Long The Gray Lady (NYT)

I  don’t regularly read the New York Times, but I like the current set up for their stock.

Big trends would be: death of competitors, rejection of tech monopolies that ate the playing field, rise of subscriptions & increased political polarization.

Going at them one at a time…

Death of Competitors

  • Many of their competitors (outside of the Washington Post) have been bought out by private equity chop shops to where they are a masthead logo above eHow styled news content.
  • And then there are the repeat bankruptcy styled players like Tronc that do arbitrary name changes to show just how little they value their name, brand & legacy.
  • As regional news services get shallower & crappier & less differentiated while their best employees who were laid off become their fiercest critics, more people will flock to the national news outlets like the New York Times. Businesses in structural decline with many layoffs of media savvy people end up getting their ugly stories told. A few will land techno-oligarch bailouts, but most will end up getting some of the seedy behavior leaked. Their competitors will, of course, cover that story.
  • Savvy web publishers like IAC which have tried to create evergreen content via About.com have repeatedly been whacked algorithmically by Google as they split a big site into vertical sites & vertical sites into niche sub-brand sites.

Competing publishers will have the obvious brand erosion from PE chop shop rightsizing combined with an internet that forgets nothing and trusts nothing.

“Briefly stated, the Gell-Mann Amnesia effect is as follows. You open the newspaper to an article on some subject you know well. In Murray’s case, physics. In mine, show business. You read the article and see the journalist has absolutely no understanding of either the facts or the issues. Often, the article is so wrong it actually presents the story backward—reversing cause and effect. I call these the “wet streets cause rain” stories. Paper’s full of them. In any case, you read with exasperation or amusement the multiple errors in a story, and then turn the page to national or international affairs, and read as if the rest of the newspaper was somehow more accurate about Palestine than the baloney you just read. You turn the page, and forget what you know.”  – Michael Crichton (1942-2008)

Rejection of Tech Monopolies

  • Now that the big tech companies are starting to be viewed broadly with disdain, more people will seek trusted filters / curators rather than relying on the central algorithmically-driven surveillance networks.
  • European publishers who are trying to push regulators to ensure payments of compulsory copyright payments will ultimately lead to over-representation of US media across European countries. When EU pubs first pushed for these types of regulations Google started including bloggers in the “in the news” section inside their regular search results, they’ll also have no problem over-representing whatever they get for free.

Rise of Subscriptions

  • Much of their revenue base has shifted away from advertising to direct subscriptions from end users.
  • Spotify, Netflix & other online vertical media services are re-normalizing content-based subscription fees that the ad-driven Internet temporarily did away with.
  • People are starting to view paying for subscriptions as a virtue signaling move. If you never visited rural towns in the south that have been utterly decimated by “free trade” then you can smugly view yourself on the right side of history paying to inform the public with your monthly New York Times subscription payments.

Increasing Political Polarization

“The world of media, trust, and tribalism is going to get a lot more complicated in the coming years.” – John Borthwick

  • The bailouts & financial asset price reflation have fueled increasing political polarization and resentment.
  • Now that liquidity is disappearing from markets & money is once again having a price the debt binge that masked the true economic damage will start causing further hate / polarization / resentment.


 “After generations of doing the opposite, when unity and conformity were more profitable, the primary product the news media now sells is division. …  we encourage full-fledged division on that strip. We’ve discovered we can sell hate, and the more vituperative the rhetoric, the better. This also serves larger political purposes. So long as the public is busy hating each other and not aiming its ire at the more complex financial and political processes going on off-camera, there’s very little danger of anything like a popular uprising.” – Matt Taibbi

Until the U.S. economy is re-oriented toward the rust belt & away from metropolitan coastal elites the level of division will only increase.

At the bottom of the New York Times pages there is an ad with the headline “Subscribe to debate, not division.”

And yet they publish this sort of polarizing hate, which their base loves.

Millions of people with left leaning political views are likely to subscribe to the New York Times in record numbers in lieu of allowing low-income subsidized housing for teachers which risk lowering their property values by slightly re-balancing supply and demand.

As the saying goes: “I believe the children are our future, let their teachers be poor & burned out & commute at least 3 hours every day…”

Central Aggregators? Indy Publishers? Blockchain? Blah?

Automation will decimate us before we are rebuilt by (eventual) lower barriers to entry which enable our tribal affinities to be focused around more productive & niche interests rather than the primal issues which dominate the current political landscape.

“automation will likely disrupt your current job (and your next one, and the one after that), and you’ll be the target of attention-grabbing, behavior-modifying algorithms so exponentially effective you won’t even realize you’re being targeted. The best defense against that? An emotional flexibility that allows for constant reinvention, and knowing yourself well enough that you don’t get drawn into the deep Internet traps set for you. … I don’t have a smartphone. My attention is one of the most important resources I have, and the smartphone is constantly trying to grab my attention. There’s always something coming in. … The way to grab people’s attention is by exciting their emotions, either through things like fear and hatred and anger, or through things like greed and craving” – Yuval Noah Harari

Longterm I think the web will have many Stratechery-styled businesses where beat reporters who know a particular field exquisitely well build niche communities consisting of many direct subscribers, but that future could be 10 or 15 years off.

Between now and then the Gray Lady will sing.

Normally I write posts shortly after establishing a position. I have an itchy trigger finger for buying some NYT, but I want to give it a couple more days to a week to slide back from the recent strong run it has had. Maybe it keeps going up, but I think somewhere around $23 might be a good entry point.

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