Crunching the New York Times numbers

November 21, 2008

The New York Times Co’s announcement on Thursday that it’s cutting its dividend by almost 75 percent is a pretty grim indicator of the fortunes of the storied newspaper publisher. It also is fraught with implications. It prompted us to put some of the numbers in perspective, but first, here’s a recap of the news:

NEW YORK (Reuters) – The New York Times Co slashed its dividend by almost three-quarters and plans to cut spending and reevaluate its assets to cope with an advertising decline that is gouging U.S. newspaper publishers.

The trustees of the Ochs-Sulzberger family’s shares in the Times said on Thursday they support the company’s actions.

“The trustees remain unanimous in their commitment to the editorial integrity and independence of the New York Times,” they wrote in a statement.

This is significant because industry watchers and media experts say the family is under more pressure than ever before to sell parts or all of the company.

Here are some ways of defining “pressure:”

  • The company is worth $725 million. When it bought The Boston Globe in 1993 it paid about $1 billion.
  • Its publicly traded shares were worth $49 two years ago.
  • The ratio of the share price to the cover price of the Sunday edition of the Times is under 2:1.
  • The ratio of the share price to the daily cover price is under 5:1.

How does cutting the dividend relate to all this? Here’s some speculation informed analysis:

  • It means the company is aware that paying its $1.1 billion in debt trumps shareholder profits for now, and that includes members of the Ochs-Sulzberger family.
  • It means the company knows that doing this will shore it up better in the long term, especially as ad revenue declines continue
  • It means the company understands that paying debt and investing in its future could be worth some short-term shareholder pain. It’s a rough economy. Everybody has to deal with it.
  • If we wanted to be really Machiavellian, could it mean that

a) The inevitable stock decline will make the company even more cheap for the Sulzbergers to take private?

b) That it will smoke out dissident shareholders with large stakes (Harbinger), especially as the financial crisis forces them to sell stakes in other companies?

c) That, as an unintended consequence, the younger Sulzbergers will freak out and demand action so they can keep making a fat paycheck?

Times employees: What are you hearing? We’re interested in your comments and we do protect our sources — just like you do. Write to robert dot macmillan at reuters dot com .

(Photo: Real New York TImes on the right, fake one on the left. Reuters)


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I think you guys should do a mobile reader application so people can get the newspaper straight to their mobile phone for the same price as an actual newspaper. It would be especially cool on a phone like the Motorola Krave, because it has a HUGE crystal clear touch screen display with T9 predictive text/digital qwerty keyboard. You can check out the full specs online at Ive been a huge fan of this phone ever since I started working with Motorola. It’s incredible.

Posted by m goode | Report as abusive

I wouldnt call that “informed analysis”, just dimwitted conspiracy theories. NYT is barely cashflow profitable after interest. Over the past year they have increased borrowings to pay the dividend – no way at all they can keep doing that. $450m of the debt is current and if they are to roll any of that they have to cut the dividend – further measures will also be required.
Sulzberger might, just possibly, want to take it private, but to do so he would need to find at least $400m to pay debt down to a level compatible with curent cashflows

Posted by Bill | Report as abusive

[…] Buy a copy of Sunday’s New York Times or 2 shares of stock? […]

Posted by Left, Right and Centered » What Should I Do? | Report as abusive

What?? You mean the NYT isn’t a candidate for bailout $? Maybe on 1/21/09 they will be.

Posted by Newt | Report as abusive

What conspiracy, Bill? It’s just thinking out loud. I’ll cop to dimwitted. I’m a reporter, not the guy who’s going to solve the NYT’s problems. If you have some thoughts, why not share them here? Or, if they’re realistic, just go tell the Times. I’m sure they pay consultants.

Posted by Robert | Report as abusive

“# The ratio of the cover price of the Sunday edition of the Times to the share price is under 2:1.
# The ratio of the daily cover price to the share price is under 5:1.”

First of all, this is extremely sloppy — you’ve got your ratios backward.

Second, it’s meaningless – ad revenue is the big issue, not newsstand sales.

Posted by Joshua | Report as abusive

Thanks Joshua, I’m painfully aware of the ad revenue situation being meaningful — and the debt and the circulation revenue that’s going up with price increases (not copies sold) and a host of other things.
Yes, I wrote it backward. I will fix it.

Posted by Robert MacMillan | Report as abusive

Frankly, as the owner of a company who has advertised in the NYTs in the past, but choses to advertise elsewhere now, the death or bankrupcy of the Times causes me no pain. I never felt like I received the value I should have given the cost of the ad.

At one time, I suppose, it was hip to advertise in the Times, but most people who buy my products don’t read or subscribe to the Times, and frankly, don’t like it’s editorial policies.

Posted by Joseph | Report as abusive

When saying the share price two years ago was $49, it would have been helpful to let us know the current share price for comparison purposes (if we didn’t know the cost of the Sunday or daily paper offhand). For what it’s worth (not very much), it closed on $5.34 on Friday.

Posted by Steve | Report as abusive

Rule #1 in the newspaper business: FIRST, have something to sell. Nobody wants to pay for advertising when there’s no circulation. Why do you think Rupert Murdoch is rich? Tear the thing apart, write some stories, and beef up circulation. You don’t have to BE Rupert Murdoch; just don’t be what everyone else is selling. Then go after someone other than Van Cleef and Arpels, Blue Cross, and car dealers as advertisers. There are lots of businesses out there. You’re WELCOME!

Posted by Ila | Report as abusive

[…] to Comments Reuters blogs’ Media File (”Where Media and Technology Meet”) offered more evidence of major media transitions (November 21, 2008): The New York Times Co’s announcement on […]

Posted by More major media in the tank? What does it all mean? « Future Tense | Report as abusive

[…] UPDATE … The editorial board of the New York Times is worried. As well it might be, considering that the Times is being fed head-first into a bankruptcy machine. […]

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