How the New York Times Can Thrive Without Profits

Tunku Varadarajan says that newspapers are indeed businesses, and says that "the media business is just as vulnerable to the pressures of impatient capital as are other sorts of business".

I’m not sure if that’s true, actually: it seems to me that in media generally, and in newspapers in particular, capital really is more patient than in many other businesses.

When did you ever hear of anybody flipping newspapers for a quick profit, even in the good years? Newspaper owners like profits, of course, but they also like the power and influence they get from owning a paper, and are therefore generally extremely reluctant to ever sell.

What’s more, I suspect that the future of the New York Times and other great newspapers might well lie in the nonprofit realm. The Sulzberger family really does consider the NYT itself to be a sacred trust — and the New York Times Company owns enough other properties that they might be willing to turn the Gray Lady into some kind of nonprofit, if that will save them from avaricious media barons and hedge funds.

The NYT’s subscribers might be able to help out here, by buying voting shares in the company which automatically become non-voting shares the minute they’re sold to anybody else; a relatively low cap would be placed on the number of such shares that any one subscriber could buy. That could give the New York Times Company some much-needed liquidity; it would also dilute for-profit shareholders with ones whose main desire is not for profit but rather for great news.

In the UK, the Guardian is published by the Scott Trust, which has done an admirable job of running a sustainable media company without requiring profits. It has even bought properties where it needed to, including the Observer. A non-profit can still be ambitious.

Other models can work too; let’s put a bit more imagination to work than simply suggesting that big for-profit media companies like Yahoo or Google should try to buy the New York Times — especially given that the Sulzbergers are extremely unlikely to ever sell to such an entity. Historically, the main constraint has been keeping the Sulzbergers’ beloved dividend. But if that’s going to dwindle away to nothing in any event, maybe they’ll be more open to alternative futures.