The Saturday after Election Day in November was a horrible day for Dean Baquet, the executive editor of The New York Times. He says he spent so much time responding to readers furious about the paper’s election coverage that he wanted to “kick the dog”—even though he doesn’t own one.

“If I had to summarize the emails on Saturday,” Baquet says, “it would be, ‘You schmuck.’” But by Sunday, “the game had changed,” and “people were writing, ‘Look, we are behind you.’”

What changed?

On Friday Nov. 11, Baquet and his boss, Publisher Arthur Sulzberger Jr., had written an unusual letter to subscribers, in which they pledged to “rededicate” the Times to its core journalistic mission. At 9:43 a.m. Sunday, President-Elect Donald Trump tweeted that the paper had “sent a letter to subscribers apologizing for their BAD coverage of me.” While the assertion wasn’t true, it forced Baquet and other Times executives to hold a Sunday conference call to talk about how to respond.

But what began as a crisis call soon shifted to something else, as executives began to notice that subscriptions were rising in the wake of the Trump tweet. The company would later tell  reporters the letter contained no “apologizing,” nor was there anything to apologize about.

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But those who misread the letter in this way were onto something. The decision to send it stemmed from the Times having “missed the underlying nature of this election,” Sulzberger says in an interview.

The back and forth that Sunday is at the heart of the oddly symbiotic relationship between Trump and The New York Times, whereby an obsessive brand promoter has become the unofficial chief marketing officer of the hometown newspaper he professes to hate. For the last two quarters, the Times has added almost 600,000 digital subscribers, a growth rate that is almost 500 percent faster than the rate for the previous seven quarters. Times executives initially downplayed the impact of Trump’s unpopularity among the paper’s readers, but now acknowledge it is the major factor in the explosion.

A version of the the Times’s Trump bump has materialized across the media landscape (including at CJR), as readers have  been galvanized by a man who may well be the most polarizing president in American history.

But the boon carries significant risks, especially for the Times. And it highlights some business-model vulnerabilities for a newspaper that is struggling mightily to wade through a brutal media climate: Not only is the company becoming increasingly dependent on Trump for its core subscription revenue, but its print readers are subsidizing the rest of the operation through repeated, and often opaque, price increases—a practice that at some point will have to ease.

Most of the new digital subscriptions are deeply discounted at 50 percent and last for only a year. In order to retain these new customers, the Times must keep them devoted to its journalism—and to its repeated public sparring with the commander in chief.

Most subscribers, old and new, are anti-Trump, and they have come to expect the paper to wage war against him. That expectation forces Baquet and his newsroom to walk an editorial high wire to try to stay true to the company’s tradition of impartiality, which already has alienated some subscribers who strongly oppose Trump.

This dilemma is not lost on the newsroom’s leader.

“A lot of our readers want us to take him out,” Baquet tells me. “That’s not my job … I can’t be anti-Trump,” he continues, explaining that stance would turn the paper into an opposition party organ aligned with Democrats. (Many Trump supporters, of course, already feel the newsroom has tilted too far to the left.) “Someday,” Baquet says of the Democrats, “they’ll be in the White House, and then you’ll just be somebody’s chump.”

 

President Trump’s post-inauguration honeymoon with the Times didn’t last very long. Three days after his inauguration, the paper ran a story about Trump falsely pinning his popular vote loss on millions of undocumented immigrants, calling his claim a “lie” in a front-page headline.

Trump has fired back via dozens of tweets, blasting the “failing” New York Times. And occasionally, a few Times reporters have criticized or mocked Trump on social media in ways their editors don’t like. “There have been times when people went too far,” says Phil Corbett, the standards editor of the Times.

The Times also buried, two days before the election, a story that foreshadowed Trump’s victory. The story, written by Nate Cohn, reported that Trump was “in striking distance of winning the election,” based on an analysis of white working class voters. Now, Baquet acknowledges, the story should have been “smack at the top of the homepage” instead of being invisible on both the homepage and the front page of the print edition (it appeared on page A-16 of the physical paper).

In addition, Baquet says the “play” of stories near the end of the campaign—though not the coverage itself—was influenced by the mindset of senior editors “that Hillary Clinton’s victory was inevitable at that point.” The Times’s homepage constantly and prominently featured a speedometer-like gauge putting Hillary’s chances of winning the election at about 85 percent. Baquet now says the gauge, criticized by many after the election, was “a mistake.”

For years, the Times has been distrusted by conservatives, even as the paper strives to reach as wide an audience as possible. Surveys by the Times and outside organizations have documented the distrust, though the newspaper has not made its own research public.

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Last year, an audience committee convened by the Times completed a wide-ranging report, based on focus groups and other research, which found, among other things, that “people were most likely to subscribe to us if they read the broadest array of our coverage,” says reporter Susan Chira, one of the panel’s co-chairs. “Conservative readers didn’t like our coverage,” she says, “but they liked our arts coverage.” The report, she says, “was shared internally but kept in-house,” and formatted so that it was “hard to forward as an email.”    

Of all the disagreements between Trump and the Times, there is one, involving a serious national security matter, that has remained out of the public eye. It arose in the early weeks of his presidency, as two Times journalists were finishing up months of reporting on a secret US cyber warfare operation aimed at North Korea’s increasingly worrisome missile program.

The dialogue between the reporters and Trump’s team seemed under control as they discussed whether publication of certain material might jeopardize American national security. Then Trump was briefed about it.

At that point, says Times Managing Editor Joe Kahn, “we then experienced a fresh and different tone to the pushback.” While Trump’s national security team was not “unduly alarmed,” Kahn says the paper came to believe that “the president himself was very concerned about it.” Reince Priebus, Trump’s chief of staff, personally called Sulzberger to voice concerns, a company vice president for communications, Danielle Rhoades Ha, said in an email.  

One Times journalist, speaking on condition of anonymity because they were not authorized to talk about the exchange, says the concerns included “legal threats involving disclosure of classified information.”   

In the end, the paper listened to the concerns. The the March story, by David E. Sanger and William J. Broad, said certain details of the cyberwarfare efforts had been left out in order to “prevent North Korea from learning how to defeat them.”

 

As the reporters were privately negotiating with the Trump White House over North Korea, new subscribers were flocking to the Times.

“Getting banned from the West Wing office? Fuck that,” a 20-something woman told a Times survey, when asked why she had just bought a digital subscription. Earlier that day, February 24, White House Press Secretary Sean Spicer had barred Times reporters from an informal briefing. Other new customers offered similar, though more polite, explanations, according to internal Times data shown to me by a Times staffer.

This audience angry with the White House has been a key driver of the Times’s explosive growth in digital subscriptions. And within that spurt, the “single largest cohort of growth” is millennials, Meredith Kopit Levien, now the executive vice president and chief operating officer, told analysts last month.

On the same call, analysts asked how many subscribers might renew once their deeply discounted initial rate expired.  Mark Thompson, the chief executive officer, said it was too early to be certain, but that the indications were “encouraging.” In fact, Thompson added, the Times had lengthened the time frame of its initial discounted offers so readers could be exposed longer to its journalism, allowing them “to get habituated to the Times,” a strategy he said was already leading to better retention rates.

The paper’s strategy is to reach $800 million in digital revenue by 2020—through both  circulation and advertising—double what it brought in a few years ago. Thompson thinks globally; he told me the paper is focused on reaching some 300 million English-speaking, college-educated readers around the world. About 15 percent of its digital subscribers already live outside the United States, according to the company.

While digital subscriptions have boomed, the paper has seen an unexpectedly swift drop in print advertising. The declines have been between 18 and 20 percent in the last three quarters. That has soured Doug Arthur, a managing director with investment research and advisory firm Huber Research Partners, on the company’s prospects.  

Arthur, who has been following the Times for decades as a financial analyst, also thinks the company hasn’t been nearly aggressive enough in monetizing one of its most valuable assets: its midtown Manhattan headquarters. This despite the fact that the Times plans to lease out more space after it finishes a $50 million renovation and dramatically shrinks its own footprint inside the building on Eighth Avenue, between 40th and 41st streets.  

As for the Trump factor, Arthur thinks the company is in for a hard landing when interest in him fades.

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“If you take Trump out of the equation,” says Arthur, “a lot of the furor would die down and the Times’s digital explosion will have a hangover.”

When asked about Arthur’s remarks, Thompson told me he “isn’t an analyst who understands our business” because “we’re trying to build a digital business which is not based on any one news cycle.” (The company acknowledges in its 2016 annual report that growth rates “driven by significant news events, such as an election, may not be sustainable.”)

Near the end of the call with analysts last month, Arthur’s colleague, Craig Huber, asked the company’s executives “where would you rank the anti-Trump” sentiment and “enthusiasm around the election” as an explanation for the recent digital subscription boom.

Levien answered: “I would rank extraordinary news cycle number one,” followed by the Times’s increased ability to retain customers through better marketing. Thompson agreed with her.

To help boost sales, the company also conducted an extensive marketing campaign last quarter. It included this pitch to buy the Times: “The truth is more important now than ever.” A branding executive at the Times, David Rubin, told CNN it was designed to tap into “the national dialogue going on right now about facts and truth.”

Thompson says the campaign is much broader than Trump, but acknowledged “he’s part of the debate.”

“Would the pursuit of truth have been equally resonant as a marketing campaign five years before, in the middle of the Obama administration?” Kahn asked rhetorically in an interview.

He answered his own question: “Possibly not.”  

 

There is another secret ingredient to the Times’s financial success: ink on paper.

If you read all 123 pages of the company’s latest annual report, you won’t find the number $648 million. It represents the single biggest slice of revenue for the company—42 percent of its total revenue—and comes solely from print circulation.

By contrast, Gannett, another publicly traded newspaper company, breaks out its print circulation revenue for investors. (It constitutes about 32 percent of the company’s overall revenue.) So I asked Thompson about the omission. As CEO, he is responsible for reviewing the company’s financial reports and attesting to the fairness and fullness of their presentation for shareholders and the public.

He says he was “surprised we didn’t state it,” but pointed out, correctly, that you could figure it out by deducting digital circulation revenue ($223 million) from total circulation revenue ($881 million) to come up with the figure for print circulation revenue.

Interestingly, the percentage of revenue derived from print subscribers has remained fairly steady over the last several years, even as the number of daily print subscribers has dropped. Year-end circulation numbers for the Times show that daily circulation, at 574,000, is dropping faster than Sunday circulation, which is at 1.1 million. The Times has more than 2.2 million digital-only subscribers.

The Times recently launched a marketing project to retain its most loyal readers. It is called “Project Love,” and it reflects “how our thinking has shifted as we transition from an advertising-centric business model to a subscription-centric business model,” a spokeswoman says. Last year, advertising revenue totaled $581 million—down from $756 million in 2011—compared to circulation revenue of $881 million, continuing a long-running trend.

Many Times readers are fiercely devoted to the paper. But their continued loyalty, in the face of constant price increases for home delivery, is a key issue.

The Times’s most recent quarterly report shows that home delivery revenue increased even though circulation continued to decline, because a price increase earlier this year of about 5 percent “more than offset volume declines.” The cost of the paper has risen about 5 percent annually for the last five years; the price of a regular home delivery subscription for the daily paper outside the New York metropolitan area now exceeds $1,000 per year.  

In the past, Times executives have told analysts the company has a good history of managing its price increases because “our subscribers are pretty inelastic to our prices,” as one executive said in 2013, meaning most subscribers are willing to absorb price hikes without dropping the paper.

In 2010, at a media conference, another executive provided additional insight into why so few canceled their subscriptions after price increases. “I think a lot of it has to do with the fact that they’re literally not understanding what they’re paying,” said Gerald Marzorati, then the assistant managing editor for new media and strategic initiatives. “That’s the beauty of the credit card,” he added, as Forbes reported at the time.

A former Times executive echoes Marzorati’s remarks. Speaking on condition of anonymity to maintain good relations with the company, the former executive says the decision to collect subscriber’s payments, in advance, by credit card goes back a few decades. It was, this person says, a brilliant “sleight of hand” that enabled the company to steadily and dramatically raise prices. “The subscriber didn’t notice,” the former executive says.

Arthur, the analyst, says the Times’s “secret sauce is that they charge their print customers a lot of money, and they don’t have a lot of churn,” which is the percentage of customers who stop subscribing.

I asked the Times how many print customers pay automatically. I pointed out that Gannett not only disclosed that percentage, 63 percent, but told investors its relevance, noting it “enhances the subscriber retention rate.”

“We do not disclose auto-pay data,” I was told in an email.

It turns out the Times, whose reporters probe the president and other public officials’ secrets, prefers to keep at least one of its own.

 

*Disclosure: Kyle Pope, editor in chief and publisher of CJR, is married to Kate Kelly, a New York Times business reporter. In addition, two senior Times editors, James Bennet and Rebecca Blumenstein, serve on CJR’s Board of Overseers.

 

Photo: President-elect Donald Trump walks through the lobby of The New York Times following a meeting with editors at the paper on November 22, 2016. (Photo by Spencer Platt/Getty Images)

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Jeff Gerth is a freelance journalist who spent three decades as an investigative reporter at the New York Times.