Strategic TransformationJames S. GoldSenior Vice-President and Chief Marketing OfficerNew York Times Regional Media Group

PANPA Queensland, Australia September 10, 2008

Today’s Agenda:

• The NYTCO Brand Portfolio

• Current US Media Landscape

• Strategic Transformation

• Balanced Management Approach: The “Ambidextrous” Organization

• Triad Management Principle

• Transformational Change @ NYTRMG

2

The New York Times Company Major Brand Portfolio

3

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

Regional Media Group

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

Num

ber i

n M

illio

ns

Source: NAA

4

The Growth Imperative: Challenges 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)

Source: NAA

5

The Growth Imperative: Challenges 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

ons

6

7

The Growth Imperative: Challenges 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

Association of America, Mark Potts projection

The Growth Imperative: Challenges 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

8

9

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.”

-Teece, Explicating Dynamic Capabilities: The nature and micro foundations of (sustainable) enterprise performance (2006)

10

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.”

-O’Reilly III & Tushman, Ambidexterity as a Dynamic Capability: Resolving the Innovator’s Dilemma (2007)

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.

Based on “Ambidexterity as a Dynamic Capability: Resolving the Innovator’s Dilemma.” (O’Reilly III and Tushman, Harvard Business School, 2007)

11

Strategic Transformation Re-Engineering the Organization for Immediate and Sustained Growth

Consumer Advertising

12

Strategic Transformational Change 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

StrategicPartnerships

LocalManagement

Open Technology

13

14

Strategic Transformational Change

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

• No Knowledge or Expertise in Emerging Digital Marketing or CRM Practices

Strategic Transformational Change 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

StrategicPartnerships

LocalManagement

Open Technology

Distribution, Single Copy SalesCall Center, E-Mail,

Direct Mail, Telemarketing, Technology, Data Management

Strategic Planning, Analytics, Campaign Management,

CRM Strategy

15

Strategic Transformation Circulation Audience/Development

16

2003

Add Demographics to Database

Consolidate & OutsourceCall 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 CalendarAudience Management for Brand Portfolio

Develop Campaign Mgmt. & AnalyticsAutomate Admin & Clerical, Centralize

Strategy, Budgets, Planning & Implementation, Consolidate Vendors

Migrate Call Center to Philippines

Digital CRM, E-Marketing

17

Strategic Transformational Change Circulation > Audience Development Immediate Growth Impact: 2008 vs. 2006

• Annualized Source Savings Exceeds $1 Million (> 20%)

• Reduction in Discount Investment of 30%

• Increase Revenue/Subscriber of 8.4%

Source: NYTRMG Marketing

Online

20%

0%

100%

40%

60%

80% Segment Penetration

Mature Years59% of Market

Family Life10% of Market

Younger Years31% of Market

Daily Newspaper Weekly Newspapers Magazines

Strategic Transformational Change: Brand/Audience Portfolio Map

Consumer Marketing expertise broadens to include entire print and digital brand portfolio

18

Strategic Transformation Re-Engineering the Organization for Immediate and Sustained Growth

Advertising

19

20

Strategic Transformational Change

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

• Little Digital Expertise

Strategic Transformational Change 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

StrategicPartnerships

LocalManagement

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,Creative Services and CRM Strategy

21

Strategic Transformation Advertising Management CRM

22

2006

2007

Self-Serve Pilots

Digital Sales Development

2009

Strategy Formula: NBD + LCV + Ops E = EG

Complete Business DatabaseInteractive SFDC Rollout/Ops Efficiency13 markets in 18 months

Creative Tech Due Diligence Sales Channel Strategy

Call Center Migration

E Campaign Management/Lead GenTest India Outsourced CreativeCreative Centralization

SuperSite in TuscaloosaIterative Creative Rollout

CRM due diligence

Profitability Analysis

2008

Strategic Transformational Change Networked Advertising Management

Sales Presentations

DataResearch

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

23

Ad Director

Publisher

Controller

CFO

Biz Office

Reporting

COO

CMO

Strategic Transformational Change NYTRMG Marketing Assets & Strategic Partners

24

Classified Call CenterGreen Bay, WI

Sales ManagementMadison, WI

Strategic SourcingNorfolk, VA

NYTRMG FinancialLakeland, FL

NYTRMG MarketingTampa, FL

Creative ServicesTuscaloosa, AL

Acquisition Call CenterPhoenix, AZ

Creative ServicesGurgaon, India

Circulation Call CenterManila, Philippines

Marketing DatabaseDenver, CO

Strategic Transformational Change 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.

25

Thank you.

James S. Gold, SVP/CMO, New York Times Regional Media Group james.gold@nytrng.com

26