The New York Times Company’s IR function is firmly embedded within corporate communications, but that doesn’t imply neglect. From her new eminence as VP, corporate communications, Catherine Mathis remembers creating the IR function. On arrival in February 1997, her first task was to build communications between the company and the Street. ‘I had great fun creating the IR area,’ she says, almost wistfully. Paula Schwartz joined a year later and became IR manager in 2000. Teamwork is apparent as they speak about their operations for the $6 bn company.
The nine-strong corporate communications team handles media relations and PR as well as IR; and they work closely with human resources, reflecting not least the fact that around half the company’s employees are stockholders. The department also includes a speech writer for the chairman and other senior managers. As a result, the whole choir is well conducted and sings in harmony – crucially, since the message, messenger and medium are all under constant, close scrutiny from rivals, investors and readers alike.
‘Organizationally consolidating these functions seems to work pretty well,’ comments Mathis. ‘Since I’ve come into this job, I have come to better understand how you can leverage IR in the public relations arena, because the business component is now important to many different constituencies.’
The team reports to vice chairman and senior VP Michael Golden, who in turn reports to the chairman. ‘But of course we have a very close working relationship with the president, the CFO, the controller’s department, the treasurer and the legal department,’ Mathis says. ‘The company does tend to be very team-spirited, with a collegial kind of culture.’
Times Square
Mathis and Schwartz both had broad experience with corporate and investor relations before moving to Times Square. Both had worked originally at the Overseas Shipholding Group – Mathis as vice president, corporate relations, and Schwartz as manager, corporate relations. Before that Mathis was with the International Paper Company for twelve years, the last five of them in IR.
A former president of its New York chapter, Mathis remains an active Niri member, with better than usual reasons for gratitude. The Times recruited her after a tip-off from a Niri colleague. ‘So it’s certainly been good from a networking standpoint, as well as from an information and educational standpoint.’ Mathis’ appointment at the Times followed the company’s realization – ironically for a company involved in communications – that it did not communicate much with the financial community. ‘Our relationship with Wall Street was not an open one, and it wasn’t a dialogue,’ Mathis comments.
‘As analysts and portfolio managers come to know our senior management team, I think they become more impressed with the company and its strategies.’ She laughingly cites the old 1960s hit, To know, know, know you is to love, love, love you. ‘And I think that’s true, because over the past five years we’ve had extraordinary earnings and now have a great outlook based on our strategies.’
Visible impact
Of course, visibility helps. Having the Times on the newsstands of Wall Street itself is an advantage, but there’s a concomitant disadvantage: ‘They think we’re only that product.’ So the IR team has to educate the markets about the scope of the company. ‘It’s not simply the Times that drives the earnings and stock price,’ notes Mathis. There are also digital properties, eight television and two radio stations, plus the Boston Globe and 22 other regional newspapers.
Media people like to think they have a higher mission than keeping Wall Street happy but Mathis discounts any tensions between the roles in the Pulitzer-bedecked New York Times. ‘Certainly this culture is imbued with the idea that our core mission is to enhance society by collecting, creating and disseminating high quality news, information and entertainment.’ She pauses and smiles: ‘If it sounds like I’ve memorized that, it’s because I have, since I’ve heard it so many times. We have a very distinctive culture, which has served us well, but IR has been a surprisingly easy sell for a company that had been so reluctant. Once they made up their minds that this was something they wanted to do, they went ahead and did it.’
Paula Schwartz emphasizes the importance of providing information to employees, particularly those who supply the IR area with news and data. ‘We want to have a quid pro quo, so we send out analysts’ reports, a daily stock recap that shows the price of our stock vis-a -vis our peers, and reports on any unusual events that cause the stock or the market to move,’ she says. ‘Employees listen to the conference call, and afterwards Russ Lewis, our president and CEO, John O’Brien, our CFO, and some of the other senior management host a town hall meeting to answer questions on how the company is doing.’
Mathis adds, ‘Clearly we’re all incentivized by the stock price, and certainly our management wants to communicate with Wall Street, but there’s much more of a long-term focus. People don’t call every few minutes, saying Why is the stock down 3/8 of a point? We really do manage our businesses for the long term.’
Level headed
In investor relations at a company like this, the medium can be the message. Even normal companies worry about what they should tell the media, but do the investor relations officers here look on other newspapers’ reporters as journalists or as corporate spies? Briskly, Mathis ripostes, ‘Could a reporter be a corporate spy? Yes, I suppose so, but it wouldn’t matter because we would still give them the information. Whatever we say to one audience we’re going to say to another audience. It’s level disclosure.
That means with Reg FD there won’t be many changes at the Times, although quarterly earnings conference calls will be webcast, which they hadn’t been in the past; and a comment on earnings estimates will be included in a monthly press release on advertising revenue performance.
Interestingly, however, among the news that the IR department does not see fit to print is the price of newsprint. ‘We feel it’s a competitive advantage of ours,’ says Mathis, who also blue-pencils any attempt to break out the earnings of each newspaper.
As the new millennium dawned, lemming investors rushed after internet players. More savvy investors realized that, far from being the modern equivalent of buggy whip makers, purveyors of information on old-fashioned paper were the beneficiaries of the dot-coms, which rushed to burn their IPO gains on seasonal advertising. The Times’ ad revenues and stock price both shot up.
‘It wasn’t just in dot-coms; the whole technology area exploded,’ Mathis explains, also citing deregulation’s boost to advertising for everything from Propecia to Viagra. ‘In the short term, people overestimate the impact of technology, and in the long term they underestimate it. I certainly think that’s what happened in the internet arena.’
Indeed. In October, the company postponed its attempt to launch an internet tracking stock. Online assets were doing well, but while they waited for the market to get over its web jitters, the quiet period meant that they couldn’t tell people about it.
Strong cast
Presentations to the Street reflect the company’s diversity, with CEO Lewis and CFO O’Brien backed up by Janet Robinson, president of the New York Times, or Martin Nisenholz, CEO of New York Times Digital. In meetings in Boston, it makes sense to use Rich Gilman, the Boston Globe’s publisher.
But whoever is speaking is always meticulously briefed. Mathis and Schwartz prepare executive Q&A sheets on areas of the company analysts are likely to ask about. They explain that these briefings tell executives what the financial community is interested in, and also provides a frame of reference on how the company presents particular topics.
Countering any overly long-term bias, the Times provides a monthly ad revenue report. Management also sponsors regular Powerpoint-less lunch meetings with institutional investors. In the media business, circulation, viewership and other markers are also under regular investor scrutiny. And Mathis adds thankfully, ‘One of the things the Times has is very, very good reporting and information systems, on all the aspects of all our different businesses. Without it we couldn’t speak knowledgeably about them.’
The diversity of the company’s enterprises gives entry to a variety of different conferences, including internet, publishing and media. Besides quarterly conference calls, the company also proactively seeks investors outside New York for face-to-face meetings. ‘In the last year we were in London, Chicago, Phoenix, Boston… so we get around a bit,’ the pair confess. Often the opportunistic school of investor relations works best, scheduling meetings to take advantage of travel plans of senior executives, from board meetings to speeches.
Hitting targets
Institutions represent 57 percent of the stock, and some 17 percent is held by the Sulzberger family, which bought the New York Times in 1896 and took the company public in 1967. ‘Institutional investors drive valuation so we get more mileage out of our efforts with them. Given our limited resources, we’re going to concentrate more on institutional investors than the retail side,’ comments Schwartz. But they have addressed investment clubs and see the web as a tool to reach retail investors. ‘We try to make our web site as user-friendly as it can be and provide as much information as possible.’
Institutional targeting is ‘based on orientation, turnover, and in some cases we’ve done it based on geography. For example, when we go to London we’ll look at institutions to visit and decide which would be a good fit with our company,’ Mathis adds. ‘And that’s something we’ll probably expand in the coming years.’
They have always worked closely with the buy side, but would never neglect the sell side. ‘We’ve always had one of the highest number of strong buy recommendations in our industry. It’s like having an adjunct sales force if they’re recommending our stock.’
What the analysts say
Rudy Hokanson, CIBC
Hokanson extols the Times’ IR efforts: ‘They’re very responsive, their press releases and statements give you what you need, and they’re always ready to put you in touch with appropriate management.’
Hokanson adds: ‘They are one of my favorite higher valued companies as far as investor relations go.’
Doug Arthur, Morgan Stanley
Arthur, who deals with Mathis professionally every day, says, ‘Under Catherine Mathis’ reign the information flow at the NYT has improved. The monthly ad revenue reports are much more informative than they used to be and the company makes itself much more accessible. They give a clear message on how business is going and what the outlook is.’
Michael Beebe, Goldman Sachs
Beebe admits he ‘began coverage at the same time as Catherine Mathis started, so we learnt together. I found her extraordinarily user-friendly. She not only does the IR job extraordinarily well – in terms of returning calls and giving out information – but when she doesn’t have the information, which is very rare, she rushes to get it.’
Praising her fortitude in adversity, he continues, ‘The NYT has had some good results but she has had to deliver some difficult messages, such as recent deceleration of top-line growth and the awkwardness of the tracking stock discussion, which she handled well and fairly. She has been very proactive in managing our expectations under Reg FD and I think she’s been critically involved with the rest of the industry in determining what information is going to be disseminated and in what fashion.’ He concludes: ‘She very well represents the values embedded in the NYT.’
