence, wouldn’t the institutional ownership of 30% of the company’s stock by 10 financial firms, some that are interconnected, affect coverage of the financial crisis, bailouts and subsequent looting of the American piggybank? How can the Times or their properties exercise any independence to continually cover the TBTF banks and continuous subsidies and ZIRP of the FED when their stock could become out of favor with a single financial institution and cause meltdown? Stock pricing is on the margin, so if Wall St wanted, those shares would be sold quickly.
The Times stock is low. This is the Sulzberger fortune. They live off the dividends. They need good news. They have a negative operating margin and have had a rough last few quarters. Craigslist isn’t going away. They need advertising. If they don’t get the FIRE advertising, they are in a world of hurt. Even if they get the advertising dollars, if one of the major holders decides to rate them a sell, they will suffer. CEOs and CFOs of public companies have to do dog tricks in front of analysts and institutional investors. I can’t imagine being a CEO of a firm that could criticize or save a firm. That would be immense power. That power and possible good use for shaping national economic policy would be weakened with the financial firm on the side to sell at a moment’s notice or downgrade the company. The FIRE economy found a 2nd avenue to make the media dance to their tune; power of the market. The moment the NYTimes and other publicly traded media firms get tough on the FIRE economy and our corrupt financial system, the banks can put in some sell orders or rotate out of those stocks, and it’s lights out. Because of the incestuous nature of Wall St and hedge funds with funding, a hedge fund can do the selling to ‘raise cash’ for redemptions with a wink back to a targeted TBTF bank. Because of high frequency trading, selling orders could trigger any algorithm sending the stock price down in a flash crash. With a weakened equity position, their debt to equity ratio would skyrocket. In a firm with growing revenues or new product launches, this is tough but doable. The NYTimes has no new product line. The NYTimes had revenues of 3.2 billion in 07/08, and has had revenues of 2.3 billion the last two years. They cannot afford a lower stock price. They are hostages.
The Sulzbergers publish all the news that is fit to print. They share all the news that they choose to print. There are reports on foreclosures, the Wall St-DC connection, campaign donations and other chicanery, but the big picture items remain untouched. The Times may rail against income inequality, but they will not come clean about the financialization of the US economy increasing income inequality or immigration destroying the labor value of our poorer citizens. Unfortunately, due to their financial situation they cannot print all the news that would generate eyeballs, sales and prestige. A Pulitzer would be awarded to the reporter who unearthed the financial crimes of our century. A crusade worthy of the old muckrakcers that cleaned up the meat industry or broke up Standard Oil is there if only they could print it. The Sulzbergers needed money. The Sulzbergers needed to maintain their life of leisure. In the process of maintaining thatpower and wealth as a true 1% family, they sold out their paper’s integrity. One of the greatest crimes in American financial history goes underreported in the hometown of the paper of record. The USA sucks in millions of new Americans unchallenged by the premier paper in the USA because of financial problems. To modify a line from Fight Club, the people you owe eventually own you.