New York Times Case Study

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  Case

  14    New York Times
| Troubled Times for the “Good Gray Lady”|

The early months of 2009 were a difficult period for the New York Times Company (NYT), publisher of the New York Times and Boston Globe and the owner of a number of regional titles as well as several nonprint media businesses. In common with other U.S. newspaper publishers, the NYT was suffering from the cyclical problem of cutbacks in advertising budgets and the long-term problem of declining readership as newspapers increasingly lost ground to online sources of information.

During January and February, the company was subject to repeated speculation concerning its ability to meet its financial obligations—in particular, the refinancing of a $400 million line of credit due to expire in May. In January the company bought itself breathing space with a $250 million loan at 14% interest from the Mexican billionaire, Carlos Slim. In February it eliminated its dividend for the year.

The annual results for 2008 showed revenues contracting at a faster pace than the company could cut costs. Once impairment charges were taken into account (mainly relating to write-downs of goodwill and the masthead values), NYT made a net loss of almost $58 million (see Table 14.1 ).

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TABLE 14.1    | New York Times Company, Inc.: selected financial data ($000s, except where indicated)|  | 2008| 2007| 2006| 2005| 2004|
Revenues| 2948856| 3195077| 3289903| 3231128| 3159412| Operating costs| 2791613| 2928070| 2996081| 2911578| 2696799| Impairment of assets| 197879| 11000| 814433| –| –| Gain on sale of assets| –| (28578)| –| 122946| –| Operating (loss)/profit| (40636)| 227429| (520611)| 442496| 462613| Interest expense, net| 47790| 39842| 50651| 49168| 41760| Income from continuing operations| (66139)| 108939| (568171)| 243313| 264985| Discontinued operations –Broadcast Media Group| 8300| 99765| 24728| 15687| 22646| Net income| (57839)| 208704| (543443)| 253473| 287631| Property, plant and equipment| 1353619| 1468013| 1375365| 1401368| 1308903| Total assets| 3401680| 3473092| 3855928| 4564078| 3994555| Total debt| 1059375| 1034979| 1445928| 1396380| 1058847| Stockholders' equity| 503963| 978200| 819842| 1450826| 1354361| Return on average stockholders' equity (%)| -8| 23| -48| 18| 21| Total debt to total capitalization (%)| 68| 51| 64| 49| 44| Operating profit/revenues (%)| -1| 7| -16| 14| 15|

Current assets to current liabilities| 0.60| 0.68| 0.91| 0.95| 0.84| Employees (full-time equivalent)| 9346| 10231| 11585| 11965| 12300|
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Source: New York Times Company, Inc., 10-K Report, 2008.| |
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The NYT's share price reflected the general pessimism concerning the company's prospects. In September 2008, its shares had been trading at above $14. On February 20, 2009, they closed at $3.44. At the shareholder's annual meeting on April 29, 2009, Board Chairman Arthur Sulzberger Jr. addressed the company's problems and the board's strategy for dealing with them: |

| In our remarks this morning, both Janet Robinson, president and CEO of The New York Times Company, and I will talk about the actions we and our colleagues are taking to steer our organization through the current financial downturn, advertising decline and technological fragmentation—which, collectively, are having a brutal effect on all in the media business.As you will hear and see this morning, The New York Times Company is no exception. As the Times Company's board of directors and senior management continue to lead our enterprise through this uncertain era, we are guided by four underlying premises: |   | First, quality will remain the distinguishing feature of all that we have to offer;| |

  | Second, business will continue to be difficult, but we are absolutely committed to creating greater shareholder value;...
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