governance report

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Introduction
The New York Times (“NYT”), issued daily, is the largest local metropolitan newspaper in the United States and third-largest newspaper overall. Founded and continuously published in New York City since September 18, 1851, NYT was acquired in 1896 by Adolph Ochs who coined the paper's slogan, "All the News That's Fit to Print", delivering an objective to maintain the editorial independence and integrity of the Times “free of ulterior influence, unselfishly devoted to the public welfare”. Crowned as a national "newspaper of record", NYT prevails over any other news organization by winning 112 Pulitzer Prizes, and remains the guidance of American value. Owned by The New York Times Company, NYT has been under the control of Ochs-Sulzberger family through four generations for more than a century. Due to family supersedure, institutional influence and industry environment, the governance structure has evolved to defend the Ochs-Sulzbergers’ holy mission of maintaining the editorial independence and integrity of the Times when solve its existential quandary for further development. This paper, adopting the Family Business Governance Framework as the methodology, is to explain the family control in media and newspaper industry, to analyze the evolution of ownership and governance structure of NYT, and to predict its future tendency.

The Family Business Governance Framework (“FBG Framework”), put forward by Professor Morten Bennedsen and Professor Joseph P.H. Fan, aims to help family business owners work out the structure of corporate and family boards and the design of succession model and exit form by considering special assets and the roadblocks as two parameters controlling governance and ownership respectively. From horizontal perspective, family business endowed with special assets by the family should be managed by family members. Lacking special assets like value based leadership, relationship, skills and history, etc., family business can be governed by professional managers. From vertical perspective, roadblocks from family, company, industry, policy, etc. threaten the ownership of the family. Long-term family ownership depends on whether family business can stride over roadblocks by effective strategies. Controlling by two parameters, FBG Framework can be divided into four quadrants: ⑴abundant special assets with many roadblocks lead to family driven external ownership in the first quadrant; ⑵few special assets with many roadblocks give rise to exit/ passive external ownership and management in the second quadrant; ⑶few special assets with few roadblocks bring about separated control and ownership in the third quadrant; ⑷abundant family assets with few roadblocks resulted in close family firm in the fourth quadrant (Refer to Chart 1).

Chart 1
Family Control in This Industry
The U.S newspaper industry has long been dominated by closely-held family firms. In the 1950s, over 70% of the nation’s daily newspapers were family-owned, including both small-town dailies and most big-city papers, such as the Otis-Chandlers at The Los Angeles Times, the Grahams at The Washington Post, and the Ochs-Sulzbergers at The New York Times.

According to the FBG Framework, family control in media and newspaper industry falls in the fourth quadrant where special assets are abundant while roadblocks are few. From special assets perspective, the aspiration which founders and their families entertain to shape news gradually forms family value as a special family asset. From roadblocks perspective, small family-run operations were more efficient in such a labor-intensive industry and so there were almost no roadblocks in 1950s.

NYT is such a family-dominated newspaper. The founder’s will to preserve the Times “free of ulterior influence, unselfishly devoted to the public welfare” constitutes a family value of maintaining the editorial independence and integrity of NYT. For the sake of this objective, Adolph...