In a tech-savvy town, the new free-lance cab services like Uber and Lyft (who had GM buy in earlier this week) seem to have helped do them in-
The taxi industry as a whole has been under massive pressure from startup newcomers such as Uber, Lyft, and the recently defunct Sidecar. Those companies are regulated under California’s “transportation networking company” (TNC) law, which is separate from traditional taxi law.
Taxi companies enjoy a oligopolic position in a lot of big cities. If the city requires a license to drive a cab and limits those licenses (or medallions), they are valuable commodities, going for upwards of a million dollars in New York City. If you have that much invested in the medallions, you'll need to make $50,000 to $100,000 above and beyond the cost of fuel, maintenance and paying the cabbies in order to make the investment worth-while.
Uber and its ilk don't need no steenking medallions, at least in California. Other towns will often try and bar the newbies, protecting their cab companies, but California state laws trumps city law. Silicon Valley has more clout than cab companies in Sacramento, it would seem.
That makes the value of medallions drop. If they were financed by debt, then reduced revenues might see the interest charges be hard to handle. Their financing was likely designed without Uber in mind, and a game-change would blow up the old paradigm, giving us a classic case of creative destruction at the expense of rent-seeking medallion-holders.