Bad News Piles Up for New York Times

The onslaught could not come at a worse time for The Times, which has been reeling along with the rest of its newspaper publishing counterparts from the rise of the Internet and a downturn in the U.S. economy that threatens to get worse before it gets better.

In addition to weakness in the luxury goods sector, Bank of America analyst Joe Arns said in a research note that The Times is also vulnerable to the pain in financial services wrought by the subprime lending debacle, because roughly half the company's revenue comes from finance towns New York City and Boston. Banks like Citigroup (C Quote) and Merrill Lynch (MER Quote) have taken gigantic writedowns, and many observers say that more trouble for the industry is in store.

Arns said a recession could result in a 20% gap or more between the company's forecast for 2008 earnings before taxes, depreciation and amortization and Wall Street's expectations.

Such concerns are what ultimately convinced members of the Bancroft family, Dow Jones' controlling shareholders, to succumb to the $5 billion buyout offer from Murdoch -- an unsavory buyer in the eyes of journalism purists for the publisher of a newspaper that was incorporated as a public trust. The family initially opposed the offer, but Murdoch ultimately won enough support from its members to claim his prize.