In the spring of 1971 Fritz Beebe, a former partner in the New York law firm of Cravath, Swaine & Moore, and chairman of The Washington Post Company, approached the owner, Katharine Graham, with a dilemma. The company, Beebe said, was running out of money. Over the years the Post had been fairly generous in granting stock options to favored employees, and the cost of buying out those options had put the company in a bind.
But Beebe had a solution. Following the lead of bigger rivals, such as Knight Ridder and Times Mirror, he advised that the company go public. Selling stock in the Post would ease the company’s cash crunch, Beebe explained, and otherwise, the Post would have to sell one of its television stations. Graham hesitated. “I wish I had understood the whole thing better than I did,” she wrote in her 1997 autobiography of the decision to go public. “I . . . simply took Fritz’s word for the problem and assumed we only had two choices: either go public or sell WJXT.” The company went public, making its initial offering on June 15, 1971, the same week the Pentagon Papers controversy erupted. “I wasn’t sure what being a public company entailed,” Graham wrote in her autobiography, “but I knew there would be obligations and disciplines that were not imposed on private companies.”
In the past year, many newspaper companies, including the Post, have been getting a refresher on just how onerous the “obligations and disciplines” of being publicly owned can be. Despite profit margins that generally hover around 20 percent — extraordinary when compared to almost any other business sector — newspaper stocks are getting pummeled. As of early December, the stock of Gannett, the country’s largest newspaper publisher, was down 28 percent for the year. Tribune Company was down 29 percent. The New York Times Company was down 35 percent. Even the Washington Post Company, whose diverse holdings have insulated it somewhat from the market’s pessimism about newspapers, was down 25 percent.
http://www.cjr.org/issues/2006/1/mccollam.asp
But Beebe had a solution. Following the lead of bigger rivals, such as Knight Ridder and Times Mirror, he advised that the company go public. Selling stock in the Post would ease the company’s cash crunch, Beebe explained, and otherwise, the Post would have to sell one of its television stations. Graham hesitated. “I wish I had understood the whole thing better than I did,” she wrote in her 1997 autobiography of the decision to go public. “I . . . simply took Fritz’s word for the problem and assumed we only had two choices: either go public or sell WJXT.” The company went public, making its initial offering on June 15, 1971, the same week the Pentagon Papers controversy erupted. “I wasn’t sure what being a public company entailed,” Graham wrote in her autobiography, “but I knew there would be obligations and disciplines that were not imposed on private companies.”
In the past year, many newspaper companies, including the Post, have been getting a refresher on just how onerous the “obligations and disciplines” of being publicly owned can be. Despite profit margins that generally hover around 20 percent — extraordinary when compared to almost any other business sector — newspaper stocks are getting pummeled. As of early December, the stock of Gannett, the country’s largest newspaper publisher, was down 28 percent for the year. Tribune Company was down 29 percent. The New York Times Company was down 35 percent. Even the Washington Post Company, whose diverse holdings have insulated it somewhat from the market’s pessimism about newspapers, was down 25 percent.
http://www.cjr.org/issues/2006/1/mccollam.asp
