The New York Hard Times

I have many times pointed to the day Arthur “Pinch” Sulzberger, Jr. took over the reins of The New York Times as the beginning of the end for the then-“newspaper of record” for America. The subsequent retirement of Abe Rosenthal (an old-school liberal, true, but a newspaperman of the first rate, a man of integrity) steepened the slide. Under Rosenthal, the editorial page was liberal, and the choice of emphasis on news stories showed a decided liberal slant – which is not unacceptable or unusual. But with Abe at the news helm, if you read it in the news columns, you could take it to the bank. A stated fact had been thoroughly sourced and rigorously checked before it appeared in print. Alas, that ethic collapsed with his departure. Pinch had his agenda, and the paper was his tool.

But all this concerns the Times as a newspaper, not as a business. As it turns out, debasing the newspaper also affected the company’s fiscal status. Over at The American Thinker, they’ve been conducting a withering examination of the paper as a publicly-traded corporation, and it’s coming up wanting.

Christopher J. Alleva examines the balance sheets. The Times has been closely held by the Ochs and Sulzberger families and, as was common in the industry, when it went public, the real power was reserved to the original owners to maintain family control. The families, though, have grown fat on dividends and depend on them, and the company has been paying them in excess of actual earnings. This represents a threat to the soundness of their bonds, and Alleva notes that, under a standard measure, the company is on the verge of bankruptcy risk. Given the pending entry of competition for the lucrative Sunday ad dollars from new offerings by the New York Post and Rupert Murdoch’s newly-acquired Wall Street Journal, and the general downward trend in print advertising, their future revenues seem in serious doubt.

But that’s only the beginning.

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Thomas Lifson recounts the poor record of Pinch himself. His fiscal mismanagement has left the company under fiscal stress to the point its major asset is the brand name. Turning that into cash to right the ship means selling out – bringing in major investors, who will insist on control. The founding families’ devotion to their scion may be the crack which brings down their house.

Lifson and John Berlau report that the flap over the improperly discounted ad raises questions about internal controls, which may bring down the heavy hand of the Sarbanes-Oxley law, a misbegotten overreaction to the corporate scandals of the late ’90s and early 00’s which already sucks an estimated $35 billion every year in compliance costs, for no appreciable benefit. This opens the company, should Pinch’s oversight be deemed insufficient, to shareholder lawsuits worth billions. Ironically, the Times has been among the most vocal supporters of this onerous legislation, and now may reap what they have sown – in spades.

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