New York Times Enters Talks with Lenders
December 9, 2008 - 3:02 PMNew York Times Co. said Tuesday it is in talks with lenders about debt payments coming due in the next two years, as the newspaper publisher struggles to weather continued declines in advertising sales.
The New York-based company says it will borrow up to $225 million against the value of its Manhattan headquarters to help repay debt due in May, and is evaluating assets for potential sale as it looks to boost liquidity.
"There is no doubt that 2009 will be among the most challenging years we have faced and more steps will be needed," New York Times Chief Executive Janet L. Robinson said Tuesday ahead of a media conference presentation.
The newspaper industry as a whole is facing hefty debt and declining ad sales as more readers flock to the Internet. On Monday, fellow media company Tribune Co. filed for bankruptcy to cope with a crushing $13 billion in debt.
The Times has reported that total revenue dropped 9.4 percent in October compared with the same month a year ago. On Tuesday, Robinson said advertising trends declined further in November, particularly in the entertainment, real estate and automotive advertising categories.
In addition to its flagship newspaper, The New York Times Co. also owns The Boston Globe, the International Herald Tribune and several regional newspapers.
Last month, the company slashed its quarterly dividend by 74 percent. The move is expected to save $98 million a year but will curtail the income of its controlling shareholders, the Sulzberger family, who together own about 19 percent of the company.
Chief Financial Officer James Follo said the company does not plan to fully replace its $400 million credit facility, which expires next year. He said New York Times is also looking at other financing alternatives, such as revolvers, public offerings or private placements to help meet its obligations.
Asset sales are up for discussion, but Follo acknowledged that may be difficult in the current market and credit environment.
Analysts say rival Tribune - which owns the Los Angeles Times, Chicago Tribune, Baltimore Sun and other dailies - will almost certainly be forced to sell some of its major holdings, which could prove very difficult because of the bad economy and the poor outlook for newspapers.
Also Tuesday, the New York Times also updated its expense guidance. The company now expects depreciation and amortization costs will range between $140 million and $145 million in 2008 and between $135 million and $145 million in 2009.
The company forecasts roughly $140 million in capital expenditures this year, which includes about $22 million for its new headquarters. For 2009, the company expects capital spending will fall to about $80 million.
In afternoon trading, New York Times shares lost 32 cents, or 4.1 percent, to $7.53. The stock has lost 64 percent of its value since trading at a 52-week high of $21.14 in April.
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