The Iceberg Awaiting The New York Times

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Over the past few months, we’ve frequently speculated here that The New York Times Co. may be in worse financial condition than it was admitting. Evidence is emerging that we were right. The Silicon Alley Insider has been digging through the company’s latest SEC filings to find that the Times owes its creditors a huge $400 million payment next May, but it only has $46 million in cash on hand with six bleak months to go.

Its stock closed today at a historic low — $7.34/share — a two-thirds drop from its high point over the past year. Layoffs — some announced, some not — have been regularly shrinking the newsroom, even as other executive talent walks out the door. For example, Vivian Schiller, the General Manager of NYTimes.com, is leaving the Times on December 1st to become the President and CEO of NPR.

According to its latest 10-Q, the Times has short-term cash and collectibles totaling $412 million and debt payments and accounts payable totaling $865 million, including long-term debt payments and rent of $50 million. The long-term picture is no better, with $1.501 billion in assets (according to the company’s internal valuation methodology) and $1.468 billion oflong-term debt and other liabilities.

Add in the steady fall in advertising revenue for all newspapers, and you can surmise the extent of the crisis that faces the Times. None of its remaining options — cutting its dividend, selling off major assets, and/or many more layoffs — are attractive. On top of all of this, there are questions about whether the $366 million short-term credit line on its books is still actually available. The company’s stock has been downgraded to junk status, it is shut out of the commercial paper market, and selling equity at fire sale prices has to seem likely to emerge as the choice of last resort.

The sad thing about all of this is it could have been avoided. The Times had well over a decade to adapt to the Internet and embrace online opportunities to extend its brand into the new media environment. However, the company’s web strategy has lurched around from paid to free to partly hidden behind a paywall to all free again. Its only profitable arm — About.com — is reportedly up for sale, probably because the Times is so cash-starved.

During this recession, which George Soros predicts may well deepen into a depression, a lot of iconic American companies are going to fail. It doesn’t give me any joy to predict that one of those, sooner as opposed to later, will be The New York Times.

(Thanks to my Bnet colleague David Hamilton for help with this piece.)

Tags: Payment, New York Times Co., Operational Accounting, Investment, Asset Management, Workforce Management, Finance, Operational Planning, Business Operations, Human Resources, David Weir

In addition to serving as a BNET Media analyst/blogger, David Weir is a veteran journalist and the author of several books. Weir is a co-founder and vice-president of the Center for Investigative Reporting, as well as an editorial board member of The Nation.

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1

macnamband

11/14/08 | Report as spam

RE: The Iceberg Awaiting The New York Times

You may be right, and what a tragedy, mismanagement notwithstanding. Yet it's hard to imagine that if the Obama administration is willing to support saving Wall St. and now Main St., then why not 44th Street?
2

hotweir

11/14/08 | Report as spam

RE: The Iceberg Awaiting The New York Times

I agree. And this is where business realities need to be balanced against social needs. To be clear -- I do NOT want the Times to go bankrupt. I want to see it adapt to the new media realities in a much more user-friendly, interactive way, so it maintains its leadership position on the basis of merit, not history.
3

skiplaw

11/14/08 | Report as spam

RE: The Iceberg Awaiting The New York Times

This is a good example of a company that puts its
political philosophy ahead of everything that it prints
which renders its mission as an assembler of truth
meaningless. It has lost its way and subsequently
violated both its corporate charter as well as its business
plan. It really has no further reason to exist and would
probably do better converting the business into a 527 for
all liberal causes and be financed by Soros donations.
4

k2times

11/16/08 | Report as spam

RE: The Iceberg Awaiting The New York Times

Rather harsh assessment skiplaw, no? NYT has long been a punching bag for conservatives, yet as a long time reader of it as well as the Journal (for example) I frequently find that the sole differences with respect to ideology are to be found among their respective editorial sections. News is news, and the Gray Lady is a venerable institution and a critical aspect of a healthy American government. Thus, the fact that it will likely cease to exist in its current form and function sooner than we may have recently thought (I, like Mr. Weir, take no joy in affirming that I find this to be the most likely outcome) will be a blow to the fourth estate that I regretfully believe many observers have not yet fully considered.
5

hotweir

11/17/08 | Report as spam

RE: The Iceberg Awaiting The New York Times

I completely understand those who have been frustrated by what they consider the Times's liberal bias. But I don't see it myself, plus I don't think it is really at the heart of the newspaper's current problems. What I do agree with critics about is that the NYT has made some egregious editorial errors in recent years, which have undermined its journalistic cred. Here at Bnet, in any event, I do not really address the content, per se; rather, the business model and attending strategies. Whether you think the Tiems is biased or not is not the point -- how can they survive riding an outdated revenue model?