The New York Times' Problem Is Not Political

| About: New York (NYT)

Ombudsman Arthur Brisbane got conservative hearts all a-flutter over the weekend by accusing his employer of "progressive bias" in a parting shot at the paper.

But bias in the news room has no more to do with the business fate of The New York Times (NYSE:NYT) than that of News Corp. (NASDAQ:NWS).

The problem, in both cases, lies in the editorial tail wagging the business dog. NWS has already paid for this "sin," in a pending spin-off of its newspapers, including The Wall Street Journal, into a new entity.

The depth of the Times' real problem can be seen in its recent sale of About.Com to IAC/Interactive Corp. for $300 million.

First, you didn't know the Times even owned About.Com, did you? Nope, it bought the site in 2005. Second, you know what it paid for About.Com? It paid $410 million. So the price it got for the site, after a bidding war, was $110 million less than what it paid for the same site seven years ago.

That speaks to management, and it doesn't speak well.

A publisher is always nothing more, or less, than what its target market wants it to be. Its job is to monetize that attention, to organize and advocate that place, industry or lifestyle.

It doesn't matter whether the Times is liberal or conservative, just as it doesn't matter whether the Wall Street Journal is conservative or liberal.

What matters is whether the publisher can organize and advocate that audience, whether it can sell ads against that audience, the degree to which it can represent that audience to advertisers and profit from it.

The problem for all newspaper companies today is that audiences have moved decisively from print to the Web. They can't sell print ads. They can sell web ads. So the key to profit is knowing who those web readers are, and making certain the right readers are reading you. Because that's the only circulation you can monetize.

For example. I know what Seeking Alpha is. It's the community of small investors. If you want to narrow-cast it, it's active small investors.

What's The New York Times? Is it a demographic or a psychographic? If the former, does it represent Manhattan, New York City, or the New York metro area? Whatever the answer to that question, it needs to prove a dominant market share among those target readers. The same would be true if it's a psychographic - how much of the country's intellectual elite, or even liberal elite, read the paper every day? Make sure they do.

Only after you prove you're hitting an advertiser's target market do you have anything to sell.

The same problem was evident with Can you define the audience - who are they, what do they represent as a market? Can you substantiate that audience, and can you convince the people who want to sell to that market that you are hitting their target?

I don't think the Times ever asked those questions regarding, let alone got answers to them. If they had the value of the asset would not have gone down under their watch.

And I don't think they have yet to get those answers about NYTimes.Com, let alone deliver proper answers to them that advertisers can spend against.

Until they do, NYT remains a sell.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.