No Honeymoon

10.26.12

Mark Thompson, New York Times’ Latest CEO, Faces Rocky Start

The former BBC director general faces a battle with the Times’ unionized employees over a new contract, and a simmering controversy back home over what he knew about the case of Jimmy Savile, the late Beeb star accused of sexually abusing numerous women and girls.

There have been some rocky crossings of the Atlantic from the U.K. to the East Coast of the U.S. The Mayflower had a tough time of it in 1620. The Titanic didn’t make it in 1912. Now, Mark Thompson is the one encountering choppy water.

The former BBC director general was tapped in August to be the next chief executive officer of The New York Times Company. At first blush, it seemed like a strange choice. Hiring a Brit who ran a government-owned, not-for-profit global television business to run a company dominated by its U.S.-based newspaper?

But Thompson had helped a venerable, powerful organization extend its global brand, and clearly had the chops to run a sprawling, high-brow news organization. Britain’s media culture may have been soaked in scandal, but the BBC enjoyed a reputation for journalistic probity and high standards in the U.K., much as The New York Times does in the U.S.

The timing seemed propitious for Thompson, too. Yes, the Times Company’s stock has been in decline for a long time. And, like every other print entity, the paper has had difficulty making a profitable transition to a digital world. But the business seems to be stabilizing, thanks in part to a lot of tough decisions made by the company’s much-maligned executive leadership.

To cope with declining advertising revenue, the Times installed a controversial paywall. In Thursday’s earnings report, the company reported that total revenue fell marginally—ad dollars were down nearly 9 percent from the year-ago quarter—but circulation revenues rose 7.4 percent. Why? “Paid subscribers to The New York Times and the International Herald Tribune digital subscription packages, e-readers, and replica editions totaled approximately 566,000 as of the end of the third quarter, an increase of approximately 57,000 or 11 percent since the end of the second quarter of 2012.”

In January 2009, the company, desperate for cash, borrowed $250 million from Mexican industrialist Carlos Slim Helu at a sky-high 14 percent interest rate. But after years of heavy cost cuts and  cash-preserving measures like cutting the dividend, it managed to retire the debt it owed to Slim in July 2011. Meanwhile, the Times has been holding a garage sale of sorts:  in late 2011, it sold off its collection of regional newspapers for $150 million. Last month, it sold About Group for $300 million to IAC, parent company of The Daily Beast. Earlier this month, it received $167 million for its share of Indeed.com, a jobs search engine, which was sold.

But here’s the irony. As Thompson prepares to assume the position of CEO—his first day is supposed to be Nov. 12—he’s facing two significant issues that will bear directly on his ability to lead the organization: a scandal over journalistic ethics in London, and a long-running, increasingly bitter labor dispute in New York.

When Jimmy Savile died last year, mourners lined the streets of his hometown of Leeds to pay tribute to the bleach-blond, cigar-chomping British television presenter. But Savile, a staple on the BBC’s radio and television services for nearly 30 years, now stands accused of sexually abusing more than 300 women and underage girls—allegations that become more lurid with each turn of the news cycle. One witness described Savile, long celebrated for his philanthropy, molesting a brain-dead woman while volunteering at a hospital. 

Despite shifts in Thompson’s Jimmy Savile narrative,New York Timeschairman Arthur Sulzberger Jr. is sticking by his new hire.

Allegations of Savile’s misconduct long circulated among journalists, but in the months after his death Newsnight, the BBC’s flagship current affairs program, vigorously investigated the charges, speaking to victims and documenting numerous allegations against the star. Last December, Newsnight abruptly canceled the segment, although it’s still unclear who pulled the plug, and why. A source within the network told The New York Times the Savile affair constituted “the worst crisis in half a century to afflict the BBC.” Thompson has explicitly denied previous knowledge of the Savile investigation, and denied any involvement in killing the segment.

“I was not notified or briefed about the Newsnight investigation, nor was I involved in any way in the decision not to complete and air the investigation,” Thompson said in a statement released Monday. He added that during his tenure as director general, he “never heard any allegations or received any complaints about Jimmy Savile,” and believed that the decision to cancel the investigation “was made solely for journalistic reasons.”

Margaret Sullivan, The New York Times’  public editor, was skeptical of Thompson’s blanket denial, asking “how likely” it was that he “knew nothing” about the Savile investigation. “A director general of a giant media company is something like a newspaper’s publisher,” Sullivan wrote. “Would a publisher be very likely to know if an investigation of one of its own people on sexual abuse charges had been killed?”

Thompson has now amended his original statement, claiming that he did, in fact, discuss the investigation at a 2011 Christmas party. But, he said, the journalist who mentioned the report “did not go into what Newsnight was investigating.” On Wednesday, Thompson told the London Times that he had “formed the impression” and was intuitively “aware that they have been looking at allegations of abuse of some kind related to Jimmy Savile,” appearing to contradict his previous denials.

Despite these shifts in Thompson’s narrative, New York Times chairman Arthur Sulzberger Jr. is sticking by his new hire. In a letter Thursday sent to Times staffers, Sulzberger wrote that Thompson “has provided a detailed account of [the Savile affair], and I am satisfied that he played no role in the cancellation of the segment.”

Assuming Thompson can negotiate the Savile row, he’ll be facing another problem when he shows up to work at 41st St: grumpy employees.

The company’s unionized employees have been aggressively fighting management proposals for a new contract. The current contract expired in March 2011. After years of buyouts, layoffs, and holding the line on costs, employees are agitated over potential changes to the pension plan. The fact that former CEO Janet Robinson left last year with a $15 million severance package doesn’t help matters.

The Times wants the unit of the Newspaper Guild of New York to sign a new contract by Nov. 15. “The chief sticking points right now are wages, the contribution to the health-care plan, and pension plan, and reduced severance packages for the senior members of the staff,” said Grant Glickson, a paginator at the Times and chair of the paper’s unit of the Newspaper Guild of New York. Union officials say Times employees took salary cuts in recent years, and then diverted a chunk of salary raises in other years to pay for benefits. Like so many in the media, they are fighting to conserve what they have.

“We’re not looking to improve our health-care plan, we just want to maintain it so people don’t have to pay more money,” said Glickson. On wages, he added, “We just want to stay ahead of inflation.”

The union says the changes the Times wants to push through would result in an annual reduction of benefits and compensation of $12,000 per year. Eileen Murphy, a spokesperson at The New York Times, said the company didn’t want to comment on negotiations as the two parties are in mediation. “We have been in negotiations for 18 months. I know they are doing a lot of talking,” she said. The two parties have held three mediation sessions and have scheduled more for Sunday and next Tuesday afternoon.

Thompson may not have played a role in the embittered labor relations. But he’s been greeted by them—literally. At Saveourtimes.com, hundreds of Times staffers have signed an open letter addressed to Thompson, Chairman Arthur Sulzberger, Jr., and Executive Editor Jill Abramson, On October 8, Times workers staged a brief walkout. And on Tuesday, a large chunk of the newsroom staff gathered in the lobby and took a group picture to give to Thompson, who was visiting for meetings. Some of them held placards reading “Help us save our Times.”

Thompson is likely to face some uncomfortable questions in London as investigations open into the Savile affair. Some of them are likely to come from employees of The New York Times who are aggressively reporting on the story. And some are likely to come from the Times employees who can read a balance sheet and have made careers about asking tough financial questions of CEOs.

In an email circulated to union members on Thursday, reporter Donald G. McNeil, Jr., dissected the company’s earnings announcement. With $614 million in the bank, more than $400 million coming in from sales of assets, and a small profit on the paper, the company’s finances are looking stable. “They’re actually kind of embarrassed at how much cash they have,” MacNeil told his fellow Times people. How, he wondered, can a company with so much money in the bank claim that it can’t stump up the $20 million annually the union wants for wages and benefits?

“We want $20 million per year.  They have 50 times that much in their back pocket; $1 billion earns a lot of interest.”