Cashflow trouble for NYT?

Bad news in two parts ...

http://www.alleyinsider.com/2008/10/new-york-times-nyt-running-on-fumes

And the company has indicated that it may have to default on its debt:

NYT lost almost 11 percent of its per-share value Friday, closing at $9.55 per.

 

And McCain campaign uberdoucheflack Michael Goldfarb couldn't resist shouting those facts from the rooftops yesterday.

I'm sure the Times will last longer than 10 days, which is how long you have left in your job, fuckstick.

 

The day the Times folds, is the day that all newspapers fold. Until then.....

 

Whatever. Facts is facts, and right now the facts is, as I understand, that the only real tangible value the company has is its Manhattan real estate. That's a genuine fustercluck, seems to me.

 

Here's the same blogger (alleyinsider) giving his seven-step plan for how to fix the Times. It's painful to think about, but it seems to make sense.

1. Sell the stake in the building. The New York Times recently moved into a spectacular new Times Square headquarters, which it co-owns with developer Forest City Ratner. At the peak, the NYT's stake in the building might have fetched $1 billion, or $750 million after-tax. Now, the company might be able to net $500-$600 million for the stake. The company needs to sell the building immediately. (It can rent it back, so staffers won't have to move. It just needs the capital. Now.)

2. Try to sell the Boston Globe and Red Sox stake. Probably a few hundred million of value left in the Globe, at least for a while. Newspaper assets are hard to sell these days, but the Globe is a famous, valuable franchise. It might fetch $300-$400 million. (Jack Welch approached NYT about buying the Globe in October 2006. He is one of the few people who could raise the money.) Lehman recently estimated that the 17% stake in the Sox is worth about $150 million.

3. Eliminate the dividend. NYT Co. currently pays out about $130 million of cash a year. It can't afford to do this, especially prior to selling assets. The company currently has only $46 million of cash, is burning cash, and is relying on short-term credit to finance itself. This situation will only get worse as advertising continues to fall. Until it secures more liquidity by selling assets, the dividend has to go. (Yes, this might trigger screams of pain from the Sulzberger clan, who reportedly live off the dividend. But the alternative might be defaulting on the debt and/or severely damaging the news franchise. And those options would wipe them out.).

4. Shrink, sell, and/or shut down the regional papers, which are bleeding cash. This will require negotiating with the unions, which likely have veto over personnel cuts. Unfortunately, for the sake of the company, it's time to play S.I. Newhouse hardball: Explain to the unions that the choice is cuts or closure. (In September, revenue at this division was off by 15% to $89 million which is faster than the rate of decline earlier in the year.)

5. Reduce the size of the New York Times newsroom by 30%. This will make the paper comfortably profitable again (for a while). The improved cash flow, combined with the increased liquidity from the asset sales, will allow the company to vastly reduce its debt load, which will reduce the possibility of default (and equity value destruction) in the future. The particular cuts can be made by analyzing the traffic to NYTimes.com and see what/who is being read and what/who isn't. Chances are, 20% of the content and writers produce 80% of the value.

6. Significantly reduce the $1.1 billion of debt--and, possibly, pay it off completely. This will put the company on far sounder financial footing, which will make it easier to keep control and keep creditors at bay. (NYT could sell the Globe, any profitable regional papers, and perhaps its joint ventures in two newsprint and paper mills.)

7. Use the breathing room to put a long-term print-to-online transition plan in place. In all likelihood, another 40% of the newsroom will eventually have to go. Figure out who, how, and when. Start making the digital operations the centerpiece of the company, and rehire the best writers and editors into New York Times Digital, buying them out of their expensive New York Times pension and union contracts (It's a new world, and unfortunately benefits and pay scales need to be far more closely tied to performance). Develop a long-term plan to manage the decline of the print business, while continuing to milk it as long as possible. Then sit back and watch the New York Times Digital stock fly.

 

Oh my fucking lord, that's the dumbest thing I've ever heard. How does whacking 30 percent of your newsroom ensure profitability? The 70 percent that remains will have to (say it with me) "DO MORE WITH LESS!" When has that idea ever worked? All it does is start a downward spiral that chases away readers. And those readers, once gone, aren't likely to return.

Also, like it or not (if you're of a certain political view), the Times is a standard-bearer for the entire newspaper industry. If it gives up and starts to slash wholesale, it will send shockwaves throughout the industry. If any paper can pull itself out of financial hell, it's the Times. Hopefully, it at least tries before pulling a Singleton/JRC/Media General/Lee/Gannett.

 

The pontificating NYT has long been one of my least favorite newspapers. Can't say it would be missed in this quarter.

 

That would be the Moron Quarter, I'm guessing. I always thought it was one of the nicer parts of Duncetown. Shame about the schools, though.

 

Some folks have yet to get the memo that the righty wingnut whackjob ghetto at sj. is already overcrowded.

 

The idea that digital versions of newspapers require fewer reporters and editors than print ones is one of those Wall Street delusions like mortgage-backed securities. It takes more.
PS: Rest assured layoffs at the Times will spark a hiring binge of the layoffees at the Wall Street Journal. The Times can't shrink for cash flow. For the first time since World War II, it has a real competitor on its turf.
It could sure sell the Globe-for maybe $125 million. The Globe is the part of the NYT corporate body that's bleeding the fastest.

 

You folks in here spewing all your profanity about right-wingers who criticize the NYT are wasting your breath. It's like blaming Ken Starr for Bill Clinton's inability to keep his pants on.

While all newspaper products are suffering and falling, obviously, the NYT's basic product and brand still is good enough that had it even tried to maintain a semblance of evenhandeness in its news reporting, its fall would have been much less than it has been and they wouldn't be in the current situation of needing a whole bunch of tourniquets.

But go ahead and spew your venom at "right wing nut jobs" if it makes you feel better.

 

This guy's a Univac robot, not a human. He's talking about cutting the staff by more than 50 percent over time. And how are you gonna define which stories bring "value" ???