There’s A Disconnect Between The 10% Editorial Cuts At The Times And Sunday Times And Their Hiding Behind Pay Walls In June

Philip M. Stone May 20, 2010 Follow on Twitter

Much has been made of the general interest Times and Sunday Times in London going behind pay walls in June with the common belief that editorial would be beefed up to entice the public to pay since similar editorial products are available elsewhere for free. So much for that – both newspapers have announced 10% editorial cuts.

Those Murdoch newspapers going behind pay walls are being watched globally as a grand experiment. In a market where they by no means have exclusivity to the day’s general news and information, can they entice people to pay a small amount for online access? The New York Times proved a couple of years back with TimesSelect that if you have columnists people really want to read then some will pay but the venture was scuppered because that additional subscription revenue was less than the advertising income thought to being lost from the free model. All the UK nationals have columnists – if a reader loses free access to a favored one will he/she then pay for the privilege or find another like-minded columnist elsewhere?

Murdoch had been a great believer in the free Internet model until he actually got his hands on the Wall Street Journal and the subscription numbers there convinced him that you can indeed teach an old dog new tricks and he converted to subscription.

Both the Wall Street Journal and The Financial Times have found good subscription success but they are not general interest newspapers – even if Murdoch is slowly trying to make the WSJ such. Business executives and the like have expense accounts for their online subscriptions so the WSJ and FT are doing well online. But The Times and Sunday Times are basically hawking the same news as the 10 other daily and 10 other Sunday UK national newspapers so will people sign up to £1 a day or £2 a week?

The smart money said if that was going to happen then the newspapers must have desirable content not available elsewhere. But to get that content you need feet on the ground. So, how can you fire 10% of your editorial force before the grand experiment begins?

The answer apparently boils down to The Times and The Sunday Times being particularly hard hit by the recession and they are hemorrhaging money at around £240,000 a day and even to News Corp., that is more than petty cash. Those numbers were based on the last fiscal year that ended June 30 and the expectation is that things won’t be so bleak in this fiscal year, but apparently they are bleak enough for the axe to fall again. It was only February of last year that The Times culled 14 journalists; this time around it looks like another 50 will go. At The Sunday Times, that fired 20 editorial staff last year another 20 or so are to go now with the newspaper decimating its Scottish edition, editorial there going from around 20 to just three.

The old business model under which the cash-cow Sunday Times more than made up the losses of the always money losing Times is down the drain. The recession has really killed off Sunday Times advertising so instead of a plus figure for the profit of the two newspapers combined as in so many years, the last fiscal year saw the loss at £87.7 million, up from the £50.2 million loss from the year before. Something obviously had to be done.

So that’s why the editorial culls and that’s why the pay walls are arriving. The Times and Sunday Times previously shared the same web site, but their page views were significantly below The Mail or The Guardian, which means not that much advertising money was there, so it’s not as if the newspapers are going subscription from a position of strength.

The spin is that the money saved on journalists will be invested in making the digital products that much better but Times editor James Harding warned, “Our losses are unsustainable. We cannot ensure the long-term future of this paper and our futures in journalism if we cannot make a viable business out of The Times.”

And there’s the rub – until the Sunday Times starts reproducing the profits it once had and The Times severely cuts costs it will not be a fun time at either newspaper. For the one thing that Rupert Murdoch does not want to go down in history as is the “Villain Who Closed The Times”. He is real sensitive to his reputation in the archives. Back in 2003 - 2004 for instance, he lost a small fortune publishing The Times in broadsheet and in compact size at the same time until The Independent took the plunge to switch from broadsheet to compact, and only then did Murdoch allow The Times to become solely compact. Murdoch then said the last thing he wanted was for The Times to be the first in London to switch solely to compact because he didn’t want to get slammed for destroying the heritage of such a prominent newspaper. But following the crowd, so to speak, was okay.

If he delayed in switching to compact because he feared for his place in history then doubtful The Times in print will be the first UK national newspaper to switch entirely to digital. But if its losses continue huge and things don’t improve tremendously at The Sunday Times, and if the pay wall experiment doesn’t bring in the additional cash to help get the newspaper back to its pre-recession financials target, then is there a Plan C?

See also in ftm Knowledge

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Rupert Murdoch and News Corporation

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