There were rumours about job losses but when the news came it was worse than expected. Some 250 people out of 700 were to lose their jobs, with further cost savings.

The news came with a warning that if cuts were not forthcoming there was a risk that the company would close.

The company is The Irish Times, an Irish institution, the Old Lady of D'Olier Street, a newspaper which has weathered many crises since its foundation in 1859.

As a unionist newspaper it survived the events surrounding the foundation of the State.

As a supporter of the Allies during then second World War, it survived the enthusiasm of the official censors; and it survived the decline of its core readers, the Protestant population of the south.

More recently it came through economic crises in the 1960s and 1970s, was reborn as a trust and weathered the economic gloom of the 1980s.

Over the past seven years it all came together.

It has been breaking its own circulation records annually and, with audited sales at just over 119,252 daily, it has begun to nibble at the heels of the Irish Independent, which sells 168,300.

Its advertising income was also record-breaking and it was read by the most affluent in this most affluent country.

Journalists at The Irish Times were used to periodic budgetary restraints being imposed but rarely took them seriously. The assumption was that they gave the growing number of editorial managers and administrators a function.

The first thing to note is that the crisis is not about readers. Industry sources suggest that last September was the paper's best month to date.

The paper is expected to record another all-time high when the official circulation figures are published at the end of the year.

The problem is in advertising, spending and the institutional problems within The Irish Times itself.

Since the mid-1990s, The Irish Times has been raking in money from the new areas of advertising income - the high-tech industries and the recruitment advertising which accompanied it.

The property boom was also good at filling the property supplements every week with lucrative adverts.

As the economy grew, the advertising industry was crying out for space, especially colour space, and The Irish Times, unlike its rival, the Irish Independent, could provide it and at the top rate, without discounts.

It produced supplements, two on a Friday, in order to soak up this advertising.

The Independent did win the race to produce a colour magazine, so The Irish Times produced a better one, with little thought of cost, on high-gloss paper which includes some 25 pages of a television guide which has no advertising.

That magazine is losing about £2 million in a full year, industry sources believe, and it cannot be printed in its present format on the new £50 million printing press at CityWest.

In the online war The Irish Times is winning hands down. Its Irish Times Online and then ireland.com won prizes and plaudits from around the world.

Yet this is at a cost and is a constant drain on the company.

So until earlier this week that was how The Irish Times appeared; a company that had made surpluses over the past number of years; had record circulation figures; a new press about to start operating; and a number of prestige activities, such as its glossy magazine and its website.

It had also invested in journalism, with two correspondents in the US, one in China and a number of full-time correspondents in major cities in Europe.

It had sent correspondents to the major events around the world; it was covering the events since September 11th with its own correspondents in Asia, Europe and the US, with an authority unmatched by any other Irish news outlet.

And then last Tuesday it all changed.

Advertising will, of course, be down this year. But it will be down on an exceptional year. In fact between January and September advertising revenue for Irish national newspapers was actually up 7 per cent on the same period last year.

It is clear, however, that the high-tech bubble has burst, with recruitment and property hardly expecting an upsurge in 2002.

The vulnerability of The Irish Times is clear: a quality product with the high cost base of a single title in a small market.

Its advertising bonanza was based on products and services hit first by the economic downturn. Additionally, the company did not seem to see the urgency of the signals which were there since the high-tech bubble burst.

There is a further factor in the failure of management and the trust.

The trust was established in April 1974, with a loan of £2 million, in order to preserve the independence of The Irish Times.

It put the newspaper into a prestigious but small group of newspapers owned by trusts, including the Guardian, Le Monde, and the St Petersburg Times in Florida. It protected Irish Times journalism from the vagaries of the market.

It also meant that The Irish Times was always cautious. Time and again unions were told that without shareholders the paper could not raise finance; that it was always necessary to ensure there were reserves for the bad times.

That made it even more bizarre when it emerged that management had spent the company's reserve.

Irish Times management is old fashioned and hierarchical. While the staff might enjoy the boardroom battles and the constant speculation as to who is in the ascendant, such battles mean that major decisions and appointments can be based on boardroom victories rather than rational decisions

For instance, why was ireland.com not integrated into the newspaper as a journalistic enterprise, with journalists contributing to both the newspaper and online with shared resources?

Instead, a separate company runs ireland.com, even though most of the journalism comes from The Irish Times.

Its core strength, news, has become diluted. Successful online newspapers have been those with news at their centre. Now ireland.com will be assessed as a loss-making commercial concern, rather than another aspect of journalistic activity, such as the finance desk or foreign desk.

Some believe the present management spent money, when it could, as a reaction to the traditional conservatism of the trust and the board of The Irish Times, and there is little doubt that there has been an emphasis on prestige, such as a range of foreign correspondents, yet no investigative unit in Dublin, for instance.

Whatever the reason, there is no doubt that the core of the management problem lies with the trust. Major Thomas McDowell (78) was instrumental in setting it up; he was once a dynamic and visionary force in the newspaper and still runs it. There is, however, no dynamism now.

Major McDowell's A share enables him to outvote the full board on one issue only - that of his position as chairman of the trust.

However, the "nominated directors", who are nominated by him and are the "governors" of The Irish Times Trust, have an inbuilt majority on the board of The Irish Times Ltd.

Such Byzantine structures and ethos are totally out of place and disruptive, with a vast amount of energy expended on predicting the succession stakes or making a point about the trust or Major McDowell.

The Irish Times must use the opportunity to reorganise the trust so that it can lead the newspaper, as the Scott Trust has led the development of the Guardian.

It is also imperative that, whatever battles take place in the boardroom, there must be no loss of focus on the key, critical issues of journalism and editorial content.

The irony of The Irish Times's position is that the events of September 11th were one of the catalysts which hastened this week's announcement. Those events have also forced journalists to look at the function of news, its importance in people's lives and, most significantly, the role of the newspaper. The success of The Irish Times in September is part of that. It would be a tragedy if the Irish newspaper which was able to give such detailed and authoritative coverage to those events and their aftermath was now not able to be part of that debate.

Michael Foley is a media commentator, a lecturer in journalism at the Dublin Institute of Technology and a former Irish Times journalist