New York Times (NYT) management is finally taking the steps necessary to try to save the company. Several years too late? Yes. But better late than never.
First, the company announced plans to sell its headquarters, which should bring in $250 million. Then it began actively shopping the Boston Globe and Red Sox stake, which might bring in another $250 million (if it can find anyone to buy them). Now it has filed a shelf registration with the SEC to permit it to issue a variety of different securities when it feels like it.
Now, needless to say, is not the optimal time for NYTCo to be raising cash. Seven months ago, the stock was $20. Three months ago, the stock was $15. Now it’s just over $6.
Similarly, on the debt side, a year ago, the New York Times still seemed like a healthy company, with strong cash flows and a thriving Internet business. In those days, these characteristics would have set debt buyers mouths’ watering. Not anymore.
Any cash the New York Times raises in the current environment will be outrageously expensive. It’s also hard to imagine that the company will attract much interest from equity investors until it can articulate a plan for long-term survival that involves something other than selling off non-core assets (eventually, it will run out of these).
In our opinion, this plan will need to involve a major restructuring, including a reduction in the size of the company’s editorial operation by at least 40% (and, eventually, more, as the print business wanes). Based on NYTCo’s response to the crisis to date, however, we suspect management will continue to hope for a miracle.
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