03/08/2009 05:12 am ET Updated May 25, 2011

Where Is The New York Times Going?

Some people think bankrupt. The paper has been bankrupt before -- by 1896 it was losing $1,000 a day (about $25,000 in today's money) -- which was when Adolph Ochs, the founder of The Times' current owning dynasty, swooped in and made a respectable business out of a respectable newspaper. Many people who are now pointing to The Times' first bankruptcy to prove that the paper is indeed mortal - or, more accurately, mortally wounded -- should keep in mind that its' first brush with insolvency also occasioned the birth of a media empire.

Today, the paper is suffering from many of the same problems which plagued The Times at the turn of the 20th century, when it began losing readers and money to more lurid, splashy, "yellow" tabloid competitors. These papers were, incidentally, cheaper to run since they didn't maintain bureaus and salaried reporters all over the world. (Sound familiar?)

In 1909 as much as in 2009, technology was the key (or a key) to a newspaper's success. The New York Times has historically been way ahead of the technological curve. Already in 1924, the Times made a technological leap by investing in a super-heterodyne receiver, which allowed it to receive direct transmissions of reports from Europe and positioned the Times as the best place in the US to get news about the rest of the world. Actually, by 1907, Ochs made a visionary technological move by working with the inventor of the radiotelegraph, Guglielmo Marconi, to innovate the world's first transatlantic wireless news service. This wasn't just an advance for the Times but a revolution for global news reporting.

This and the paper's subsequent tradition of technological superiority leaves us with an important question about the Times of today. In the past, Times technologies paid off with boosted readership and increased revenue -- and terminal competitors. Today, the paper runs the most sophisticated, resource-rich, and usable news website in the US (and probably the world) but is bleeding cash and readers. Why?

The New York Times Company has grown to become a giant. Since Arthur Sulzberger Jr., chairman of The New York Times Company and publisher of the paper, took the helm of the company he's been stocking up on assets. The company has bought everything from shares of baseball teams (it owns nearly 20% of the Boston Red Sox) to radio stations, to a gigantic new skyscraper in New York, tying up company capital at a time when capital is badly needed to weather the current financial crisis and to fully transform its media business from being print-centered to web-centered.

The company has lost -- or maybe just temporarily misplaced -- the most precious asset Adolph Ochs gave it: focus. In its pre-Ochs incarnation the paper was more newspaper than business, and so it foundered. Today, the Times has become more business than newspaper -- and so, while it may not be foundering, it is definitely floundering.

In the past months, the Times' corporate offices have been busier than ever. After fighting off an attempt by two private capital management firms to gain as many as four precious seats on the board; after taking a financially unfavorable loan from a dubious Mexican tycoon; and after mortgaging its share in its marquee Manhattan building, The Times is now "exploring" the sale of its share in the Red Sox.

Many take this to be death-signs for the Times. But the opposite is true: if anything can save the paper, it's the shedding of fat and a return to a leaner, business-minded but news-focused organization. This seems to be materializing. First, the capital management firms (one of which owns 20% of The New York Times Company stock) that seemed to be on a campaign of hostile share-buying came to an agreement with the company to expand the corporate board from 13 to 15 seats, with the two new chairs occupied by members chosen by the elite investing firms. This stands to add a more realistic business perspective to the Sulzberger-Ochs-controlled board which has long considered itself a "sacred trust." But the agreement will also preserve The New York Times Company's guarded two-tier stock structure which, among other things, ensures that media robber barons (and maybe an Australian one in particular) can't swoop in and grab control.

Then there are the fire sales. The huge amount of investment the company made in real estate, radio, TV stations, and a baseball team could have had the effect of "diversifying the portfolio." But it definitely had the effect of tying up badly needed capital and further limiting the financial options of the company's core business - its newspaper. The same is true of the company's sale of its stake in the new building: it forces the company to return to its core business, to focus on making one thing profitable instead of struggling to make many things viable.

Finally, The Times' troubled waters are compelling the company to come to terms with a difficult fact: newsprint is dead. Or at least unprofitable. While The Times may attach much of its prestige and heritage to the gray papers, the company will finally be forced to make good on something it seems to have understood years ago but still has not fully accepted: that the future of the newspaper's profit and prestige lies in pixels, not pulp.