Greetings from Los Angeles and welcome back to In the Room. Late August is the season of hurricanes, fantasy drafts, and carriage disputes in advance of football season. This year’s big fight has pitted Fox Corp against YouTube. Just before the 2 p.m. deadline, sources told me no deal would be reached and that Fox channels would go dark—but then, the two sides agreed to a “short-term extension,” with no timeline given. So, T.B.D.

Speaking of YouTube, I’ll be interviewing C.E.O. Neal Mohan at this year’s Paley International Council Summit in Menlo Park in October. I look forward to seeing many of you there. More details here.

In tonight’s issue, news and notes on The New York Times’s A.I. initiatives, as a pair of activist investors call upon the Gray Lady to realize its Netflix-level potential. Meredith & Co. were already at the vanguard of legacy media’s adaptation to new technologies a decade ago. Can they do it again?

🍸 Plus, on the latest edition of The Grill Room, Andy Lack, the former chairman of NBC News and MSNBC, joined me to pore over the myriad existential crises rattling television news, as well as his new act as a purveyor of local news startups across the Deep South. Follow The Grill Room on Apple, Spotify, or wherever you prefer to listen.

Mentioned in this issue: Mark Guiducci, Meredith Kopit Levien, Jonathan Karp, Graydon Carter, Alex Hardiman, Hamid Biglari, Ben Sherwood & Joanna Coles, Dylan Haggart & Sarah Coyne, Emily Sundberg, Olivia Nuzzi, Oliver Darcy, Kara Swisher, Melania Trump, and many more…

Let’s get started…

Karp Diem: Simon & Schuster chief Jonathan Karp is stepping down after five years, citing a desire to get back to editing after capably navigating the publishing giant through Covid-19, a scuttled takeover bid by Penguin Random House, and, finally, a sale to private equity firm KKR. In a brief call this week, Karp told me that after a successful term—he says S&S is profitable and growing—he’d rather be editing and publishing than managing the P&L. And, without sounding obnoxious, you can be assured that his KKR overlords would also probably prefer that a professional C.E.O. rather than an editor operate the company.

Karp will now launch his own imprint, Simon Six, which will publish just six titles a year (an intriguing concept, which Karp foreshadowed back in 2005 when he launched the “Twelve” imprint at Hachette, intended to eventize each release). The S&S board is currently searching for his replacement.
Guiducci knockoffs: I was amused to read new Vanity Fair editorial director Mark Guiducci float the names of some of his ideal hires on background in Semafor on Sunday. Max Tani reported that Guiducci “has had conversations with Olivia Nuzzi, ... approached New York Times writer Jazmine Hughes and New York writer Allison P. Davis, … met with the LA Times’ Amy Kaufman and The Hollywood Reporter’s Chris Gardner, … [and] wants the popular newsletter writers Emily Sundberg and Oliver Darcy to contribute, as well as How Long Gone co-host and journalist Chris Black. In recent weeks, Jonathan Capehart has stopped by the office.” (Yes, he also pinged my partner Matt Belloni.)

Look, I’m genuinely rooting for VF, and as a media insider, I love the personnel gossip, but this story just seemed like kinda icky journalistic name-dropping. It was almost as if Guiducci was trying to burnish his credentials by sharing the details of his Google calendar.

Yes, we all know that we’re decades past the glory days, and that Vanity Fair has entered its Kodak-Polaroid-Ottoman Empire phase, but even Radhika Jones would not have leaked the names of writers that she was having coffee with. It was all a little reminiscent of Ben Sherwood and Joanna Coles’s lusty proclamation, last September, that they would revitalize The Daily Beast with contributions from Samantha Bee, Kara Swisher, and former Twitter C.E.O. Dick Costolo. (God, Costolo’s reign seems like a lifetime ago…) We all know how that worked out. Coles and Sherwood proved that they were still prolific media cage-rattlers, but the coverage moved on when their claims were no longer credible.

You sort of hope that someone inside Condé Nast will hook Guiducci by the collar and explain that he might wish to avoid the same unforced error. Tina Brown was already a star when she arrived stateside at VF; Graydon Carter, himself, was an entrepreneur who had founded Spy and edited three publications before he began his tenure. Jones, too, had been a top editor at Time and held an upper-mid-management job at the Times. The knock on Guiducci was that he was yet another Anna Wintour acolyte who got the job because it would be easier for her to manage him than bring in someone new. The best way to outrun this impression, fair or not, would be to spend his first year with his head down reinventing the brand rather than talking about it—or worse, feeding these sorts of tidbits into the maw of the press in a no-touch manner.

Either way, as he’s quickly learning, he’s actually got a fairly unglamorous job. Earlier this week, the Daily Mail published a thin story about Guiducci’s openness to platforming Melania Trump on the cover. Naturally, it was followed by a Daily Beast piece featuring the grievances of staffers—well, one staffer in particular. This whole affair seemed slightly overblown, but it’s probably a harbinger of what may be around the corner if VF undersells The Hollywood Issue and trouble beckons. Anyway, here’s some free advice, Mark: Don’t make it harder than it has to be.

And now, the main event…

The Times Co. Greets Its Barbarians at the Gate

Yesterday, a pair of activist investors took it upon themselves to remind the New York Times Company of its A.I. potential (as if it needed reminding). Of course, whatever form that will take will likely determine the future of newspapers in the A.I. era.

Dylan Byers

Earlier this week, a pair of activist investors announced that they had built a small stake in The New York Times Company, and would push it to more aggressively integrate artificial intelligence to fuel subscription growth. Dylan Haggart and Sarah Coyne, the cofounders of Fivespan Partners, said the Times had an A.I. “tailwind” that could “more than double the company’s long-term revenue and profit potential.” They even argued that the Times had a “comparable opportunity” to Netflix and Spotify—“A.I. beneficiaries” that trade at a premium, due to their “growth potential and market dominance.”

This was neither a hostile stake nor a particularly hot take. The stake was undisclosed and, of course, the Times Co. is a famously dual-class structured entity, which has allowed the Sulzbergers to impenetrably maintain control despite their minority ownership position. As for the take: No shit, Sherlock. As I reported back in March, Times C.E.O. Meredith Kopit Levien and her team have been pursuing A.I. integration across the business and editorial departments for years, and Fivespan’s stated goals—“enhancing growth by reaching broader audiences, converting more readers into paying subscribers, and unlocking new, lucrative profit pools”—more or less match the company’s existing priorities. Five years ago, in their previous roles at ValueAct, this same duo had pushed the Times to bundle lifestyle apps like Games and Cooking, something that was already well underway.

In any event, Fivespan’s letter—and the promise of Netflix- or Spotify-level multiples for a 174-year-old newspaper company—seemed to tickle the erogenous zones of those industry insiders who have become downright evangelical about the transformative potential of A.I. “The power and impact of A.I. is just getting started,” one investment banker texted upon reading the letter. “Things will keep getting wild. Hold on.” Henry Blodget offered an only slightly more restrained perspective on the Times’s growth potential during a recent episode of Peter Kafka’s Channels podcast.

As I’ve noted before, the most immediate benefit of A.I. integration will be the backend efficiencies that could save the Times, and its rivals, tens of millions of dollars in overhead costs while allowing its growth teams access to better, more readily available, and actionable data on existing and prospective subscriber sets. While Times leadership officially touts A.I.’s potential to “enhance productivity” without eliminating jobs, several high-level sources at the paper have privately acknowledged to me that these new technologies are likely to eliminate hundreds of positions, and even entire departments, while fundamentally changing the paper’s economics. They’ll also continually allow the company to advance its slow evolution towards truly becoming a tech-first business, at least by the standards of the legacy media industry.

Beyond that, there is obvious transformative potential. “Newspapers don’t have to be one-way communication devices, they can be interactive communications devices,” Hamid Biglari, the chief strategy officer at RedBird Capital and head of its A.I. initiatives, told me. Biglari has been advising the Telegraph, which RedBird recently acquired, on its own A.I. integration. He listed myriad ways all news organizations could use the new tech to fuel subscriber growth, from automated personalization to archive integrations to sophisticated translation tools that will immediately “internationalize” the content. “It’s hard to compare newspapers with entertainment streaming services, but if you broaden the question to ask: Are there ways in which A.I. tools can be used to both increase revenues and increase productivity, the answer is absolutely yes.”

The Times is still in the very earliest phases of its A.I. testing. Earlier this year, Times chief product officer Alex Hardiman gave me an overview of some early initiatives: automated voice features that allow users to switch between text and audio; Cooking app tools that facilitate metric conversions; A.I.-powered search in Wirecutter that helps consumers find products and trusted reviews more efficiently; and so on. On the ad side, the Times’s BrandMatch tool optimizes ad placements by matching messages with relevant audience segments. In a matter of years, these will likely feel as quaint and rudimentary as the flip phone.

Still, more than a decade after the Innovation Report, it will be fascinating to see if the Times can remain at the vanguard of legacy media’s adaptation to new technologies, and once again set the standard for their integration. Presumably, if any legacy newsco can do it, it’s them. Implicit in the Netflix and Spotify comparison is the fact that the Times really isn’t strictly a news company anymore. It’s a multifaceted news and lifestyle content service that, in addition to covering current events, furnishes subscribers with games, recipes, product recommendations, podcasts, and cultural touch points that make it a habitual part of daily life for consumers regardless of the whims of the news cycle, albeit on a smaller scale.

Yes, yes, you know all this, but I point it out because an inflection point is coming. As it currently stands, the Times Co. occupies a fascinating fulcrum in the media industry. It’s a multimedia company built around—and, in many ways, built to insulate—a newsroom model. Right now, this all sits more or less in proportion. Media scribes and investors correctly note the ascendance of Wordle, Cooking, Wirecutter, etcetera in equally weighted juxtaposition to the legacy journalism business and its old-school management system and hierarchy.

But what happens when the road to 20 or 25 million paid subscribers is paved by other lifestyle acquisitions or A.I. integrations, and the newsroom becomes a smaller and smaller slice of the overall revenue pie? At the very least, it’s a challenge that A.G. Sulzberger, whose formative years were burnished by the predatory Slim loan and near-death experience of the financial crisis, presumably feels lucky to embrace.

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