Strategic Transformation

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Strategic

Transformation

James S. Gold

Senior Vice-President and Chief Marketing Officer New York Times Regional Media Group

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Today’s Agenda:

• The NYTCO Brand Portfolio • Current US Media Landscape • Strategic Transformation

• Balanced Management Approach: The “Ambidextrous” Organization • Triad Management Principle

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The New York Times Company

Major Brand Portfolio

D: 2.5 million c S: 3.0 million c O: 47.2 million u (11th₎ Regional Media Group

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The Growth Imperative: Challenges

US Circulation/Penetration

While US Households continue to grow, paid circulation and penetration falls.

Increasingly, a once powerful mass medium appears to be evolving into an ageing niche player. Source: Editor and Publisher Yearbook data; U.S. Census Bureau

Number i

n

Mill

ions

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US Newspaper Print Ad Revenue Trend

1996-2007

Advertising growth remained strong through the advent of the Internet. While recent troubles are both cyclical and secular, how deep is the secular change?

Billi

ons

Total Print (National, Retail & Classified)

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US Classified Revenue Trend

1996-2007

Classifieds, now under siege from online players, is the site of much of the revenue erosion. Automotive revenue has declined for 15 consecutive quarters.

Source: NAA

Billi

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Print & Digital: Crossing The Chasm

The Migration of Print to Digital

The Outlook: Print’s decline, even with digital growth, will drive revenues and earnings downward for years

Source: Concept from “Crossing the Chasm, The Life and Death Threat that Newspapers face in Transitioning from Print to Online-And what they can do to Survive.” Copyright 2007 by Mark Potts. Data from Newspaper

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US Newspaper Stocks:

2003 - 2008

Source: Yahoo Finance, Merrill Lynch research 2008 INMA Outlook

With years to go before digital growth will balance print declines, investors see little opportunity

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The Growth Imperative: Solutions

Radical Reorganization

“Long-term success inevitably requires that leaders

reallocate resources away from mature and declining businesses toward emerging growth opportunities.

The key to sustained, profitable growth is the ability to

recombine and reconfigure assets

and

organizational structures

as markets and technologies change.”

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The Growth Imperative: Solutions

Radical Re-Organization: Ambidextrous Management

“

Asset orchestration

is how organizations evolve to maintain ecological fitness.

Exploitation

is about efficiency, increasing productivity, control certainty and variance reduction.

Exploration

is about search, discovery, autonomy, innovation and embracing variation.

Ambidexterity

is about doing both.”

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Strategic Transformational Change

Ambidextrous Management Principles

• Simultaneously pursue

immediate

&

sustained

growth

• The ability to simultaneously

“exploit”

and

“explore.”

• To

configure

and

reconfigure

organizational resources.

• To simultaneously pursue

mature

and

emerging

strategies.

• To gain greater

efficiencies

in the

mature

business.

• To sharpen the organization’s ability to

innovate

.

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Strategic Transformation

Re-Engineering the Organization for Immediate and Sustained Growth

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Re-Engineering The Organization: Triad Management Principle

A new management approach allocates traditional and key emerging expertise and resources to maximize return, encourage innovation and accelerate growth

Shared Resources Strategic Partnerships Local Management Open Technology

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Triad: Circulation Management

Key Strategic & Operational Issues (Circa: 2003)

• Traditional Group Management: Independent Islands. No Group Synergy or Scale • Heavily Reliant on Primitive “Sequential” Mass Telemarketing…DNC Looming • No Analytical Metrics or Performance Management, Low New Start Retention • Brand and Distribution Management Combined, Poor Branding Quality • Call Center Management Issues (Abandonment)

• No CRM Strategy, Technology or Practices

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Triad: Circulation >Audience Development

Distribution and single copy sales remain a local management responsibility.

Subscriber acquisition & retention management and overall strategic planning is centralized. Call center management is outsourced. Clerical and administrative tasks are automated and provide resource to hire new talent required going forward.

Costs are reduced and the organization gains momentum for moving toward total audience management. Shared Resources Strategic Partnerships Local Management Open Technology

Distribution, Single Copy Sales

Call Center, E-Mail, Direct Mail, Telemarketing, Technology, Data Management Strategic Planning, Analytics,

Campaign Management, CRM Strategy

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Strategic Transformation

Circulation Audience/Development

2003

Add Demographics to Database Consolidate & Outsource

Call Center

2004

Build Total HH Database

Provide DBM/DM Services

2005

2006 2008

2009

Add PRIZM Lifestage Data 2007

Multi-market DM, TM, EM Campaign Calendar Audience Management for Brand Portfolio

Develop Campaign Mgmt. & Analytics Automate Admin & Clerical, Centralize

Strategy, Budgets, Planning & Implementation, Consolidate Vendors Migrate Call Center to Philippines

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Circulation > Audience Development

Immediate Growth Impact: 2008 vs. 2006

• Annualized Source Savings Exceeds $1 Million (> 20%) • Reduction in Discount Investment of 30%

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Source: NYTRMG Marketing Online 20%  0%  40% 60% 80% 100% _{Segment Penetration} Mature Years 59% of Market Family Life 10% of Market Younger Years 31% of Market

Daily Newspaper Magazines Weekly Newspapers

Strategic Transformational Change:

Brand/Audience Portfolio Map

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Strategic Transformation

Re-Engineering the Organization for Immediate and Sustained Growth

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Triad: Advertising Management

Key Strategic & Operational Issues (Circa: 2006)

• Management Islands

• Duplication of Creative Services

• Little Resource Share or Best Practice Development

• Little Rep or Management Visibility into Account History or Prospects • No Continuity (Attrition and Absences)

• Only 20%Time in Sales. Travel, Administration & Clerical Dominates Day • Questionable SMB Account Profitability

• Little NBD (Creative or Prospecting): Only 20% Market Penetration • Low Consultative Sales Approach

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Triad: Advertising Management

Major Retail & Classified accounts are managed locally or centralized. Classified Transient and SMB accounts are outsourced. Creative Services are centralized with some work outsourced to India. Marginally profitable accounts are migrated to self-serve technology

or call center. Shared Resources Strategic Partnerships Local Management Open Technology

Select Mid- Major Account Management

Call Center/SMB Management, Self-Serve Ad Production and

Select Creative Services Strategic Planning,

Analytics, Campaign Management, National/Regional Account Management,

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Strategic Transformation

Advertising Management CRM

2006

2007

Self-Serve Pilots Digital Sales Development

2009

Strategy Formula:

NBD + LCV + Ops E = EG

Complete Business Database

Interactive SFDC Rollout/Ops Efficiency 13 markets in 18 months

Creative Tech Due Diligence Sales Channel Strategy

Call Center Migration

E Campaign Management/Lead Gen Test India Outsourced Creative Creative Centralization

SuperSite in Tuscaloosa Iterative Creative Rollout

CRM due diligence

Profitability Analysis

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Networked Advertising Management

Sales Presentations Data Research Local Creative Group Creative Offshore Creative Creative Services Spec Ad Database Ad Rep Ad Rep Ad Rep EM DM TM Advertising & Marketing Managers

Call Center Ad Rep Local Sales Ad Rep Ad Rep Business Continuity Wireless Connectivity Campaign Management

Web-based CRM connects each rep and all customers to a global network of support Ad Director Publisher Controller CFO Biz Office Reporting COO CMO

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NYTRMG Marketing Assets & Strategic Partners

Classified Call Center Green Bay, WI Sales Management Madison, WI Strategic Sourcing Norfolk, VA NYTRMG Financial Lakeland, FL NYTRMG Marketing Tampa, FL Creative Services Tuscaloosa, AL

Acquisition Call Center Phoenix, AZ Creative Services

Gurgaon, India Circulation Call Center

Manila, Philippines

Marketing Database Denver, CO

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Summary & Recommendations:

Strategic:

• Growth requires clear vision and strategic organizational transformation

• Gain efficiencies in mature business & sharpen innovation capability in emerging business • Develop Triad perspective. Centralize and/or Outsource. Keep Local only what must be Local • Identify key expertise and positions going forward

• Develop 3 year Strategic Roadmap, financials and major earnings initiatives • Insist on accountability

• In all things, think & act: Transformational, not Incremental

Tactical:

• Strong change leaders & project management coordination to orchestrate the Roadmap • Transformation will be full time employment for many for years.

• Standardize and simplify before you Centralize or Outsource • Out of sight is not out of mind. Learn Virtual management • Leave no stone unturned, no sacred cows.

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