The parent company of The Dallas Morning News, DallasNews Corp. (Nasdaq: DALN), is at risk of being delisted from the Nasdaq Stock Exchange due to ongoing financial difficulties.
This potential delisting comes after the company reported negative stockholder equity, meaning its liabilities exceed its assets.
While the company initially regained compliance over the summer, a recent decline in equity has once again put its status on shaky ground, the Dallas Business Journal reported.
The news underscores challenges legacy media companies face as they navigate a changing industry landscape and declining revenues.
Nasdaq first warned DallasNews in June 2024 that it did not meet the minimum $2.5 million in stockholder equity required for continued listing. At that time, the company submitted a plan showing improved performance, which temporarily brought it back into compliance.
However, by the third quarter, stockholder equity had fallen to negative $576,000, prompting another warning from Nasdaq on November 19. This negative equity figure signals significant financial instability and can discourage investor confidence.
In addition to failing the equity requirement, DallasNews has not met Nasdaq’s alternative standards for market value of listed securities or net income from continuing operations. The company reported a $1.4 million loss in the third quarter of 2024, with revenues dropping 10% year-over-year to $31.1 million. Staff reductions have also been part of the company’s strategy to mitigate losses, with a 12% decrease in headcount bringing its workforce to 534 employees as of September 30.
Despite these setbacks, DallasNews is attempting to appeal the potential delisting. As of December 9, 2024, its stock was still trading at $4.52 per share, reflecting a market capitalization of around $25 million. The company’s future hinges on whether it can successfully present a viable plan to regain compliance and improve its financial standing.
If the appeal fails, delisting could significantly impact the company’s ability to attract investors and secure funding.
One notable development in the company’s shareholder landscape is the involvement of David Hoffmann, a Florida-based billionaire. In November, Hoffmann’s private equity firm, Hoffmann Family of Cos., purchased a 5% stake in DallasNews, acquiring 239,516 shares for approximately $1.32 million. This investment could signal confidence in the company’s potential for recovery, though it remains to be seen whether this backing will influence the outcome of the Nasdaq appeal.
DallasNews Corp. owns not only The Dallas Morning News, the 14th-largest newspaper in the United States but also the marketing agency Medium Giant. Like many traditional media companies, it has struggled to adapt to declining print circulation and advertising revenues. Efforts to diversify through digital marketing services and other ventures have yet to offset these losses, highlighting the tough road ahead for the organization.