Succession Lessons at The New York Times
Arthur Ochs Sulzberger, Jr., 40, succeeded his father as publisher of The New York Times in January. The fifth family member, representing four generations, to lead The Times in 96 years of family control, he will oversee all aspects of the newspaper. Arthur Ochs Sulzberger, Sr., 66, continues as chairman and CEO of the company.
Descendants of Tennessee printer Adolph S. Ochs, the family controls 84 percent of company stock and elects nine of 14 directors. In addition to the flagship, The New York Times Company owns 24 other dailies and eight weeklies in 12 states, 17 magazines, 5 television stations, New York AM and FM radio stations, a news service, a feature syndicate, newsprint and paper manufacturing facilities, and 50 percent of the International Herald Tribune.
The Timesreported on its new and recent publishers in a lengthy front page article. We think this successful succession illustrates many useful family business lessons.
In his 29-year tenure as publisher, Sulzberger, Sr. laid down huge footsteps for his son to follow, but his life-long attitude and demeanor made the transition less intimidating. Washington Post Chairwoman Katherine Graham describes him as "modest and wonderful...really funny." His sister and fellow director says he is "so modest, so understated and so wise." In describing his approach to his position, The Times reported, "while taking responsibility seriously, he bore it with a lightness, warmth and self-deprecating wit...[he] never used the paper for personal, family, political or financial advantage."
The elder Sulzberger's commitment to orderly transition may be a result of his own experience with unexpected succession. When his brother-in-law died after only two years as publisher, Sulzberger was thrust into the position while the paper was reeling from a prolonged strike. He described himself as "shell-shocked," and in a conversation with his sister after one day on the job, he reported, "I made my first executive decision. I've decided not to throw up."
"If you believe in the process of an orderly transition," says the senior Sulzberger, "then you have to 'tran-sit.' It gives me great fatherly pride to turn the publishership over to someone not only qualified, but a son."
Sulzberger, Jr. was guided through a well-planned, step-by-step career development path providing broad exposure to all areas of the business while gradually increasing responsibility. During college at Tufts University in Boston, he worked summers at newspapers including The Boston Globe. After graduation, he got significant experience outside of the family business working for two years as a general assignment reporter at The Raleigh(NC)Times (owned by the Daniels family), and then spent two years in London with the Associated Press. In 1978 he joined The Times' Washington bureau before hitting New York to cover City Hall. Then came his first management job -- assignment editor.
Next he became an advertising salesman before supervising a sales team. He moved into corporate planning, followed by a stint in production -- as night production manager. Finally he became assistant publisher, and in 1988, he became deputy publisher. "The threads of multifaceted training began to come together," reported The Times. His last responsibility prior to his promotion involved planning a new $450 million color printing and distribution plant.
Sulzberger, Jr. takes the helm during a deep recession when advertising revenues and profits are way down. He is firmly guided, however, by his family's historical experience with the enterprise and by family values. The fundamental lesson of The Times history is, he says, "if you have quality information, profit will follow." The paper has a tradition of using tough times to invest in improvements and expansion rather than cutting costs. During World War II, The Times elected to include more news and less ads in papers restricted by rationed newsprint. This strategy won market share from competitors who took the opposite approach. In 1974, with New York City almost bankrupt and ad revenues down 25 percent, the paper was expanded from two sections to four. Sulzberger, Jr. will be guided by examples such as these. Successfully negotiating hard times early in his tenure may also strengthen him for future challenges.
In assuming his new responsibility the younger Sulzberger's stated his commitment to his family's values: "I pledge my devotion to the precepts that make this paper great: the fairness and honesty of its journalism, the integrity of its journalistic practices, and the decency of its treatment of all individuals."
The extended family remains close. As the younger Sulzbergers grew up, the family frequently convened at Hillendale, the Connecticut estate of his paternal grandparents. There, 13 grandchildren were imbued with their family heritage which "was lightly but constantly present." The fourth generation has established and all contribute to a charitable trust, called The Hillendale Group.
Four first cousins work at The Times including the vice president of forest products, the senior vice president and general manager of the women's publishing division, the director of sales development in the circulation department and the director of The Times history project. Aunts Marian Sulzberger Heiskell, Ruth Sulzberger Holmberg and Judith P. Sulzberger are company directors. Aunt Ruth is also publisher of The Chattanooga Times.
Careful estate planning has preserved family assets and assured family control. In 1986, Adolph Ochs' grandchildren and great-grandchildren entered into an agreement restricting stock sales outside the family. Two classes of stock assure voting power stays in the family. Individual family members wishing to sell stock must convert to "A" shares which have little voting power but are publicly traded.
On the death of Iphigone Ochs Sulzberger, the founder's daughter, four trusts were established to benefit her four children, 13 grandchildren, 24 great-grandchildren, and later descendants. These trusts hold 83.7 percent of the Class B voting stock and four percent of the class A shares. All four siblings in the third generation are trustees of all four trusts and their decisions regarding class B shares must be unanimous. The trusts can survive until 21 years after the death of the last descendant who was born on or before August 5, 1986.
The family's sense of stewardship is institutionalized in documents establishing the trusts. Their primary purpose is stated as being "To preserve the editorial independence and integrity of The New York Times."
Succession is not yet complete. Arthur Ochs Sulzberger, Jr. will report to his father, company chairman and CEO. The transition process continues, for this generation and the future.