Wednesday, April 22, 2009

New York Times nearing bankruptcy

They need some real business leadership, and they need it now. The Grey Lady is going down for the count thanks to the internet, craigslist and the recession. Will there be a bailout?

BusinessInsider: As expected, the New York Times's business operations began burning cash this quarter (until now, they had remained cash-flow positive). The company has recently made several wise moves that have postponed the date at which it will run out of cash. But the situation is still critical.

At the current rate of cash consumption, assuming no one-time expenses (highly unlikely), we estimate that the company will max out its current borrowing capacity in 4 quarters. At that point, it will owe about $1.2 billion in debt. This estimate does not include any payments on the company's $600+ million pension and benefit obligation, of which $181 million is due next year.

The bottom line: The New York Times Company remains on the brink of insolvency. There are also at least $1.5 billion of claims ahead of common shareholders of the company's assets should it file for bankruptcy. ...
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6 comments:

NickJenkins said...

What happens to people with subscriptions if the NYT stops publishing? They lose the money? If that's the case, or if people at least perceive it to be the case, it could lead to a decrease in subscriptions/circulation/ad revenue, making the NYT's problems spiral further. I just read a book called "The Power of Small" ( http://tinyurl.com/cmdxg6 ), which talks about how small things can have major consequences. The Times needs these small things to turn in its favor.

10:36 PM
anon said...

Now the inconsequential who would matter will have to look elsewhere for vicarious importance.

That is, it will be more difficult to fool the ordinary into believing they are participating.

11:06 PM
Bee said...

Brave new world. See also my related post The Price we don't pay.

3:25 AM
Luke Lea said...

Maybe after bankruptcy the Times can re-emerge as a smaller paper aimed at a smarter, better educated-audience centered in NYC. In other words, a paper more like it used to be.

9:16 PM
HiPlainsDrifter said...

I bought 50 shares of nyt at around 14 and have watched the value evaporate.
But Harbinger put in a lot more money than I did.
The New Yorker this week had a story on the Times and its looming bankruptcy, which was partly attributed to investment bankers urging the Times to borrow money and buy back shares. The article said the newspaper wishes it had held on to its money. I wish it had held onto its tv stations too. I think investment bankers have damaged the Times as much as changing readership. Look at what investment bankers have done to the rest of the economy, starting with the relentless firing of employees so wages can be used to pay debt for acquisition by lelvleralged buyers. Somehow the more than century old Times leveraged itself too.
Its one thing to report the news and another to learn a lesson from it.

12:26 AM
gillian said...

Maybe the NYT will look into other strategies like merging. It will save the company and the people working there. Great post. stock market

12:43 AM

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