26 July 2008

Troubles at The New York Times Co.

An article in BusinessWeek observes that a share of stock in The New York Times Co. is now worth only half what it was worth a year ago.

Why? Well, it's true that the equities of US based corporations have fallen across the board, but not so dramatically as all THAT! The S&P index has fallen about 20% in the past year. The NASDAQ 100 has fallen only 10%. So why has NYT fallen nearly 50% (or to be precise, 46.3%)?

In a July 23d release about disappointing second quarter earnings, the CEO (Janet Robinson) blamed the economic slowdown as well as "secular forces playing out across the media industry."

No. First, if this were simply a manifestation of the general economic slowdown, it should mirror the results of the broader indexes. Second, if the problem were "secular forces" etc., you'd see similar results at other companies in the media industry.

You don't. The Washington Post Co. has lost about 25% of its value over the last year. That IS in line with the general economy, or only slightly worse. And that would tend to show, by the way, that the stereotypical conservative answer ("it's because the NYT is so dam liberal!") isn't empirical. The WPO is as much on their enemies' list as the NYT. But it has done better, or only half as bad, over these last difficult months because ... because its a better run enterprise.

That is where responsibility lies. With Ms Robinson and her board.

God bless you please. [Okay I couldn't help myself there.]

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Knowledge is warranted belief -- it is the body of belief that we build up because, while living in this world, we've developed good reasons for believing it. What we know, then, is what works -- and it is, necessarily, what has worked for us, each of us individually, as a first approximation. For my other blog, on the struggles for control in the corporate suites, see www.proxypartisans.blogspot.com.