UPDATE 1-Thompson takes helm at NYTimes, faces stiff challenges
* Sulzberger backs Thompson in internal memo
* Thompson confronts biz issues at Times Co, BBC fallout
* Thompson tells ITV: BBC saga won't affect NYT job
Nov 12 (Reuters) - Mark Thompson reported to work as the New York Times Co chief executive on Monday, confronting challenges ranging from making the publisher less dependent on advertising to trimming costs and figuring out what to do with its pile of cash.
Thompson is also dealing with questions pertaining to a series of scandals at the BBC, where he served as director-general from 2004 until September this year.
George Entwistle, who succeeded Thompson at the British broadcaster, resigned on Saturday and two of its top news directors stepped aside on Monday. [ID: nL5E8MC4BN]
The BBC has come under fire for its handling of two investigations at its flagship news show, "Newsnight". One is a massive sexual abuse scandal involving the late Jimmy Savile, a former presenter at the network. The other is a news story of an allegation that a former top politician sexually abused children, which was later proven to be false.
The latter report occurred after Thompson left the BBC. However, an unaired program about Savile was produced while Thompson was director-general of the broadcasting company.
In a staff memo obtained by Reuters, New York Times Chairman Arthur Sulzberger welcomed Thompson but sidestepped addressing the BBC scandals.
"We welcome him at a time of tremendous change and challenge, which must be met with equal focus and innovation," Sulzberger said in the memo distributed on Monday.
"Mark will lead us as we continue our digital transformation, bolster our international growth, drive our productivity and introduce new technologies that will help us become better storytellers and enrich the experience for our readers and viewers."
British ITV filmed Thompson as he arrived at the New York Times headquarters on Monday near Manhattan's Times Square. "I'm looking forward to starting work there right now," said Thompson, who was dressed in a navy blue suit, red tie and had a backpack slung over his right shoulder.
Asked if the BBC saga would be a distraction, he said: "I believe it will not in any way affect my job, which I'm starting right now as chief executive of the New York Times Company."
Still, the volley of news about the turmoil at BBC has been coming fast across the Atlantic since a rival British broadcaster aired a bombshell investigation about Savile in October.
There is little to suggest the pace will slacken as the chairman of the BBC Trust called for a "thorough structural radical overhaul" of the organization, and police and parliament have opened inquiries.
Ken Doctor, an analyst with Outsell Research, said the BBC scandals will replace "hackgate" - the phone hacking controversy that shook News Corp's British newspaper arm - in the UK popular press and in parliament.
Indeed, News Corp founder, Chairman and CEO Rupert Murdoch, who has criticized the publicly funded BBC in the past, tweeted on Saturday, "BBC getting into deeper mess. After Savile scandal, now prominent news program falsely names senior pol as pedophile."
Thompson said in a letter to British lawmakers he would be happy to appear in front of the parliamentary committee or any other inquiry in the future.
The British investigations into the BBC could prove to be a distraction for Thompson if they are drawn out.
"It's clearly a distraction," Doctor said, who added that he believes Thompson should have stepped aside over the weekend.
"How big, how long this is going to last is unknown. For anybody who cares about the New York Times and its journalism this is an unneeded distraction."
Doctor is another voice in a growing chorus to question whether Thompson is fit to serve as CEO.
New York Times Public Editor Margaret Sullivan wrote on Monday a second column about Thompson.
She praised the coverage in Times about the BBC saga and Thompson, saying it "pulled no punches in reporting," and noted that the scandal is being felt in New York.
"It's safe to say that everyone here - from the Times' board of directors to the mail clerks - hopes that Mr. Sulzberger's faith in Mr. Thompson will be rewarded," she wrote.
"What happens in London reverberates in New York. And the chaos at the BBC - in which many of the people Mr. Thompson has supervised stepped aside as recently as this past weekend - feels uncomfortably close to home."
Thompson did not immediately respond to a request for comment regarding Entwistle's resignation. Earlier, he declined to be interviewed about his plans for the New York Times.
TAKING CARE OF BUSINESS
Thompson took the helm at the New York Times just weeks after the company reported that it missed third-quarter revenue and profit expectations, which sent its stock tumbling 22 percent. [ID: nL1E8LPE20][Breaking views: ID: nL3E8MC3NX]
His arrival on Monday marks the first time the company has had a CEO since the abrupt ouster of Janet Robinson last December.
In addition to the business challenges, Thompson must also manage the desires of the Ochs-Sulzberger family, which has controlled The New York Times for more than 100 years. The company's business issues have forced the family to forego a dividend since 2009.
"The first thing he will have to focus on is the balance sheet," Barclay's analyst Kannan Venkateshwar said of Thompson's priorities.
Analysts widely expect the company to reinstate a dividend since it will end the year with about $1 billion in cash, due in part to sales of some of its newspapers and its digital group About.com. Debt is about $700 million and therefore is very manageable in the context of cash, Venkateshwar said.
Beyond the balance sheet, Thompson will have to tackle the declining advertising revenue in both print and digital while convincing readers to pay more for its products.
While the company's circulation revenue - which includes both print and digital subscribers - makes up 52 percent of total revenue, that percentage must increase to offset persistent advertising losses.
"I think there are a lot of hurdles to the NYTimes.com pay model," Morningstar analyst Jocelyn Mackay said. "I do wonder if their price point is too expensive."