The New York Times (NYT) had an OK quarter, all things considered.
The company hasn’t yet released a balance sheet or cash flow statement, but it appears to have generated about $40 million of cash from operations (EBITDA less CAPEX less TAX less INTEREST). It has also finally acknowledged its cash crisis and taken steps to alleviate it. All this is good news. But Q4 is the strongest quarter of the year, and barring major cost cuts, this will likely be the last quarter that the company’s operations are cash-flow positive. And the company only has so many assets it can sell.
Importantly, NYTCo also noted that its pension plan is now underfunded to the tune of $625 million. Unless the stock market recovers or the government changes its pension regulations, this obligation represents yet another claim on the company’s assets and future cash flows ahead of that of common shareholders.
Including the pension obligation, the company has cash obligations of about $2 billion coming due over the next 7 years (including the $250 million loan from Carlos Slim). The sale of the Red Sox stake ($200 million?) and corporate headquarters ($200 million?) will help reduce this. But that will still leave more than $1.5 billion of cash obligations for a company that will likely begin consuming cash this quarter and beyond.
The bottom line: The New York Times still needs to develop a plan for long-term survival, one that will probably involve major restructuring. The current course–cutting costs gradually and hoping the economy will recover–won’t do it.
Our Plan To Fix The New York Times (NYT)