Tribune was toast the moment Sam Zell loaded it up with $13 billion of debt. That it may file for bankruptcy, therefore, comes as little surprise. (Read this early prognosis from Alan Mutter if you doubt that sane industry observers saw this coming).
More startling over the past year has been the collapse of the New York Times (NYT). 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.
We imagine that the New York Times’s cash situation is top of mind in its executive suites (we certainly hope it is, anyway). Specifically, we assume Janet Robinson and Arthur Sulzberger have a plan for dealing with the $400 million deadline. So could we maybe trouble some of the crack reporters in the New York Times newsroom to calls upstairs to figure out what it is?
(We will confess that we have occasionally wondered when the New York Times will begin covering its own situation. The potential bankruptcy or default of one of the world’s most famous newspapers is a big story, especially here in New York. If the paper doesn’t start covering this story soon, someone might accuse it of not being objective!)
UPDATE: No sooner had we written this than we saw that the NYT is planning to sell or mortgage its headquarters to raise $225 million. This is a smart move, one that will buy time. The New York Times reported the news.