Globe publisher talks about newspaper's prospects
In his first extensive interview since the Times Co. threatened last month to shutter the Boston Globe unless it gained $20 million in concessions from unions, Globe publisher P. Steven Ainsley discussed the impact on the newspaper, its employees and the community, as well as prospects for the future.
Q. Why the nuclear option? Why the threat of shutdown to gain these concessions?
A. That wasn't my call. That was made at the upper reaches of the company so you'd really have to ask them. I would tell you just what I've said: The Globe's a business like any other. And the dollars that we've been quoted as losing, $85 million, is a very real number. It was felt that if we could find a means to reduce that fairly dramatically in a short period of time, then the company wanted to give that every opportunity to succeed. But if the opportunity didn't exist to cut the $85 million down dramatically. then they felt they didn't have any other option. They just couldn't sustain the losses.
Q. Could you explain the timing of it, why it happened right after the company completed layoffs and buyouts in the newsroom?
A. I really can't because I wasn't part of the decision. Without addressing it specifically, we had planned the layoffs, as something we had to do when we were formulating our budget for 2009. But we never anticipated this year starting off, as difficult as it has started off. I would have to think that precipitated decision.
Q. What's been the impact on the paper's brand, its employees?
A. This has clearly been extraordinarily difficult for all of our employees, both on the management side as well as the rank and file. Employees have been remarkably resilient under very difficult circumstances. I don't know if I've ever been prouder of a group that I've worked alongside than I have in the last four weeks. With this kind of cloud hanging over everyone's head, we've done remarkable journalism. We've done some things in the paper that have continued to establish that the community needs the Globe.
It's been kind of energizing in an odd way. People desperately want us to succeed. People are saying, 'I'll pay more for the Globe, charge me for online. What can we do?' I've gotten a ton of suggestions. I don't think the brand has been hurt. I don't think our journalism is considered less viable, less important than it was prior to all this.
Q. Do you think trust needs to be restored between management and labor?
A. Does management trust employees? Of course we do. That's never been an issue.
Q. Clearly, there are a lot of hard feelings right now.
A. I have to take your word for it. To be honest with you, when I walk I'm walking around the building, I've asked people how they're doing and how they're feeling. Are they concerned? Are they nervous? Are they apprehensive? Of course. But what I'm not hearing is 'Why did you do this to me?' or 'What have you done to precipitate this terrible state in which we find ourselves?' It's more, 'We want the Globe to succeed. It's important for the community.'
We do have to have healing, because this has been a very difficult process. Management has made considerable sacrifices in terms of their own benefits and compensation. Similarly, as these [union] agreements unfold, it's going to be very clear that we're asking our employees to make some considerable sacrifices. And that's tough. We've got to get to the point that we're comfortable with the notion that these kinds of sacrifices that the company has asked of all of us are worth it, that the larger mission is something that we think is important.
Q. What about these management bonuses that have become a source of controversy? I assume they'll be a source of controversy in the contract ratifications.
A. Well, they've been eliminated.
Q. One of the issues has been that, earlier this year you paid bonuses for 2008, which was not exactly a banner year for the paper. At the same time, union employees have gone two, three, four years without a raise.
A. They aren't gifts. It really is compensation that's at risk. Let's look at it at different level. Our ad sales people, for example, are all members of the Newspaper Guild. A significant component of what they make is in commission. Our ad sales are down dramatically, but we still pay commission. People don't make as much as they've made in the past, but to pay no commissions, we wouldn't keep any sales people.
It's really no different for managers. We give them a host of goals. Some are tied very directly to our financial performance, last year there were no bonuses paid on financial performances. Other bonuses are tied to a variety of other things that push the business forward. And yes, we did pay bonuses there and markedly below what they've been in past years. But to think of these incentive payments as just sort of gifts for being a good employee is really incorrect.
Q. Do you expect to announce additional cuts in management positions, salaries, and benefits to smooth the ratification of union contracts?
A. We did it in advance of the negotiations. Originally when the company announced that 5 percent wage cut for management, they also gave managers the option of taking an additional 10 vacation days. In retrospect, that was a mistake, and so we eliminated those vacation days. We eliminated incentive payments. In the past six or seven months, the pension program's been reduced. I suppose I could have waited until now to say, 'OK, the proposals are out there for the rank and file and now this is what we're doing.' I thought it was important for us to make a statement up front before we made the first request of any of our bargaining units. In early November we laid off a significant portion of our management team, around 17 percent.
Going forward, as I said to a union leader a month ago, we're not in a position to overlook any opportunity to save money and be more efficient. Are there any of specific plans at this point? No, but I wouldn't want to suggest that means we're not going to be doing more.
Q. Do you expect additional layoffs in union ranks? At least one union leader suggested that more layoffs are coming
A. Let me put it this way. Layoffs, or staff reductions, or force reductions in one way shape or form are probably part of how we operate this newspaper for at least the foreseeable future. Are there plans right now for additional layoffs? No, there are not. But I'm not going to be disingenuous about it. As our business gets smaller, and the business is, as it is with all newspapers is getting smaller, we have to look at ways to be more efficient. One of the ways to do that is to determine the proper size of the work force. But is there something right now on the books? No there is not.
Q. Do you think we're still going to be here in a year?
A. I really do. There are a lot of things on which that's contingent, not the least of which are these ratifications. We're becoming more efficient apart from these, such as the closing of the Billerica plant. We just raised single copy prices, but we also have in the works in the near term, an announcement on a home delivery price increase. We've got some digital web programs that kick off, the Yahoo partnership that we just announced and a few other things. So a combination of revenue initiatives and expense efficiencies will get us pretty close to where we need to be. I'm pretty confident of that with a few caveats.
Q. Do you think we'll still be printing paper in two years or three years?
A. I think we'll be printing a paper for some time to come. Certainly we're going to be making the trajectory toward Boston.com. We had an article in our paper today about the larger format Kindle. We're very pleased, very excited frankly, that Amazon has asked only three newspapers to help push that forward: The Washington Post, The Times, and us. That kind of thinking, how can we find different platforms to present to present our journalism, until we find the one that gains the broadest acceptance is certainly part of our strategy.
It's a tougher nut to crack, but we're exploring how we can find some model that allows us to effectively gain some revenues from our online effort, from Boston.com. It remains to be seen just how we do that because I'm not convinced anyone has really figured that out yet. But I think it's entirely likely that, I'm really scared about putting a timetable on it, but at some point over the course of the next several years, newspapers in general and the Globe, will be tackling a different strategy with respect to what's in print and what's online.
Q. Do you think The New York Times will own us in a year?
A. That's a very creative way of asking the question, 'Are we for sale?' And company policy is that I just can't comment on acquisitions.
Q. I'm going to ask you again because The New York Times reported today that the Times Co. is actively shopping the Globe. Is that true?
A. And I'll have to give you the same answer.
Q. So what is the plan for getting out of this? Shrinking revenues and budget cuts is not a winning business model.
A. People say to us, 'You've got to charge for online.' We've had readers for the last month contact us, and say, 'I'll pay more for the Globe.' That really is at the core of what most newspapers' strategy must be going forward. Consumers of the news are going to have to pay a larger portion of the cost of producing that journalism. Which is a very different business plan from what we've done for the last hundred plus years. When I started out in the newspaper business, what we charged for the paper basically paid for the newsprint. And advertising more than covered all of our other costs.
Right now we're in the midst of a crushing economic downturn. That's going to improve, and we'll benefit from that at some level. But the onslaught of the Internet, the loss of our classified base at least in a couple of major categories, that's gone. So we have to find those revenues somewhere, and whether it be online or in print or more likely both, we are going to be going to the reader and saying, 'We're going to have to ask you to make a larger investment in what we do in order to enable us to continue to do it.' That's a very big piece of this.
I can't sit here and tell you that figuring out ways to get more efficient, to get smaller aren't a part of it because they are. But we can't cut ourselves to success. No business can.
Q. Have you thought of specific ways to generate revenue from online? There's talk about micropayments?
A. There's a group of employees from every corner of the building who are working on just that and looking at all those things. At this juncture, I'm skeptical of the prospect of just charge to go on Boston.com. My skepticism is born out of the fact that from an advertising standpoint, Boston.com is extraordinarily successful. From a revenue standpoint, it is one of the most successful websites in the country.
Q. But it still just generates about 10 percent of the revenues here.
A. Yeah, about that. In the newspaper world, that's pretty good. Very few generate more. My point being if you put up a true wall, what you immediately do is reduce page views. As a consequence we also reduce the advertising appeal. So it's a balancing act. But we're definitely taking a very hard look.
Q. Speaking of advertising, has this whole episode had an impact on advertisers? Are they asking, 'Are you still going to be here? Should I put my ad in the paper?'
A. There's totally been those questions. More of the conversations that I've had directly with advertisers are along the lines of one I had this yesterday with one of our fairly significant advertisers. The tone of his conversation was, 'Are you going to be around, because we need you? We rely on you. The Globe works for us. You deliver the customers that we need.'
You would expect that because people who run successful businesses have to develop marketing plans not for next week but for several months down the road, there's been concern. At the risk sounding, too much like the glass was half full, I'm kind of glad they're asking the questions. Because if they weren't, it would suggest to me that they were ambivalent, and that's hardly the case. We still have twice the circulation of the next largest daily newspaper in Boston. We have the largest market penetration. So I don't think it's diminished our reputation as an important and an extremely credible advertising vehicle for our advertisers.
Q. The dough is still coming in?
A. Our performance in the last month was not really any different from what it's been in previous months.
Q. Since you mention the other newspaper in town, any comments on their coverage which has sort of zeroed in on you at times?
A. I'd be happy to go off the record with you.
A. I'd really rather not comment on that.
Q. The question has come up about your own compensation, which was a total of about $2 million. How do you feel about making that much money - equivalent to 10 percent of the union concessions you're seeking - particularly when people have gone years, not only without wage increases, but also seeing their health care costs and inflation go up?
A. Well, if I made that much money, I'd think that would actually be an inappropriate level of compensation. The fact is, the reporting of that as my compensation speaks to the fact that those who were reporting on it don't know how to read a proxy statement. I probably should stop right there.
Q. Tell me about your own of feelings about this episode, how it's affected you.
A. Today, I can tell you the last month has been unquestionably the most difficult thing that I've ever done on a number of fronts. I've asked every person in this building to make enormous personal sacrifices in the name of this institution and that's hard to do. It's appropriate because my primary responsibility is, at least as I see it, to ensure the health and longevity of The Boston Globe. After a lot of soul-searching this is the only way I felt we could achieve that.
But it doesn't come without personal price. It's been difficult just listening to how much the people in this community rely upon the Boston Globe and how concerned they are over the prospect of not having the Globe. And as anybody knows who's committed a good portion of their life to the newspaper business, it's more than just a business to us. It's a huge community responsibility that we take seriously.
With some irony, it's also been kind of energizing to fully understand how important we are to the community. And similarly, it's been energizing walking around the building and talking to employees, who understood that what was being discussed was making personal sacrifices in the name of the Globe. So many of them said, 'You know, we're willing to do that if it will help the Globe.' And I can tell you, that's very moving.
Q. What kinds of sacrifices have you made?
A. My salary's been reduced, as everyone else's has. My bonus has been eliminated. The pension plan has been altered.
Q. We've talked a lot about the economy and industry trends hitting the paper, but have you made mistakes that have contributed to our financial position right now?
A. I certainly would never say that I haven't made any mistakes. As an industry and I include myself as part of the industry, we could have reacted to the Internet faster. In terms of the economy, the shake-out was so dramatic, no one predicted it. I don't think there's anything we could have done to mitigate the losses that we've experienced since last September, October. If I could throw back the clock 10 years, not just two and a half years, but 10 years I would say we needed to react much, much faster, with more precision to the Internet.
Q. Among the union agreements, the proposals that are now before the guild all have modifications to the lifetime job guarantee language to give the company more flexibility. How do you plan to use that?
A. That falls into talking about negotiations. It's something I'd probably be wise not to address at this point.
Q. Do you think we should have heard from Times Co. chairman Arthur Sulzberger and chief executive Janet Robinson about what's been going on, why it's been going on, what their plan is?
A. Well I think we did, in the decision that was communicated a month ago.
Q. They haven't communicated directly. Should we hear from them about what precipitated this?
A. To be honest, I don't really have an opinion on that. I've been so focused for the last month or so about what we need to do to get through this that I really haven't spent a lot of time thinking about that.
Q. Do you get the sense they still like us?
A. I do and I'll tell you why. I know there's been a lot of criticism throughout the community about the New York Times Co. and its decision. I don't think there's any institution that anybody could reasonably say has more passion for journalism than the New York Times Company. In that context, they've had an enormous amount of passion, and I should say respect, for the journalism that this newspaper puts out. Having said that, the only way we can put out that journalism is if we're a successful business. And right now we're not. We need to get back to that place. So to the extent that the company likes the Globe or respects the Globe, they absolutely do. You have to kind of divorce that from what unfortunately has been an extraordinarily difficult business decision to make sure that we get viable once again so that we can continue to do what we do.