Since 2000, The New York Times Company has generated a respectable cumulative net income of $1,598,062,000. Yet management, over the same period, has paid out $2,779,601,000 for stock buybacks and dividends. This means, during the present decade, stock buybacks and dividends have exceeded cumulative net income by an astonishing $1,181,539,000. Is it any wonder The New York Times’ balance sheet is such a train-wreck? Operationally, this company has done well during the past nine years. Conversely, the company’s balance sheet has been hideously mismanaged by an incompetent executive management team – as supervised by a grossly negligent board of directors.
The New York Times, most certainly, is encountering a difficult operating environment. The internet has posed a serious challenge to companies involved in print media. Advertising revenues, moreover, are dropping dramatically due to the current economic depression. Nonetheless, had executive management been prudent and conservative with respect to balance sheet management, the Times would have had a war chest full of cash, strong working capital, and strong equity; thus, allowing it the financial flexibility to survive these very challenging times. As things stand today, in my opinion, the Times’ strategic alternatives are probably limited to either seeking an acquirer or reorganizing under Chapter 11 Bankruptcy.
In closing, it is appropriate to bring The New York Times’ op-ed columnist, Maureen Dowd, into the picture. She recently savaged executives from A.I.G., Bank of America, Citigroup, Merrill Lynch and the U.S. automakers; deeming them to be incompetent, self-serving charlatans. In this January 28, 2009 op-ed piece titled Wall Street’s Socialist Jet-Setters, she calls these executives “boobs,” “dumb,” “obtuse,” and “…careless ghouls who murdered the economy.” So Ms. Dowd, what do you think of the executives who “murdered” The New York Times Company’s balance sheet? What names would you like to call them?
