The New York Times Co. posted a $648 million loss for the fourth quarter on Wednesday as it absorbed an $814.4 million charge to write down the value of its struggling New England properties, The Boston Globe and the Worcester Telegram & Gazette.
The company said the non-cash charge reflected declines in current and projected results at the newspapers, which have been hit hard by the consolidations of key advertisers in the New England area as well as greater competition from online media.
The company originally paid $1.1 billion for the Globe in 1993 and $296 million for the Worcester paper in 2000.
We saw this coming. When the New York Times Company announced the sale of its profitable television stations, we wondered if it might not sell its terrible investment in the Boston Globe and other New England newspapers at a loss, to avoid paying capital gains taxes. Instead, it took a write-down to balance the capital gain, opening up the possibility of actually booking a profit, once 58% of the purchase price was written off. The person responsible for this massive loss of shareholder value is Arthur Ochs Sulzberger, Jr., aka "Pinch." When Gerald Levin led Time-Warner into a disastrous merger with AOL, he paid with his job for the blunder. But then, his family didn't control election to the board of directors.
It would appear, based on size of the write-off and the size of the loss, that underlying earnings from operations may actually be up. But without more complete information, it is impossible to say with certainty. However, the stock is up in early trading.Hat tip: Richard Baehr
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