A New York Times spokesman told Bloomberg Businessweek today that the company has no plans to go private. But why not?
"The company does not plan to go private and is not for sale," was the actual statement given, but it seems to belie everything the Times has worked for in recent weeks. You see, the paper is about to get rid of the search-bonking, money-burning thorn in their financial side, About.com, for some $270 million. And Bloomberg Businessweek's Edmund Lee explains that the move would give them about $840 million in cash. "That would be more cash versus its market value than any U.S. publisher worth $200 million or more, according to data compiled by Bloomberg," he reports, adding that the company is "better positioned than ever to go private as Mark Thompson [the company's new CEO] takes the reins."
Add to that the benefits of going private—no stockholders to have to keep happy, no competitive dividends to be paid, keeping all the financial information to themselves—and it's a mystery to us as to why the company wouldn't want to even explore the possibility of going private. After, all it's not like being public has done wonders for them. As Lee explains:
The stock is down 83 percent from its peak (NYT) in 2002, and the publisher’s enterprise value was only 3.58 times earnings before interest, taxes, depreciation and amortization on June 25, a record low, according to data compiled by Bloomberg. Analysts estimate (NYT) on average that the stock will fall to $8.90 within the next 12 months, down from $9.22 yesterday.
Clearly, that isn't a pretty picture. But let's take the spokesman's word for it. At the very least, the Times has taken the first steps necessary in case they ever change their minds, writes Poynter Business Analyst Rick Edmonds, who's a bit more skeptical of any possible private move than we are. The chances, he says, are "Not impossible, but I would put the odds at less than 50-50."
This article is from the archive of our partner The Wire.