CNBC transcript: CNBC‘s Sara Eisen interviews The New York Times Company CEO Mark Thompson from the CNBC Evolve Conference in NYC Today
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Following is the unofficial transcript of a CNBC interview with The New York Times Company CEO Mark Thompson live from the CNBC Evolve conference in New York City on Wednesday, June 19th.
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SARA EISEN: Well, that was a good setup. So, let's get to those accusations of treason and failure, which are the latest. But really --
MARK THOMPSON: I'm on the business side, folks. You know, that's where --
SARA EISEN: Are you vulnerable to those charges?
MARK THOMPSON: Not worried at all, actually. But we'll come to that.
SARA EISEN: Okay, we'll come to it. We're here to talk about your leadership, and in preparation for this I went back and I looked at the stock price, and I looked at some of the news reports. I'll paint the picture for you. Third quarter 2012, I think ad revenue declined in the quarter 9 percent. Revenue was down like 80 percent, 88 percent from the year before. The dividend was scrapped, the stock price fell 22 percent on the earnings news, and then New York Times names a new CEO. Why did you take the job? You came from BBC. What is the time frame?
MARK THOMPSON: Well, look, many people here have had the experience of a headhunter calling about some job. It's one of those calls where I thought, I can get to know really quickly. And I did, I said, I don't think it's for me. I'm not an American, I've not worked in newspaper before. And I spent about a week thinking about it. I was a digital subscriber of the New York Times. I loved the New York Times, I'd loved it for years. The moment it became possible to see it on the web in the '90s, I started looking at it every day and I became a digital subscriber. The thing that kept me from -- that kept on occurring to me that week was, the potential of this thing, it's kind of the best of journalism anywhere, really. I'm running -- was at the BBC at this point. You know, it's part of the single most trusted news brand in the world is the BBC. I'm a journalist by training. I thought The Times is unique, and it's completely that reputation, the quality is completely under-leveraged. And I had some friends working there at The Times and I knew a lot of other people in New York, and very strongly, the majority opinions of my friends is don't touch it with a barge pole.
SARA EISEN: Newspapers or The Times?
MARK THOMPSON: Specifically The Times. They are incredibly brilliant people. It's never -- it's a block of concrete. You'll never move it. It's so set in its ways, it's so -- it's so kind of fixed in its traditions. You know, it's the most conservative of all American media organizations. You won't shift it. But then actually one or two people said to me: It's really quite interesting. Nobody has really had a go with it yet, and you can do some brilliant things with it. Then I started meeting with family, got the controlling interest, met some independent directors, and I honestly came to believe they really meant it when they talked about change. Everyone in media talks about change all the time and innovation, how much they love it, how much they want to promote it. But almost everyone is lying about that, or maybe lying to themselves. They don't really. They are actually of the kind of thinking, God, maybe I can sit this out, maybe the winds will change. Maybe, you know, we can --
SARA EISEN: More young people --
MARK THOMPSON: -- really well, we're going to be fine sort of thing. These guys looked over the press piece in 2009, got into liquidity crisis, cardiac arrest of the company. And they -- I thought they really meant it. So my back was -- it was sort of like a contrarian investor. I thought actually there is something we can do here. Honestly, I would say very quickly, although it's taken us a long time to do everything we've done so far, there's plenty more to do, that was proven out. I felt when I got there, although there were plenty forces of conservatism, there was also a real groundswell of impatience to get on with the future.
SARA EISEN: For the next chapter in that story, on the stock chart that was near the bottom. I think the stock was in the $8 range. It's now trading in the 30s. So it's basically quadrupled under Mark's leadership.
MARK THOMPSON: Yes.
SARA EISEN: How do you take a business with such a rich history that you've described, such a tradition, such a valuable brand and business that is declining and turn it toward the future?
MARK THOMPSON: Well, to me it's what do you keep and what do you cherish, and what do you change? You've got to be quite clear about that, and I think the organization has got -- it's got to be true, and the organization's got to believe that you share the passion and conviction about the quality of the journalism. One of the things that came to me very quickly was not only do I believe in trying to maintain our newsroom, where possible, we would invest in it. Our model is a very simple one, which is we should invest in great content and the future of journalism, if you want a great future, make more journalism. Do more and better journalism, and figure out smart ways of putting that in front of people and ask them to contribute to support that journalism. And this model, which is the same model, by the way, as Netflix, is the opposite of what people were interested in doing, was thinking basically this is like a cost-cutting thing. As long as we chop our costs, maybe we can remain profitable. To me the risk of a downward spiral of falling costs, falling revenue is completely obvious. It's not been obvious to many of our competitors. But once you convince people that you really believe in the fundamentals of the product and the values, then you earn permission to start talking about those things where you do need to make changes. Simple things. In 2012, if you'd gone into the newsroom at 7:00 in the morning, you'd have found four or five guys with vacuum cleaners. That was the dead part of the 24-hour cycle for a physical newspaper. 7:00 in the morning is the peak time for small-firm consumption. That's the most important time to be current, to be fresh, to have new things to put in front of the audience. Instead of thinking a print product, out of which you get a desktop website, out of which you get, by the way in those days an RSS feed, a smartphone app, you think of a news report which is aimed at delivering the best possible smartphone user in the world, out of which you can get a website and out of which you can then curate a physical newspaper. That's quite a big change, but it's not a change to the idea you've got to do the best, most serious journalism in the world. That's the part they really care about.
SARA EISEN: It seems as if you did a two-pronged approach. You changed -- you've had a strategic transformation and you had a cultural transformation. What was that like, and which is harder?
MARK THOMPSON: A strategic -- I've been a TV executive for 18 years now. One of the things I've learned is the trick is to not try and come up with a strategy and, like, impose it on an organization. The trick is to encourage and cajole and help the organization come up with its strategy. So you kind of pull the strategy out of the organization, so you get your colleagues to come up with a strategy. And because they've come up with it, it's their strategy; they own it. So trying to impose a strategy, get a group of external consultants to come in and give you a strategy, which you kind of then email to everyone, it's just not owned. So to me the first thing -- I think the strategy making process and the cultural change were the same thing, which is really -- it's like we're going to sit down and we're going to have an open-ended, honest inquiry about what's going on and what we need to do, and you're going to help with that, you're going to be part of that. And after that we're going to start coming up with ideas about what we should do differently. And they did that. And I would say, you know, the strategy, new Times strategy has come out of its newsroom, it's come out of its marketing department. It's been kind of organic. And because of that, you get enough people who believe in it that you can do it. The real problem many, many organizations have is you have theoretically a great strategy, but it doesn't really feel owned by the organization. So it's therefore essentially impossible to implement, especially because modern digital media requires massive integration of different disciplines. And trying to do that with a legacy media organization which is very strongly silo-based, and all previous strategies have been silo-specific strategies, is incomprehensible to people on the ground. And that has to be played out. The actual operational decisions end up being cross-divisional decisions being taken off the ground far away from the C suite. And if those guys don't feel a part of what is happening up here, it doesn't happen. It's like the gears just don't have the oil and just can't move against each other.
SARA EISEN: How would you describe what came out of those meetings and what came out of their brainstorm sessions? And, by the way, we have questions for the speaker coming up in the last few minutes.
MARK THOMPSON: I'll give you a couple examples. We're a subscription-first business. We said we're going to focus mainly on building our digital subscription business. Initially in the room senior people headed by -- she's now the Chief Operating Officer, Meredith Kopit Levien, said: You can't say that. What am I going to tell my colleagues in advertising, that they're chopped chicken liver; that they no longer count? We said, advertising was going to be an important but secondary revenue opportunity for us. It was so helpful to say to everyone, we're going to build a digital subscription business. We're going to do broadcasting, TV, we're going to still have a great advertising product, and by the way, we're going to transform advertising, as well. That's a simple idea. We're going to be a destination. At a point in 2015, where everyone else or many people were saying it doesn't matter whether you've got your own assets on your own destination, you can be on -- you can be on Facebook, the Facebook newsfeed is fine. We said: No. For us we want to be a place where people come and find us. We want to be a daily habit. That's not a new idea. The physical paper has always been a daily habit for its really committed users. We said: We need the same thing, that same sense of indispensability day in, day out, with a physical product. So we began with a single sheet of paper with probably six ideas on it. Each one of them is a really important idea which points to a change or to the rediscovery of some eternal truth about The Times, which is really relevant.
SARA EISEN: Well, it's an interesting strategy, because I feel like a lot of media companies are going digital. They have digital departments, they have digital people. But then the bulk of their revenue still comes from traditional media advertising. That's where the focus of the business is going to be.
MARK THOMPSON: So one of the first things I did when I got there, I created a print products and services division, and a bit later we set up a print hub in the newsroom. So that's the opposite signal. It says we're going to have a group of specialists who are going to run our print platform, deep muscle memory, fantastic professionalism, and they do have significantly a cost-cutting, efficiency agenda. We want to drive contribution margin out of that wonderful platform for as long as possible. But it's a mature platform. It's not going to be with us forever. We need to build a future. So we isolated the existing business and said: Let these guys get on with that over here. The equivalent, of course, in TV would be the current cable operations and the revenue which comes from subs and advertising. And you say: Let's contain that over here, so that most of the brain space in the organization is focused on product and revenue, which are currently a small percentage of the total, but are essentially most of or possibly all of our future.
SARA EISEN: Is anyone doing that?
MARK THOMPSON: Very few people. That's a move -- I don't know why, because it's kind of obvious. The thing about a mature platform, it doesn't need much running, actually. And there's a kind of mythology about how much effort and brain space it takes to run a mature platform. The whole point of a mature platform it's mature and you really understand it, it's pretty efficient. It may face secular pressures, but you can run it over here. And what you mustn't do is pretend to yourself that it requires enormous strategic energy. It's futile trying to pour enormous amounts of energy into what is essentially a mature business.
SARA EISEN: And then taking it a step further, how did you utilize the data that you were getting from the subscriptions to really leverage those subscriptions in the digital ad business?
MARK THOMPSON: Yeah, by the way, we weren't using digital techniques sufficiently in terms of our print platform. Our printing plan is as good as a digital plan. And digital data of audience is just as relevant in the print now. We use machine learning to figure out how many copies of the New York Times to put in Starbucks to try and reduce the wastage of copies, which is the optimal number per Starbucks around the United States, for example. I would say that we have got progressively better. You know, when I arrived the handling of data at The Times was like that kind of opening a kind of -- a Victorian cabinet of kind of ancient legacy systems. We figured out the architecture and the data engineering now, we've got a lot of both effective and broadly -- but a large number of data analysts, but we've also got some high-end data scientists working on all of that. It's becoming more useful. But I want to say as well we're now also in the process of really trying to figure out what parts of data about our consumption of the Times do we really need and what don't we need? So can we reduce to a minimum, for example, the amount of information about units leaving our building to the absolute minimum to run the business? And, secondly, can we be more transparent with you about what is happening in terms of your interaction with The Times and the data? Again, I would say that our industry has got very used to spraying user data around as if it didn't really matter. And the world's regulators are in the process of changing that.
SARA EISEN: Yeah.
MARK THOMPSON: And again, this is going to fundamentally be appalling, kind of a cesspool -- cesspool on the Atlantic -- that kind of digital advertising. You know, terrible, kind of seedy or dodgy intermediary companies and so-called segments, which don't really work. You know, all of that nonsense which has sprung up in the open market, the market world particularly. It's not really defensible, either.
SARA EISEN: Let me ask you this. Is the President a distraction for you when it comes to these strategies and doing your business? He tweets and mentions the New York Times constantly.
MARK THOMPSON: So -- and just to -- just for one minute, to be serious about -- the President accused us of treason over the weekend over a story about U.S. efforts to get the capability to interfere with the infrastructure of Russia. Essentially, our story said as a deterrent to persuade the Russians from messing up infrastructure in this country. It's a story where The Times had contacted in advance the defense authorities in the Administration to ask the question, are there any national security interests at stake; is there anything we should need to know, anything you would like us not to publish anything. We were told they had no concerns at all, and we published, and the President accuses us of treason.
SARA EISEN: He had to one-up "the enemy of the people."
MARK THOMPSON: Well, I think our publisher, Arthur Greg Sulzberger, had two public meetings with the President in the last 12 months, and both times has called the President out for words, that's what they are, they're words, but reference which is dangerous. Because in the end, calling journalists "traitors" or calling them "enemies of the people" is inevitably going to increase the risk of violence and hostility towards journalists. And it's irresponsible, and he shouldn't do it. The President is entirely entitled to not like everything that he reads in the New York Times. We get that. He's got every right to say he doesn't like the way we cover him or anything else. Not saying we shouldn't be criticized. But actually isolating journalists as a group, not just at The Times, but the whole industry, is a really frankly hostile, stupid, but also dangerous thing to do. And the treason charge, read the Constitution. It's absurd. Treason is a crime in the United States only applicable essentially in times of war against official enemies of the United States. So it's an absurd charge. But it's a dangerous further escalation in the language.
SARA EISEN: Open it up for questions. I'm sure people have -- I have many more, but I'll give the audience a shot. Anybody? We have one in the front here. We have a mic coming to you.
AUDIENCE MEMBER: So you mentioned that in the industry there's been a lot of data strewn about over the years, and you folks are getting better, more strategic -- what data from users matters. Can you give us some sense of what you found or what you believe about what types of data matter and can be used responsibly, versus those that are not? Particularly now in the era where Facebook is getting a lot of criticism?
MARK THOMPSON: So I think the big thing we feel is that we -- I think I'm not alone on this -- have done nothing like enough to extract the most value out of as it were, first-party data. I was telling stories a day ago that we have 140 million unique users a month. We have a wealth of information about how people consume our content. We're in the process progressively of encouraging people to register so we know who they are, and we believe we can do a great deal more deduce things about our users without any of the data having to leave our building at all. We've begun to develop some advertising products, which are based on first-party data. We are getting better at marketing tactics on platforms like Facebook, using Facebook as a paid marketing platform, where, again, we're using tactics which rely on first-party data rather than enormous exchange, open-ended exchange, of data to multiple third parties. So, I would say in the judgment of GDPR, the European registration, the idea of first party and indeed, as it were, the New York Times is a controller of people's data, we have a responsibility for the data, and using -- third parties using them as processes, rather than sharing control of people's data with other controllers, not least because it's become clear over the last 18 months that even the largest and best established digital platforms themselves have not had particularly thought-through or secure or responsible practices for handling their users' data, or indeed our users' data.
AUDIENCE MEMBER: Hi. Thanks for being here. You talked about making the subscriptions and everything a daily habit. You certainly made me a daily Daily listener. What other new medias are you looking at to continue this habit driving?
MARK THOMPSON: There's a lot going on. It depends, in a sense, on the famous funnel; which bit of the funnel you're in, whether you're someone coming to The Times for the first time or whether you're an occasional user or more regular. The people who really become more regular, the Daily has been a fabulous tool, actually getting to the stage of things like our morning briefings, which was not done enough to keep innovating in yet, but we're going to fix that. I think the breaking news is quite important. People come to us, we know this, from Google search results much more than they used to for breaking news. Because as a digital brand has grown, we can sometimes beat CNN, for example, specifically for breaking news. Which is not a strong New York Times tradition. The Times was always known for end of day, what does it mean, classic 800-, 1000-word you know summary of what happened; not literally something that's happening now in real time. People want both from us, and this is going to be a kind of separate operation for us, but we are literally now -- I just did this weekend in the beta with android app, so one platform with the beginnings of a solution to breaking news. But at the level of occasional users, we need to do a better job on the -- let's say the mobile web story page. You come via social or via search for one story from The Times. We've got you. What next? What else do we put in front of you? How do we get you from that one experience to the next experience? And it's amazing in terms of -- it's almost shocking, but we haven't cracked that yet. But I would say not only have we not cracked it, we haven't even really gone at it systematically. We're engaged in that, as well.
SARA EISEN: We are out of time, so I will give you a final yes or no. Do your subscriptions go down when President Trump is no longer the president?
MARK THOMPSON: No. No.
[ LAUGHTER ]
MARK THOMPSON: We're trying to help people understand a confusing and in some ways frightening world. So there's always great things going on there, as well. And the disruptions of today, everyone is here because of the disruptions. It's a business, that to our economy, geopolitical has shifted from east to west, America's loss of relative strength in the world. They are social, they are about agendas and about how we think about diversity. They are about the climate. They are about automation and how people's jobs change. I would say U.S. and the U K. politics at the moment are symptoms of this painful, fragmentary, fascinating, terrifying process of change. But our business is the business of giving people tools and information to make up their own minds about what the hell is happening. That doesn't go away with any one politician.
SARA EISEN: Mark Thompson, thank you very much.