The New York Times Company (NYT) has taken positive steps to address its cash needs, but it still has more work to do. Unless/until it sells assets or cuts enough costs to become cash-flow positive, it will be dependent on the kindness of strangers for the next few years (and beyond). If the economy and NYTCo business continue to deteriorate, these strangers will likely become less and less willing to extend kindness on terms the company finds reasonable.
With the patient help of the folks at the NYT, we’ve put together a schedule of how much cash the NYTCo needs to come up with and when. Barring asset sales or further deterioration of the business, here’s the bottom line for the next three years.
- 2009: $214 million of cash needed
- 2010: $546 million of cash needed
- 2011: $500 million of cash needed
(For the purposes of this analysis, we are assuming that the company uses the $400 million line of credit due in 2011 to fully pay down the $400 million line due five months from now, in May 2009. The company has already drawn down a portion of the second line. The company has not proofed these numbers, which contain some of our own estimates. Also, the company’s liabilities extend well beyond 2011, so it will need additional cash in later years).
If current revenue and expense trends continue, the business itself will soon stop generating cash and start consuming it. Unless the company significantly cuts costs or sells assets, therefore, NYTCo will likely need more cash than we have outlined here.
In a press release this morning, the company said it was looking at various options for raising this cash, including revolving loan agreements and equity or debt offerings. Given the trends in the business and the company’s financial position, we continue to believe that these sources of financing will be very expensive. Perhaps it could consider becoming a bank holding company.
Details below and in this online spreadsheet.