Bad Times At the New York Times
This morning, the New York Times Co. announced its fourth-quarter and total 2006 financial results.
They aren't pretty.
And they cap a year of downer financial news from the parent company of the Gray Lady.
The big headline out of today's news is a $648 million loss in the fourth quarter of last year caused by an $814 million write-down in value of the company's two New England papers, the Boston Globe and the Worcester Telegram & Gazette.
The loss represented a steep drop in the goodwill value of the two newspapers -- in other words, the value of the papers beyond their physical assets. It means that the papers' advertising bases have deteriorated to such an extent as to diminish the total value of the papers.
The Times Co. bought the Globe in 2000 for more than $1 billion, at the height of the market. Now, the paper may be worth as little as $550 million, if you believe the value that former GE head Jack Welch put on the Globe, when he attempted to buy it last year.
Here's a recap of the Times Co.'s 2006:
* The company's debt rating was downgraded by Wall Street.
* Big shareholder Morgan Stanley agitated to break up the company's dual-class stock system, which gives company control to the Sulzbergers, which has owned the company for more than 100 years.
* Why? Because New York Times stock has underperformed the stocks of other newspapers.
* To raise needed money to pay down debt, the company sold its nine television stations and its stake in the Discovery Times TV channel.
Today, the company said that advertising revenue is down across all of its media properties, with the only significant ad growth coming online, including About.com, which the Times Co. bought a year ago.
Further, the company said it anticipated making up to $75 million of additional cuts in 2007 to save money. It will outsource certain financial and computer systems work. Last week, the Globe announced it is shutting down its three remaining foreign bureaus to save money.
What these cuts do the quality of Times Co. journalism remains to be seen.
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