I am a huge David Carr fan. Great writer, great eye for news-about-news, a shoe-leather reporter when he needs to be (as when driving the frat boys from the Tribune Co. executive suite). Plus he originated the delightful Carpetbagger Oscars-watch blog in his spare time and found himself in a starring role in a documentary about The New York Times. Wow.
But Monday’s take-down of The Washington Post (one in a series if you have missed others), left me grinding my teeth.
Carr recycles newsroom scuttlebutt about Publisher Katharine Weymouth’s stylistic stumbles. But his is a business section column and near the end, Carr reaches for commentary on the Post as an endangered business:
The Post retains a toehold on its former greatness by virtue of its family ownership — its election coverage showed significant muscle — but those dynamics are now hard against an age that requires decisive, confident leadership. The cushion of profits from other endeavors like the Kaplan education division are all but gone, and if The Post is going to endure, the motor of the enterprise will be the people who occupy what is still one of the most talented newsrooms in the business.
Even a cursory look at the Washington Post Co.’s financials shows how off the mark that last sentence is.
Through the first nine months of this year, the Post’s newspaper and other smaller publishing enterprises lost $56 million on operations. Kaplan was about break-even. Cable and broadcasting units generated $240 million in earnings. Those profits covered publishing losses by a ratio of more than 4 to 1. I would call that a great cushion, not a cushion “all but gone.”
Is a talented newsroom “the motor of the enterprise” at The Post? If Carr means just the newspaper, sure it must have a strong news core on whatever platform. Metaphorically, with Newsweek gone, the paper houses the company’s journalistic soul.
But those same financials show that publishing now accounts for only 14 percent of the company’s revenues. Kaplan, which may or may not regain its growth mojo, plus cable and broadcast, do not rely at all on the newspaper’s editorial talent.
Turn quickly for comparison to the New York Times Company’s financial report for the first three quarters of 2012. The pared-down company essentially has no businesses except The New York Times and Boston Globe. Hence no cushions beyond their earnings, and nothing much more in the cupboard to sell to raise money for new investments.
As a company, New York Times revenues are about half the Washington Post Co.’s. The difference in market capitalization between the two is even bigger: Washington Post — $2.58 billion, New York Times — $1.19 billion.
The Washington Post’s pension plan has a surplus. The New York Times will need to make big contributions to keep its plan solvent in coming years. The Times has a reasonable debt level and cash on hand; the Post is barely debt-leveraged at all.
Having heard many investor presentations by Post CEO Don Graham (of whom I also am a big fan), I know that he consistently has said:
- The Post newspaper will never be cast off on his watch.
- Management agrees that the newspaper needs to return to profitability.
- The company has had enough financial strength to operate the newspaper at a modest loss, which it has done.
- New revenue streams are of the essence.
So, whose new revenue stream is bigger? Neither company is forthcoming with numbers that could resolve that question, but the Times Co. is not an obvious winner on this dimension.
Carr could, for instance, step upstairs and ask Arthur Sulzberger Jr., how financially rewarding the International Herald Tribune has been since the Times bought out the Post’s 50 percent share a decade ago.
For this week only, Carr seems to have lapsed into a backward, semi-nostalgic take on the top end of the newspaper industry — lamenting the Post’s “toehold on its former greatness” and more in that vein.
C’mon David, you know better than that. For both companies and their flagship newspaper organizations, it’s all about defining hybrid business models and heading revenues and profits in the right direction.
The shared challenge of getting that right will (or perhaps won’t) sustain two indispensable American news operations. Weymouth’s success in getting her leadership legs is relevant. Graceful optics in making executive changes are mostly beside the point.
Related: Don’t blame Weymouth for Post’s woes (Financial Times)
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