New York Times Tries to Ease 'Cash Flow Squeeze'

The New York Times Company has a $400 million debt payment due in five months, and management has not yet explained how it plans to meet this. The company is nearly out of cash, its operations are now burning cash, and its attempts to sell assets have, so far, been unsuccessful.

As we noted a month ago, the New York Times Company now has a negative current net worth: Over the next year, it will be required to shell out more than twice as much cash as it has on hand. The New York Times' long-term assets and liabilitities, meanwhile, are roughly equal: The value of the Red Sox stake and corporate headquarters approximately offset the company's long-term debt, pension plan, and other liabilities (at least according to their carrying values.)

The New York Times has an untapped $400 million credit line that could be used to meet its obligations over the next year, but we would be surprised if its banks were not looking for some way to renege on this. The company's most easily saleable asset is probably About.com, which might fetch up to $500 million (a year ago, it would have fetched a lot more--just like everything else NYTCo owns). The sale of this asset would buy the company some breathing room.

The New York Times Company plans to borrow up to $225 million against its mid-Manhattan headquarters building, to ease a potential cash flow squeeze as the company grapples with tighter credit and shrinking profits.