N.Y. Times Unfolds Paper Across Nation and Thrives

It was long the great gray lady of American newspapers, so conservative in its journalism that it refused to call homosexuals “gay” until two years after Rock Hudson died of AIDS--and wouldn’t use the honorific “Ms.” until 14 years after the magazine of that name was founded.

The New York Times still hews to many of its traditions. It still doesn’t publish a horoscope or comics or an advice to the lovelorn column, and it still identifies even terrorists and mass murderers as “Mr.”

The Times has become brighter and livelier in recent years, but the real revolution occurring at the nation’s most influential newspaper doesn’t involve its content or appearance so much as its reach and financial foundation--and, hence, its very future.

For more than a century, the Times has had reach and impact far beyond metropolitan New York. Now, its long-standing ambition to become a true national newspaper--to attract large numbers of readers and advertisers across the country--is rapidly coming to fruition.

The last few years have dramatically transformed the Times’ financial profile, giving it an overwhelming preponderance of national advertisers for the first time. Analysts say this has positioned the Times to weather the economic slowdown that is prompting much of the newspaper industry to go into survival mode.

Though it remains deeply rooted in New York, the Times draws a readership defined more by demography than by geography, appealing to the well-educated and well-to-do throughout the U.S. Building on in-depth individual interviews with select subscribers, the Times is trying to create the kind of nationwide community of interests and attitudes that only the Internet was supposed to make possible.

The paper’s most loyal readers have what amounts to “an addiction to the New York Times. . . . almost a sense of franticness . . . when they can’t get it,” according to Times research. The Times has been able to attract advertisers willing to pay higher rates to reach that highly desirable audience.

As recently as 1996, national advertisers, including airlines, computer makers, financial institutions and automobile manufacturers, accounted for only 31% of the paper’s ad revenue. Last year, national advertisers provided 82% of its ad revenue--a percentage four to five times higher than that at the average metropolitan daily.

The Times has been able to attract these lucrative advertisers largely because its national circulation has increased significantly. Although the paper lost circulation of 85,000 in its 30-county local market through the 1990s, it has, over the last 15 years, attracted 175,000 new customers outside its local market.

Because the New York Times is published in the financial, cultural and media capital of the country, the paper is in a position to serve, and to loosely unite, a national audience of elites--and to function as a sophisticated megaphone for Eastern opinion makers in those fields.

The increasing availability of the paper throughout the country also compounds its already considerable influence on other news media. Despite the growth of the Internet, mergers are diminishing the diversity of independent, mainstream media voices. Newspaper editors and local television news directors follow the Times daily, and it inevitably influences the judgments many of them make about what is, and isn’t, news.

Metropolitan daily newspapers have historically drawn the overwhelming majority of their readers and advertisers from their immediate area. Like the Times, most have also lost local circulation in recent years, buffeted by urban flight, burgeoning populations of non-English-speaking immigrants and growing competition for the reader’s time and money.

Demographics Serve as Economic Buffer

The New York Times, however, has long relied far less than other papers on its local base; it now reaches only 9% of the homes in its local market, compared with, say, the 45% penetration rate of the Washington Post. But the Times is learning to identify and recruit the high-demographic readers elsewhere who are most likely to develop a lasting loyalty.

Like virtually every other newspaper, the New York Times is suffering a drop in advertising and profit in the current economic slowdown. Times ad revenue fell 11.6% in the first five months of the year. Last week, its parent, New York Times Co., announced plans to reduce its total full-time work force by 8% to 9% through buyouts, attrition and job eliminations.

Although advertising provides 75% of the paper’s revenue, Kevin Gruneich, a senior analyst at Bear, Stearns & Co., said its rich mix of readers and advertisers gives the Times “a uniquely positive position in the newspaper industry.” Gruneich said that though he expects the newspaper industry as a whole to have declining profits this year, he expects Times profit to be “at worst flat or even up because of its national strategy.”

The primary vehicle for this success is the paper’s national edition, which was launched in 1980 and which was--ironically--long opposed by top Times business executives, who saw it as an unprofitable diversion from the paper’s central mission in New York. Indeed, the edition might never have prospered had it not been for the perseverance of one mid-level editor and the creativity of one business executive with no previous newspaper experience.

The national edition, available only outside the New York market, contains all the news from the New York edition except for a slimmed-down version of its local, sports and lifestyle coverage. In the last six years, home delivery of the national edition has spread from 30 cities to 200. Daily circulation is 447,343--more than 40% of the paper’s total--and executives hope to increase that by 250,000 in the next decade.

(Although the paper’s circulation has increased in most big cities, it declined in the Los Angeles metropolitan area from 1990 to 1999, according to the latest Audit Bureau of Circulations report. The 8.5% drop left daily circulation here at 19,967.)

A Question of Identity

The growth of the national edition raises an intriguing question: As an ever-greater percentage of the paper’s readers and revenue comes from outside New York, will the New York Times cease being the New York Times? Will it become a national newspaper in the mode of major dailies in Western Europe, newspapers that cover and serve the entire country while being only nominally devoted to their hometowns?

Top Times editors and executives say their paper will never neglect New York.

“We’ve always thought of ourselves as a national-international newspaper. . . . Our national business strategy is now catching up with where we’ve always been in our heads,” Publisher Arthur Sulzberger Jr. said. “But this paper is grounded in this city. We are spending an enormous amount of time and energy and money to make sure the New York Times remains a local newspaper as well as a national newspaper.”

The Times has expanded its Metro section by three pages since 1986. The paper also has increased the size of its Metro staff from 76 reporters in 1991 to 99 today.

The New York Times still devotes a smaller percentage of its overall staff and space to local news than do other metropolitan dailies. The Washington Post, with a total news and editorial staff of 685--compared with 1,032 at the New York Times--has 106 local reporters; the Los Angeles Times, with a staff of 1,086, has about 175 local reporters. But the New York Times is clearly making local news a higher priority than it was.

Jonathan Landman, metropolitan editor of the Times, said that when he was deputy city editor of the New York Daily News 15 years ago, “we used to laugh at the Times. We thought the Metro section was a big joke. They aren’t laughing now.”

Many people inside and outside the Times--including a number of its critics, competitors and former reporters and editors--agree with him. Indeed, they say that despite its increasingly national scope, Times coverage of the metro area is the best it’s ever been.

“A lot of their stories are very good and original,” said Mortimer Zuckerman, publisher of the New York Daily News, “not just reporting but analysis and commentary on local issues.”

The Times’ local coverage, like its local readership, is heavily focused on Manhattan, where the Times sells more than half its New York papers and far outpaces its tabloid competitors, the Daily News and the Post. The Times is No. 3 in circulation in the four outer boroughs of the city, but stories from these boroughs also appear in the Times far more often than before.

“I used to have to hold my news conferences for Brooklyn and Bronx and Queens clients in Manhattan,” said Howard Rubenstein, a longtime public relations executive. “The Times wouldn’t send a reporter or photographer to the outer boroughs. Now they do it routinely.”

Some critics contend that the Times targets such an exclusive demographic niche that it has never really served the average New York reader. Times editors acknowledge that their paper, with bureaus in 11 U.S. cities and 25 foreign countries, has a commitment to national and international news that precludes its providing the detailed local coverage available in the tabloids.

“We couldn’t beat them on quantity,” said Joseph Lelyveld, the paper’s executive editor since 1994, who said last month that he will retire in September, “but we decided we could beat them on quality, and on big, competitive stories we could concentrate our forces.”

Improvement in the Times’ local coverage began in the late 1980s, prompted by two circumstances:

* Newsday, a tabloid based on suburban Long Island, began publishing a New York edition that was widely perceived as providing better city coverage than the Times.

* Lelyveld and Max Frankel, who preceded him as executive editor, believed that the local reporting staff had been severely reduced in size and quality to provide staff for several new feature sections.

There always have been a few stars on the paper’s Metro staff, but being a Metro reporter at the Times was traditionally viewed as either a steppingstone to national and foreign assignments or as a resting spot en route to retirement.

Lelyveld wanted to change that, and he did so by hiring 31 local reporters from other New York newspapers since 1995--reporters seemingly delighted to cover local news long-term. The Times also has hired journalists from papers outside New York, including several former foreign correspondents now assigned to local reporting.

“They’ve been persuaded,” Lelyveld said, “that being Brooklyn bureau chief or Queens bureau chief is a really big deal here now. . . . We’ve told them to cover [those areas] like a [foreign] country.”

Searching for Loyal Readers

Although many see the Times as being better than ever, both locally and overall, some critics say the paper covers the entire New York area like a foreign country.

“Their local coverage lacks an edge,” said Anthony Marro, editor of Newsday, “because they write about New York for outsiders. . . . They cover public schools for people whose kids aren’t in public schools, and they cover public housing for people who wouldn’t live in it . . . and transportation for people who don’t use the subways.”

This is done, Marro said, because the Times covers and caters to “a very thin demographic niche.”

There is no question that the paper is aimed at a special demographic niche--and it is that niche that provides the rationale for the national edition.

As Frankel put it, “We think the elites everywhere want the New York Times.”

To identify those elites, the Times has, since 1996, interviewed thousands of subscribers for 45 to 60 minutes each to “try to define our loyal reader,” said ScottHeekin-Canedy, senior vice president for circulation. “Once we had a core definition, we developed a profile of like-minded readers, people . . . we could target who had similar values and attitudes as our loyal readers but didn’t have the habit of reading the paper.”

To conduct this research, the Times hired Bonnie Gilbert, an expert in brand loyalty, whose other clients include American Express, Bayer aspirin and Tropicana orange juice.

“Most people read a newspaper for very functional things . . . things that affect them personally,” Gilbert said. “But we found that the most loyal readers of the New York Times are interested in abstract theorizing, in getting underneath, in being surprised. . . . They had what we came to call a ‘vigilant curiosity’ about the world.”

Times readers are “much more committed to the paper, much more passionate about it, than readers of other papers or even users of other products I’ve researched,” Gilbert said. “It was a sort of codependency: ‘I am the New York Times; the New York Times is me.’ ”

The paper has developed television commercials to capitalize on Gilbert’s findings. One asks, “When was the last time something you read challenged you?” Others feature such words and phrases as “unconventional,” “beneath the surface” and “insights instead of just information.”

This campaign comes at a time when many other newspapers have been accused of dumbing down their content, of using scandal, celebrity and sensationalism to rebuild sagging readership.

The Times has been able to increase circulation despite raising its prices significantly. Since 1990, the cost of a subscription to the home-delivered national edition has more than doubled to $10.25 a week, and the newsstand price has jumped 33% to $1 weekdays and increased almost 60% to as much as $4.75 on Sunday. Those increases have been enormously important to the paper’s bottom line; circulation provides about 25% of the Times’ revenue, compared with about 17% industrywide.

The Times uses its high price as a lure to advertisers. “Premium product, premium price” is the pitch. The willingness of national edition readers to pay top dollar demonstrates both their affluence and their loyalty to the paper--even though only about 25% of Times national edition readers have lived or worked in New York.

The national edition was not initially “a grand strategy to invade the rest of the country,” Publisher Sulzberger said. It was simply a worried response to the energy crisis of the late 1970s, when airlines were forced to cancel many late-night flights that carried the paper across the country.

Conquering the Continent

New satellite technology enabled papers to be printed in distant plants, making distribution easier and giving the paper later deadlines. Yet top Times business executives treated the edition as something of an orphan for many years--in part because the paper wasn’t available for home delivery outside New York. Frankel, however, thought the national edition had great potential, and one of his first moves as executive editor was to name David Jones editor of the edition.

Jones, former national editor of the paper’s main edition, was a “monomaniacal apostle of the national edition,” said Allan M. Siegal, an assistant managing editor. “Dave propagandized, proselytized and irritated the business side into submission.”

At the same time, many other news organizations--newspapers, newsmagazines and television networks alike--were responding to their declining audience by reducing national and international coverage and emphasizing local and personality-driven news.

All this increased the potential market for a national edition of the Times, as did a strategic shift in the early 1990s that emphasized home delivery rather than newsstand sales in New York and elsewhere. Then, in 1994, Janet Robinson left the magazine division of the parent New York Times Co. to become the paper’s advertising director.

“I was blessed in not having a lot of newspaper experience,” Robinson said. “I had been selling national magazine [ads] for 10 years. I realized there was a lot of gold in the hills of the national ad budgets. That was a market we were not reaping the full benefit from.”

Robinson also realized that many national advertisers--and their ad agencies--are based in New York, and she had a revolutionary idea: Instead of asking advertisers to buy space in the New York edition, with an option to buy space in the national edition, they should be vigorously encouraged to buy ads in the national and New York editions as a single package. If they didn’t want to be in the national edition, they should be required to specifically opt out.

The new strategy was implemented early in 1997. It was an almost instant success.

The growth in national advertising revenue comes both from new advertisers and from advertisers who formerly appeared only in the New York edition and now also appear in the national edition and therefore pay the higher rates that newspapers traditionally charge national advertisers.

The Times doesn’t break out, even internally, a profit-and-loss statement on the national edition because the allocation of revenue and expenses would be too arbitrary to be meaningful, said John O’Brien, chief financial officer for New York Times Co. “But if you did do any reasonable, stand-alone analysis, the national edition would be wildly profitable.”

The national edition is printed at 15 sites. Three more are scheduled to open this year or early next year, and Sulzberger--whose mantra these days is, “We have a continent to conquer”-- calls the national edition “the critical element of our newspaper’s 10-year plan.”

Russell Lewis, chief executive of New York Times Co., said at last week’s Mid-Year Media Review for stock analysts that “transforming the New York Times from a metropolitan area newspaper into this country’s premier national newspaper” is the first prong in the paper’s long-term strategy.

So far, the focus has been almost entirely on the business side--a quest for more readers and more advertisers. From the time Jones retired in 1997 until early this year, the Times didn’t even have an editor whose primary responsibility was the national edition. Although Howell Raines, who will succeed Lelyveld as executive editor, said it would be premature for him to comment on plans for the edition, Lelyveld and other editors have said they hope, in time, to customize it: to have different stories and different front pages on the national edition in different cities when the news warrants it.

Meanwhile, the Times has undertaken several initiatives designed to rebuild its local circulation, and Sulzberger said he is determined that national expansion will not threaten the paper’s New York roots, any more than does the availability of the paper on the Internet.

“We can no longer afford to care how our readers come to us,” he said, “but that won’t make us any less committed to New York.”

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A Growing Reliance on National Advertising

Percentage of ad revenue from local vs. national advertisers:

1996

National: 31%

Local: 69%

*

2000

National: 82%

Local: 18%

Source: New York Times

At a Glance: New York Times Co.

Chairman and publisher of the New York Times: Arthur Sulzberger Jr.

Chief executive and president: Russell Lewis

Employees: 14,000

2000 revenue: $3.5 billion

2000 net earnings: $359.9 million

Key holdings: Newspapers including the New York Times and Boston Globe; television and radio stations; magazines; electronic information databases and publishing companies; Internet businesses; and forest product investments. Also owns a 50% interest in the International Herald Tribune newspaper.

*

Monthly closes and latest for NYT on the New York Stock Exchange

Friday: $42.09

Sources: Market Guide, ValueLine, Bloomberg News

Times’ Circulation

Percent change in circulation between 1990 and 1999:

New York: -13%

Source: Audit Bureau of Circulations

Source: New York Times Co.