With all the financial troubles the New York Times has had lately, investors have been crying for change to boost its bottom line and sluggish stock price. Pleas have been made by large investors such as Morgan Stanley for the removal of Arthur Sulzberger Jr. from his post as publisher, the ending of the two-tiered stock structure that keeps the Sulzberger family in control and possibly sell the Boston Globe. Those demands will not happen New York Times CEO Janet Robinson said during a meeting of the Boston College Chief Executives' Club in Boston on Jan. 18.
"We've benefited from being a publicly held-company, having access to the capital markets and having the dual class of stock really underscores the editorial independence and integrity of the news product that we produce each and every day," she said. Many would beg to differ.
In its latest earnings results in October, the Times' reported revenue dropped 39% in the third quarter, while falling short of analyst's expectations by two cents. Since then, The Times have made some strategic moves that it hopes will contribute to a turnaround. But these changes certainly fall short of the drastic aforementioned demands.
The media company followed through with its plan to unload its broadcast-media group, which includes nine television stations, by selling it to Robert M. Bass's Oak Hill Capital Partners for $575 million on Jan. 4. In December, the Times also announced it will reduce its staff by 125 in
its struggling New England Media Group, which includes the Boston Globe and Worcester Telegram & Gazette. The division was hit hard by the group's advertising revenue declining 12.4% in the third quarter, and has continued to post losses since then.
If these recent moves by the Times have no impact on the bottom line, look for more investors to follow the line of Bruce Sherman, head of asset-management firm Private Capital Management, who reduced his stake in the Times class A shares to 9.35% from 11.7%, according to a September SEC filing. Sherman was instrumental in forcing the sale of the Knight Ridder newspaper chain in 2006.
To make matters worse for the Times, credit rating agency S&P showed its lack of confidence in the company by cutting its rating on its long term debt to BBB+ from AAA-. This means the cost of borrowing money for the media company would increase based on its lower credit rating. The media company already had about $1.5 billion in outstanding debt at the end of September. " —Gerald Magpily
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