I have been discussing, e.g., here, the dire straits of the newspaper business. I have also discussed one particular paper, the NYT. As I said back in April 2006:
If the market demands that the NYT adjust to these new voices and technologies and its managers are lagging in that respect it's easy to see why the Times would be suffering and why its shareholders would want change. It's called creative destruction. A system that doesn't accommodate it is doomed to fail. We shouldn't lament its happening at the Times.
The problem is that the NYT’s controlling family has used its power to rebuff activist hedge funds. These moves have a special irony, as I summarized:
The Times, whose columnists such as Gretchen Morgenson have been hawks on corporate governance and shareholder value, was curiously mum when it came to the company’s own governance.
Now the problems are coming to roost, and even the Times’ controlling owners see the wall right in front of them. They're seeking to raise cash in the worst possible financial environment by registering to sell Times stock. Per Blodget:
Now, needless to say, is not the optimal time for NYTCo to be raising cash. Seven months ago, the stock was $20. Three months ago, the stock was $15. Now it's just over $6. Similarly, on the debt side, a year ago, the New York Times still seemed like a healthy company, with strong cash flows and a thriving Internet business. In those days, these characteristics would have set debt buyers mouths' watering. Not anymore. Any cash the New York Times raises in the current environment will be outrageously expensive. It's also hard to imagine that the company will attract much interest from equity investors until it can articulate a plan for long-term survival that involves something other than selling off non-core assets (eventually, it will run out of these).
The Times likely would not be facing this dire crunch had it not closed its ears to its critics while its heavily promoted columnists spouted off confidently about how other companies should be run.
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