New York Times Company (NYT)

As a result of increasing competition from other media sources and websites like Google (GOOG), the New York Times Company has seen a steady decline in its advertising revenue both in print and online. In 2007, for example, NYT's print ad revenue declined 8.1% as many advertisers gravitated towards advertising online. Although NYT's online business segments have helped the company cope with this secular shift, NYT's online ad revenue declined by 3.5% during Q4 2008 primarily because of weaker ad spending amidst the economic crisis. The New York Times must adapt to this secular shift towards online advertising as this drastically hurts their core print publications businesses- until the company finds a way to adapt its revenues will continue to decline.

Continuing to reel from the shift of advertising to the internet, the New York Times Co. (NYT) reported a first-quarter loss of $74.5 million, or 52 cents a share, MarketWatch reported. Excluding special items, the company reported a loss of 34 cents a share as first-quarter revenue tumbled 19% to $609 million. The Times, like many newspapers and magazines, is having a difficult time coping with an advertising downturn.

The company receieved a $250 million loan from investor Carlos Helu to refinance some of its current debt. Furthermore, the company has announced it will be slashing jobs- in February 2009 NYT's About.com cut 9.5% of its jobs as part of an effort to cut costs. Lastly, NYT is also looking to sell part of its headquarters for $225 million in efforts to earn more money to pay off its debts. This firesale signals that the worst may still not be over for NYT as its still scrambling to remain in the black.

The New York Times Co. (NYT) is cutting several weekly sections and will reduce freelance spending to save millions of dollars in annual costs, according to a memo obtained by Reuters. The paper is cutting pay for non-unionized employees at The Times and other papers and is seeking similar concessions from unionized employees. It also has threatened to shutter The Boston Globe if it cannot find ways to cut millions of dollars in costs at the money-losing paper.

The New York Times bought the Boston Globe for $1.1 billion in 1993 dollars. Now, as it is trying to sell it, the highest bid it has received has been valued at $94 million - $35 million plus the assumption of $59 million in pension liabilities - by private equity firm Platinum Equity. According to calculations done by Harvard University's Neiman Journalism Lab, assuming a worst-case scenario of the Globe's revenues declining 12% annually and the cost of capital coming at 12% per year, the Globe would have to produce a small profit of just less than 8% per year to beat the Platinum Equity bid.

Unless NYT can find a better bidder, its going to need to keep the Boston Globe or face a $1 billion loss in the sale.

The New York Times already has over $1 billion in debt, with only $46 million of cash reserves as of October 2008 and a difficulty of tapping into new captial markets because its newly reduced debt to junk status. If the company does not find some way to borrow more money, NYT could default on about $400 million of debt due in May 2009. Because of the dire situation NYT faces, it appears that the company's stock isn't going back up anytime soon.

In Q3 2008, the company spent $63 million on newsprint and an additional $148 million on wages and benefits. Overall, the company believes it costs about $644 million per year to deliver its namesake paper. To put things in perspective, it would cost NYT about $300 million to send all Kindles (retail price: $359) to all of its 830,000 readers that have subscribed for the last two years. These high operating costs minimize the company's wiggle room in coping with ad sales as rising newsprint prices will further push the company into financial insolvency.