By Dan Kennedy • The press, politics, technology, culture and other passions

The numbers make no sense

Jay Fitzgerald and I are both shaking our heads over the same thing: the New York Times Co.’s claim that the Boston Globe is on track to lose $85 million this year. By one measure, he notes, you’d have to lay off 1,200 of the paper’s 1,400 employees to close the gap. Does this make any sense? How is this even remotely possible?

Last December, when Tribune Co. declared bankruptcy under the weight of $13 billion in corporate debt, it was reported that its newspapers — which include the Los Angeles Times and the Chicago Tribune — were actually profitable, or would be if it weren’t for Sam Zell’s depredations.

What’s going on with the Times Co. and the Globe is the reverse. Not that the Times Co. is without debt. The issue, though, is not corporate debt, but actual operating losses in Boston.

According to a chart in yesterday’s Globe — I’m sure it’s in the Times Co.’s annual report, but why look it up when it’s right in front of me? — the revenues for the company’s New England Media Group (the Globe, the Worcester Telegram & Gazette and Boston.com) fell from $700 million in 2004 to $524 million in 2008.

The Globe accounts for the vast majority of those revenues. I fail to understand how a paper pulling in that kind of money — with a weekday circulation of about 325,000, a Sunday circulation of 500,000 or so, and more than 5 million unique Web visitors a month — can’t find a way to break even.

I’m not a financial guy, but to me, it just makes no sense.

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8 Comments

  1. Patricia of Trakai

    I too have been thinking that $85M is an awfully big sinkhole.Since the Globe, the T&G and Boston.com are one New England unit, are the beancounters putting all the operating losses into the Globe's basket?Is it easier to shift all the NYT Company's losses onto the Globe, so that once the Globe is cut loose, the rest of the company will again be profitable?Is the $85 million figure being measured from the break-even point OR from the point of "20 percent profit" as used to be considered divine right by the owners of newspapers?I'm just disturbed at how fast we are acquiring a government without newspapers.

  2. NewsHound

    I can’t agree more; we need newspapers. Just looking back at what newspapers exposed in the past week alone is proof enough, along with the enjoyment of staying informed and being entertained.I think at this time The Times would love to break even, or even continue with a tolerable loss, if possible.The 1200 cutback to reduce costs by $85 million may be a little heavy considering various employee benefit costs, taxes, etc. Maybe instead, cutting from 1,400 employees to 400 which right now might be just as impossible. Maybe a little more trimming of executive pay would help, too.

  3. Tony

    Wasn’t there a comment recently that the Globe was losing more than $1M per week? Well, $85M divided by 52 weeks is “more than $1M per week.” Depending on what their health care costs are, along with the debt, it could be that bad. I haven’t seen the financial paperwork but there must be something in there that is showing this or else they wouldn’t be freaking out. As well, $20M does seem a drop in the bucket when you are looking at $85M. Maybe they have something up their sleeves. Who knows. The other thing, and I know some folks don’t want to talk about this, but no media org. with a slew of debt, hundreds of employees and their overhead, can afford to pay reporters and columnists $50K or $60K to do a column a week or a few stories a week. It’s just not financially viable at this point when you consider the debt, the drop in advertising, and the cost of doing business, etc. It pains me to say it, because this is the kind of situation those of us who work in the media dream of living in. I also come from a union household, which makes it even more difficult to say. But the current model at the Globe isn’t realistic right now. Paying that much money is the road to bankruptcy. A company just can’t afford to do it. They really have to have the reporters kicking out at least eight to 10 stories per week and the folks doing columns editing the newspaper or something else, not making time to work on books on the side.That is the reality of the situation right now in this business.

  4. shubh

    Predicted losses are indeed great as well the people will face the loss of disappearance of good new papers. I think organizational operational cost is affecting the corporate houses more than the fixed cost. Adviser travel.justluxe

  5. mike_b1

    I don’t know how the Globe’s finances are structured, but it could be that payments to fund the pensions/health insurance for past employees are eating up chunks of cash. Also, the Times may have saddled the Globe with a certain amount of the debt incurred when the Times purchased it.As for what Tony wrote, the demands of the Globe staff always seemed pedestrian to me. I remember when Mike Royko was at the Trib writing five columns a week (and they were good ones, too). And he apologized when he cut it to four.

  6. Tony

    I look at what we do at GateHouse and, granted, it’s apples and oranges. But, it’s still fruit. When you stack up what our editors and reporters do compared to there, in terms of sheer volume, we beat them hands down, with fewer employees, who get paid much less, and still win a ton of awards.

  7. Ryan

    I, too, am *very* skeptical. I don’t know why everyone in the blogosphere was so quick to instantly buy the NYT’s numbers. It was an assumption (their honesty) that I wasn’t willing to buy. The very numbers they use pretty much prove it. If things were so dire, why $20 million? If there was seriously an $85 million hole, wouldn’t they want to get a whole lot closer to filling that gap? This just doesn’t pass the sniff test. Either the NYT is being dishonest and fudging the numbers, or they’ve run this once-proud paper far further into the ground than any of us thought. Either they’re liars or grossly inept. Honestly, it’s the latter which would be truly unforgivable, so I hope they’re just trying to use scare tactics. Otherwise, the Globe will die soon.

  8. wellbasically

    Maybe the NYT said it’s ok if we lose $65M but not $85M. Or they said we can only cut $20M and still have a decent paper when the economy recovers.

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