International Intrigue   

After establishing the Times as a national newspaper, the New York Times Co. decided it was time to go worldwide. It took full control of the Paris-based International Herald Tribune by strong-arming its partner, the Washington Post Co., into selling its half-interest. Now the Times Co. is in the midst of a three-way global shootout with Dow Jones and the Financial Times.

When Arthur Sulzberger Jr. visited the International Herald Tribune offices in Paris last July to host a town hall meeting, he faced a far less hostile crowd than the first time he met with the staff three years ago. Back then, he was the new owner, the chairman of the New York Times Co. in red suspenders, standing before them, backslapping fellow executives and speaking bad French. Michael Golden, the Herald Tribune's publisher and Sulzberger's cousin, recalls the meeting as "very difficult," mostly because the Times had wrested full control of the paper from its co-owner, the Washington Post Co. "It was as if your parents got divorced," recalls one longtime staff member, "and the bad parent got custody."

But the bad parent turned out to be not so awful after all. The Times Co. has poured more than $100 million into the paper: $65 million to buy the Post's share of the self-anointed "world's daily," the rest in investments, sustaining multimillion-dollar losses annually to wage a global newspaper war against the international editions of the Wall Street Journal and the London-based Financial Times.

After successfully expanding the Times' national reach, Sulzberger was willing to alienate the Grahams, longtime family friends and the Post's majority owners, for unfettered access to expand the Times worldwide, says Alex S. Jones, coauthor of "The Trust," an exhaustive history of the Sulzbergers. Though skeptics question the Times' ability to remake the Tribune into a profit powerhouse, "immensely profitable may not be necessary," Jones says. Acquiring the Tribune has reinforced "the Times as the national and international news leader. It's a brand choice."

In the last two years, the Tribune has undergone a profound transformation and its greatest expansion in the paper's 118-year history as it tries to knock its rivals out of the market. The spoils are significant. The Tribune offers advertisers one of the world's most coveted demographics; the typical subscriber is an affluent, highly educated, well-informed, nomadic 46-year-old European senior manager with a $1.02 million investment portfolio, according to the paper's most recent reader survey. "It's a great audience; it's even better than the New York Times!" says Publisher Golden, as close to gushing as he gets, sipping coffee in shirtsleeves and slacks – he had ridden his bike to the interview – in his neighborhood café across the street from the Luxembourg Gardens. The Herald Tribune's readership is "highly educated, largely managerial and highly professional in business, government, education and NGOs [nongovernmental organizations], mobile and wealthy. It's great.'"

Considering the relentless newspaper industry-wide decline in advertising revenues and circulation, purchasing the Tribune was a gamble, "but we didn't place that bet thinking it wouldn't work out," Sulzberger says. "We owned 50 percent of a declining asset that was going to continue declining unless the dynamic [changed]. We set out to change the dynamic. Are we talking about massive amounts of money? No, we're not, given the size of the New York Times Co. There may come a time [when] it doesn't work, and you say, 'That wasn't working, let's move on.' But so far, we're delighted with the results, with how it's positioned, and we think it has a great future."

More than any other English-language newspaper abroad, the Tribune has a fiercely loyal following and a rich history that goes back to 1887, when horse-drawn carriages delivered the first four-page issues of the New York Herald's European edition to newsstands and hotels in Paris' most elegant quarters. Over the years, and under several owners, the Tribune became a quirky, quaint, parochial newspaper with deep roots in Paris for a growing number of Americans traveling abroad, featuring humorist Art Buchwald, whose columns helped make the paper and the City of Light synonymous. Actress Jean Seberg played a Tribune street hawker in Jean-Luc Godard's influential 1960 New Wave film, "Breathless," and an ever-increasing number of expatriates and college students became fervent fans of the Tribune for its stellar daily lineup of the best news stories from the New York Times, Washington Post and Los Angeles Times (thanks to the Los Angeles Times-Washington Post wire).

Beginning in the mid '90s, though, intense competition from other dailies and multimillion-dollar losses threatened the Tribune's future, prompting the Times to take it over completely in 2003. The transition predictably produced anxiety among veterans; nearly a quarter of them took generous buyouts the Times offered. Reporters and editors who remain cite the paper's addition of more than a dozen new reporters, more news pages, color, considerably more office space, far more original reporting and Publisher Golden's long-term lease in one of Paris' most expensive neighborhoods as evidence that the Times means to stay. In August, the newsroom staff greeted Michael Oreskes – a highly regarded former New York Times journalist and the Tribune's fifth editor in a decade – with optimism, forecasting the paper would be around at least another two to three years to give him and Golden an opportunity to try to drive the Financial Times and overseas Journal out of business.

Pundits predict only two of the three will remain in 10 years, and Oreskes, a former Times deputy managing editor and Washington bureau chief, agrees. "One will be the Herald Tribune," he says, declining to name the other. Prognosticators, including Tribune insiders and Bertrand Pecquerie, director of the World Editors Forum in Paris, predict the overseas Journal will succumb, citing as evidence owner Dow Jones' decision to convert its Far Eastern Economic Review from a weekly to a monthly in December 2004, its shrinking international operations and its move in October to remake its broadsheet in Europe and Asia into a compact tabloid.

Though both the Times Co. and Dow Jones refuse to release financial information regarding individual properties, Penelope Abernathy, senior vice president of the Journal's international division, flatly dismisses the oft-repeated notion that "the Wall Street Journal is pulling back and retreating in Europe and Asia. It's absolutely not true." The overseas Journal's predicted demise is "wishful thinking" on the part of the Herald Tribune, says Abernathy, who formerly worked for 13 years at the Times Co.

The Journal's switch to a compact edition in October, one of Dow Jones' major initiatives in 2005, has succeeded beyond "what we could have hoped for," she adds. Integrating the print edition with the Journal's Web site – with its 764,000 paid subscribers – gives the Journal a huge advantage over the Financial Times and the Herald Tribune, says Kate Dobbin, Dow Jones' director of corporate communications. "Our subscribers value our content highly enough to pay for it, which stands us apart from those of our competitors who continue to make their content available [online] for free."

In the coming years, the New York Times Co. has a chance to create a model of great journalism "partly in print and partly online" that will help solve "the challenge of our generation of journalists," Oreskes says. "Our generation will be judged by how well we figure out how to distribute great journalism even as [its] underpinnings change."

The riots that spread from Paris' decaying suburbs to cities throughout the nation last fall provided Oreskes' greatest test to date, and "he came through with flying colors," says author Axel Krause, a former Herald Tribune correspondent and editor who left in the mid-'90s and currently serves as a commentator for TV-5, the French equivalent of CNN. The Tribune's coverage was "nothing less than superb, widely quoted in the French media, including a balanced editorial, 'While Paris Burns,' " which roundly criticized President Jacques Chirac and the "out-of-touch political elite," he says.

The Tribune "was by far the best of all the American print media, with the possible exception of Time's European edition," Krause says. "The IHT, like Time, mobilized a first-class team of reporters who covered all major aspects of the crisis, including reactions in other capitals." The combination of color photos on page one for days on end and the Tribune's "well-reported, balanced and superbly edited copy" made "a highly effective package" that "beat virtually all the competing daily media, notably the Financial Times and the Wall Street Journal, plus a few French dailies I also read."

Despite the Tribune's recent success, Krause sees room for improvement. While reviewing various media for his commentaries, Krause came to realize "just how New York Times-ed the Herald Tribune had become." The Tribune and Paris "used to be like Paris and the Eiffel Tower." Now, "they've lost that connection to Paris. At this point, what difference does it make where the paper is published?" (About 60 percent of the paper's circulation of 241,000 is in Europe, just 7 percent of it in France; Asia accounts for 35 percent.)

The paper's business coverage is "much better now than it was, but it's still not as good as the Financial Times or the Economist," according to Krause. And, he says, "there's not much investigative or original reporting."

While lamenting the loss of Washington Post and L.A. Times stories, Tribune managers say the New York Times' newfound willingness to work closely with the staff has made the paper fresher and deeper. "This is a paper read by people who live in real time," says Managing Editor Alison Smale, formerly the New York Times' deputy foreign editor.

But real-time news has real-time obstacles. Paris is six hours ahead of the East Coast of the United States. When New York editors come in at 9 a.m., it's already 3 p.m. in Paris and 9 p.m. in Hong Kong, making real-time coverage "well, complicated," Smale says. A list of editing deadlines, tacked to the newsroom bulletin board, read like a nightly race around Europe and Asia: Tokyo (2:40 p.m.); Hyderabad (3:10 p.m.); Seoul (3:55 p.m.); Asia (4:14 p.m.); re-plate Asia (6:30 p.m.); Europe (9 p.m.); and Europe again (11 p.m.).

Though Sulzberger and his managers see a bright future for the Tribune, the rest of the newspaper industry is suffering from increasing costs, eroding circulation and declining stock prices, a 40 percent drop at the Wall Street Journal's parent, Dow Jones, and the New York Times Co. since 2001. Over the last year, both the Journal and the Times Co. have shed hundreds of workers. As for the Tribune, "There will be economies at the IHT, but we are not prepared to announce what they are," says Golden. In the newsroom, "We'll examine closely to see if we can be more efficient or effective," says Oreskes. "And yes, we're going to see if there are places to save jobs. But we don't have a quota or number."

During Sulzberger's visit to the paper in July, the message he conveyed was basically simple, recalls longtime Tribune reporter Thomas Crampton, paraphrasing Sulzberger's words: "Stop spending my money." When an editor asked Sulzberger how long the company would sustain losses before pulling the plug, Sulzberger said there was no deadline, adding the Times Co. was not about to carry losses forever and repeating his belief that quality journalism has always saved the company.

"We live in tight times, but the New York Times mantra is 'quality journalism,'" says reporter Thomas Fuller. "It can sound like a promotional brochure, but I haven't seen anything to make me think it's not true." As of July, the Tribune had lost $41 million since 2001, and projected losses for the current fiscal year run between $16 million to $25 million, according to one editor. That higher figure is greater than the newsroom's current budget of $24 million, an increase of more than $1.6 million from the year before, says Smale.

The Herald Tribune has among the highest-paid journalists in Paris; salaries for copy editors range from $66,000 to $160,000 annually (depending on length of service) for 35-hour work weeks, with assigning editors usually earning more, according to past and present members of an employees' group that French law requires, which is privy to the paper's finances. Employees have seven weeks off. (Tribune executives have no comment on the paper's finances and salaries, says Communications Manager Felix Marquardt.)

As far back as the '60s, the Times had wanted an international newspaper and over the years had launched various crusades to get one. After starting and losing millions on its own international edition early in that decade, the Times attempted to pry the New York Herald's European edition from its then-owner, John Hay "Jock" Whitney, a member of the wealthy, moderate Republican Eastern establishment elite. In a surprise move, Whitney in 1966 announced a partnership with Washington Post owner Katharine Graham, an alliance whose objective was "to win in Paris," according to author Charles Robertson's historical account of the Herald Tribune's first 100 years. Using Graham's deep pockets, Whitney ran the Times out of business, Robertson says. In May 1967, Arthur Sulzberger Sr. shut down the Times' international edition and teamed up with Whitney and the Post Co., with each owning a third of the paper. They called the new venture the International Herald Tribune, a name Buchwald playfully disparaged: "By the time you finish pronouncing it, you've missed your plane!"

In the 1980s, Lee Huebner, a onetime speechwriter for Richard Nixon who was named publisher in 1979, modernized and expanded the Tribune, remaking it into what one longtime former staff member called "a truly international newspaper." It also made money, 10 percent to 15 percent profit margins on about $100 million in revenues, says Huebner, belying the "myth and illusion that the [Tribune] can't make money."

By the early '90s, Whitney had sold his share of the paper to the Times and Post, and the competition in Europe had become fierce: The Financial Times had entered the market a decade earlier, followed by the European Wall Street Journal, USA Today, CNN and others. "The Trib was no longer alone," says recently retired Tribune Executive Editor Walter Wells, "and its operations were being challenged." Huebner departed in 1993, ushering in a difficult period.

The Tribune was struggling financially in the mid-'90s, just as the Times Co.'s "interest turned to international," recalls Publisher Golden. Along with his cousin Sulzberger, Golden was part of a new management team that had taken over the Times Co. from the older generation in 1997. Together, they began discussing the possibility of fully owning the Tribune, Golden says.

Back in Paris, Peter Goldmark, a former Rockefeller Foundation executive and onetime Times Mirror vice president, became the Tribune's chief executive in 1998. With Executive Editor David Ignatius, who came from the Post, "we made giant steps" to improve the paper's quality, Goldmark says, adding features, redesigning its pages, striking a deal with Bloomberg to add business news, opening a bureau in Asia, running more analysis of the day's big stories and investigations that focused on such topics as corruption and the environment. Charles Mitchelmore, a 22-year Tribune veteran who retired in June 2002, remembers Ignatius as "the best editor I ever worked for." He says Ignatius, now a syndicated opinion columnist and associate editor at the Post, and Managing Editor Robert McCartney, now a Post assistant managing editor, made "a terrific team."

But when the dotcom bubble burst, terrorists brought down the World Trade Center and advertising dried up, "we didn't have a cushion," says a former editor. Ignatius "presided over nothing but cutbacks." To some degree, the newsroom had become a velvet coffin, recalls Liz Alderman, the paper's business editor. It was "a stodgy kind of place," adds Wells, "a newsroom where some people really did want to sit in the same chair for 30 years."

In the summer of 2001, Katharine Graham died at 84, and both owners were applying financial pressure to the Tribune's managers. The Times and Post differed philosophically, McCartney recalls, with Post executives "more willing to tolerate modest losses in the interest of having this excellent platform for our journalism. The Times had a completely different attitude; if they were going to lose money, they weren't going to lose money for anybody's journalism other than their own."

The next year was "the most uncertain" in his 13 years at the Tribune, reporter Fuller remembers. Rumors circulated about a sale, or worse, closure, exacerbating anxieties in the newsroom. "They suddenly said, 'We have [millions] in losses,'" Fuller says. "It was a huge number. All of us were shocked: 'Where did that come from?' We all looked around and said, 'What happened?'"

In the spring of '02, then-New York Times Executive Editor Howell Raines began plotting with Sulzberger to take over the Tribune, Raines wrote in a 2004 Atlantic Monthly article detailing his rise and fall. The Tribune would be part of a long-range plan "formulated..over the previous 10 years" to make the Times "the centerpiece of a truly global news organization."

Sulzberger emphatically disputes almost all aspects of Raines' account of the Herald Tribune takeover. (Raines declined an interview request.) A decade ago, Sulzberger says, "We were creating a national strategy, that was where all of our focus was." Then came the Internet explosion. In light of the Times' online popularity – it has the busiest newspaper-owned Web site, with 1.6 million daily visitors – executives realized "how much the world yearns for New York Times news," Sulzberger says. "We sensed a greater potential." At the same time, "the International Herald Tribune [was] at a terrible place, spiraling down, and that spiral was going to continue inexorably unless something changed the dynamic of the 50-50 ownership structure."

To further its international aims, the company struck a deal with Le Monde to insert a weekly Times supplement into the well-respected French daily, an effort "to gauge the global appetite for New York Times journalism," Golden says. The supplement's sudden appearance "drove the IHT management crazy."

Ignatius and other managers feared the Times' Paris invasion threatened the Tribune's eroding advertising base. "We were really upset," recalls Ignatius. Post Co. Chairman Donald Graham "was furious over the branded pages," recalls one senior editor. (A Post spokesman said Graham declined to comment.)

As if it didn't have enough problems, the Tribune was also getting less-than-rave reviews in the press. Writing in Slate, media critic James Ledbetter called the paper "decades stale," and described it as "a strange archaic animal, the duck-billed platypus of the newspaper world." It had, he wrote, become "increasingly marginal in such an information-rich world."

Soon after, Sulzberger and Raines went on the offensive, Raines wrote, secretly ordering "a page-one flag for an international edition of the New York Times," scheduled to debut the following year. An international edition of the New York Times was "one of the options we considered," Sulzberger says, questioning Raines' version. The page-one mock-up was part of field research whose eventual results were "crystal-clear," he added: If executives replaced the International Herald Tribune with the international New York Times, "we'd be giving up a great brand and adversely affecting our ability to succeed."

During negotiations with Post executives in fall '02, Sulzberger offered Graham a Hobson's choice: Sell the Post's 50 percent or the Times would launch its own international edition and withhold "further flows of cash to the IHT," United Press International reported. In October, Graham capitulated. The sale "was made with great reluctance and sadness – and little choice," he said in a memo to his staff. The Post's stock rose on the news, prompting media financial analyst Edward Atorino to laud the deal and quip in Time magazine: "Who cares about [the International Herald Tribune] except some guy in a bar in France?" In retrospect, the deal was a smart move for the Times Co., Atorino says; the Tribune "was a joint custody orphan."

In December 2002, the Times named Wells, a 20-year Tribune veteran, the paper's managing editor; Ignatius and McCartney resigned and returned to the Post. By the time the Times took charge on January 1, 2003, Goldmark had reduced the staff by 14 percent, from 390 to 335, amid what the Financial Times called "the worst [advertising] recession in decades."

The Post, for its part, announced a deal allowing the Journal to publish Post stories in its overseas editions. A few days later, Tribune Publisher Goldmark called a staff meeting. Outside, the city was nearly frozen, shrouded in fog, as the staff gathered in the second-floor conference room. Saying he had been fired, Goldmark proclaimed "the end of the IHT as an independent newspaper, with its own voice and its own international outlook on the world," making public the Times' plans to make the Tribune the "global New York Times."

He did the best he could in difficult circumstances, Goldmark says. "We held on by our fingernails between 9/11 and the dotcom bubble bursting. We ran the place very lean, much leaner than they're running [it] now." Goldmark disputes the paper had losses during his tenure. "I found [the paper] hovering around a break-even mode, and we kept it at a break-even point for my years there." (Says Golden: "I don't see any value in getting into a discussion about the past performance of the IHT with a former executive.")

After the sale, about a dozen of the paper's veterans took buyouts – a month's salary for every year worked up to 15 – leaving a loss of institutional memory and a staff largely in its 30s and 40s. The departures caught Times executives off guard. "Many more left than [had been] anticipated," says Serge Schmemann, who arrived at the Herald Tribune from the New York Times in June 2003 to become editorial page editor. "It was a difficult period." The newsroom was "understaffed and overworked," he says.

Even the aging Buchwald wasn't safe. At the beginning of April 2003, the Times fired him, permitting him, Buchwald wrote in the Post, "to write one column every 50 years about my personal problems." The same month, Jayson Blair's plagiarism and fabrication came to light, ushering in what the Times itself called "a profound betrayal of trust and a low point in the 152-year history of the newspaper." At that point, "the poor old [Tribune] was not at the top of anyone's agenda," says Smale. In the wake of the scandal, Raines stepped down and was replaced by Bill Keller. The Times Co. named Golden publisher and Smale managing editor at the Herald Tribune, and promoted Walter Wells to executive editor.

With the Blair affair fading, Golden began formulating a vision for the Tribune. "What drives the paper is globalization; what drives globalization is business," he says. Golden's goal was to improve "the product, particularly to appeal to business," while maintaining the Tribune's status as "a general interest newspaper."

Only a third of the Tribune's readers – spread throughout 180 countries – are American expatriates; one third are expatriates of other nations; and one third are native to the country where they subscribe. Nearly 70 percent of the paper's ad revenue comes from Europe, according to 2004 circulation figures.

With few exceptions – fashion writer Suzy Menkes, food writer Patricia Wells, art critic Souren Melikian – there was little original reporting when he took over the paper, Golden says. Adds Schmemann, "The paper was largely an editing exercise," with editors repackaging stories from the Post, Times and L.A. Times. Though admirers loved the Tribune's eccentric character and voice, joint ownership created problems, the biggest of which was timeliness. The Tribune usually published stories after they appeared in the United States, making the newspaper awfully dated.

With new executives in place, Tribune managers began tackling the paper's weaknesses. The Golden era, 2004, was an unprecedented period of investment and expansion. Wells replaced the 12 staff members who had left and over two years added 17 more, along with a handful of contract writers. "You've got to give the Times credit," says former Managing Editor McCartney. "They said, 'As soon as we own it, we're going to invest in it.' And by God, they did."

At the start of 2004, Golden, Wells and Smale opened a Hong Kong newsroom to attract international business readers and directly challenge the Financial Times and the Wall Street Journal Asia. In June of that year, Media Asia called the Tribune "the fastest growing international publication in the region."

On the business pages, editor Liz Alderman directed the staff to find stories with a global perspective, emphasizing technology, the European Union expansion and Eastern Europe. By using reporters from the Times' foreign bureaus, Alderman hopes to beat the Financial Times on trade and trends in mergers and acquisitions. She added coverage focusing on media, communications, German and French policy issues, and macroeconomic reports from Brussels and other European capitals, turning the weekend edition into more of "a magazine read."

In October, the Tribune added Marketplace to the European edition, four extra pages, five days a week, of business coverage provided by Bloomberg's financial news service – Bloomberg already contributes four pages in the Asian edition – leading to a burst of hiring and a more direct attack on the paper's competitors.

The Times exerts no editorial control over the Tribune, Smale says, though editors on both sides of the pond have frequent contact and daily discussions. The Times added more layers of bureaucracy and meetings, and more special sections devoted to stories the Times provides, editors and reporters say. But Tribune editors decide what to publish on the news pages, as opposed to what appears in the editorials, which are "the international voice of the New York Times," says Schmemann. "There's no daylight between us. We are one editorial policy," a political leaning he describes as "left of center."

Under Schmemann, the editorial staff increased from two to four, and the section from two pages four times a week to four pages six times per week, prompting unsolicited submissions to rise about 25 percent to 200 weekly.

One editor, thrilled with New York Times ownership but speaking on background to avoid antagonizing Tribune management, describes the paper's goals as "fuzzy." The oft-stated purpose appears to be increasing readership among top-income leaders and creating a buzz that "will translate into ad dollars and financial success," the editor says, but the strategy remains "unclear."

Everyone interviewed in the Paris newsroom lauded Oreskes' appointment, in part because he has experience in print, television and online. With Oreskes, the Times "has put one of its very best people in charge," says former Editor Ignatius. "There's nothing more reassuring than that. He's as good as they get in our business."

Though optimistic, Golden acknowledges the paper is operating in a second year of a weakened global economy and flat ad sales. To succeed, he says, "We need the market to grow, and we need to get a bigger share of it." Just how long the Times will continue to subsidize the paper's losses "depends on the market and the paper's performance... If, in the next three to four years, the market does not improve, if it stays the same as it is now, we'll have to relook at our plan."

From the other side of the Atlantic, the Post's Ignatius has a rosier view. "A premium international newspaper whose news standards are strong, whose coverage is reliable, ought to make a place for itself globally. And in that sense, I think Arthur's bet has a good chance of paying off."

Senior writer Susan Paterno (editor@ajr.umd.edu) wrote about the sad saga of Gary Webb in AJR's June/July 2005 issue.