1. Tribune Company going bust: there's a surprise.
I wonder what it's going to do to NYT Company stock and commercial paper, news of Tribune company probably going bust? (There was one of these little mini-rallies in the markets so not a good day to judge but they're still under $8.)
I wonder when we're going to read an article in either the WSJ or the NYT about what other big newspaper companies could go bust?
You read today's IHT and tell me this recession isn't going to go into 2010 at a minimum, if not 2011/12. How far will advertising opportunities online have improved by then, technology wise; how many people will have changed their reading habits? Don't think the end of a recession is the end of their problems.
I don't think the NYT is going to make it beyond 2012 unless either it goes public to private or comes up with at least one, ideally three game-changing ideas.
This below from PaidContent.org
Tribune Hires Bankruptcy Advisers; May File Ch. 11 This WeekBy Rafat Ali - Sun 07 Dec 2008 03:28 PM PST Tribune, the Sam Zell-owned newspaper chain, has hired bankruptcy advisers in an attempt to stave off potential bankruptcy filing, reports NYT, citing sources. It is using inv*stm*nt bank Lazard and the law firm Sidley Austin, to try and restructure its crippling debt and assess its options, the story says. WSJ says it could file for Chapter 11 bankruptcy protection as early as this week.... Last month, the company reported a Q3 loss of $124 million, compared with earnings of $84 million for the same period last year. Publishing advertising revenues slid 19 percent ($111 million), and as part of that, interactive revenues dropped 7 percent ($4 million). The company has about $12 billion in borrowings, and stayed ahead of the interest payments as a result of asset sales, but the economy and resulting ad decline continues to hit it hard. The company doesn’t have enough cash to pay $1 billion in interest payments this year, and also owes a $512 million debt payment in June. The bankruptcy possibility was raised back in June by S&P analyst Emile Courtney. For all the gory details on the Tribune saga, read our dedicated Tribune section. Update: Another story in the NYT has some more: Rating agencies say Tribune’s short-term problem is not making debt payments, but complying with a quarterly requirement that its main debt from its acquisition of the company not exceed nine times its EBITDA. A failure to comply by end of this month would mean Tribune had technically defaulted, even if it continued to make payments, and that sometimes can lead to bankruptcy. Chicago Tribune does its own story, and quotes a company spokesperson: “It’s an uncertain and difficult environment...We haven’t made any decision. We’re looking at all of our options.” Posted in: Companies, Media
2. Sorry, but that's my last word on the subject, and the end of this blog, or was going to be, until after posting my initial draft of this post, I saw later in the day news in the print edition of yesterday's IHT of the NYT taking out a mortgage on their HQ building in NY to pay the bills.
(This was not on http://www.iht.com/ yesterday morning but IS on today: now go to the article index at the bottom of the page for Tuesday and see that the story is tagged as a regular business story, not as a Technology and Media story which the Tribune bankruptcy story somewhow is; nor is David Carr's article In string of bad news, omens of a long recession . Go figure.)
(While we're on the subject of things that are in the IHT that are not online, if you want to get the best out of the IHT you have to read http://www.iht.com/ and the print edition because NOT everything that goes into the print edition is run on the website, and not everything that is run on the website goes into the print edition. I personally find that annoying - just as I found Roger Cohen's opinion piece being run, untagged as an opinion piece, on the front page of last Saturday's European edition, extracted from NYT Magazine, and not run on http://www.iht.com/ - so much for integration with NYT and so much for carefully separation of news and opinion.)
Times Co. to borrow against building
By Richard Pérez-Peña
Monday, December 8, 2008
The New York Times Company plans to borrow up to $225 million against its mid-Manhattan headquarters building, to ease a potential cash flow squeeze as the company grapples with tighter credit and shrinking profits.
The company has retained Cushman & Wakefield, the real estate firm, to act as its agent to secure financing, either in the form of a mortgage or a sale-leaseback arrangement, said James Follo, the Times Company's chief financial officer.
The Times Company owns 58 percent of the 52-story, 1.5 million-square-foot tower on Eighth Avenue, which was designed by the architect Renzo Piano, and completed last year. The developer Forest City Ratner owns the rest of the building. The Times Company's portion of the building is not currently mortgaged, and some investors have complained that the company has too much of its capital tied up in that real estate.
The company has two revolving lines of credit, each with a ceiling of $400 million, roughly the amount outstanding on the two combined. One of those lines is set to expire in May, and finding a replacement would be difficult given the economic climate and the company's worsening finances. Analysts have said for months that selling or borrowing against assets would be the company's best option for averting a cash flow problem next year.
Standard & Poor's recently lowered its credit rating on the Times Company below investment grade, and Moody's Investors Service has said it was considering a similar move. Times Company stock, which has lost more than half its value this year, closed on Friday at $7.64, down 30 cents. More Articles in Business » A version of this article appeared in print on December 8, 2008, on page B2 of the New York edition.
http://www.iht.com/articles/2008/12/08/business/08times.php
That Richard Perlez-Pena can write this press release with so little reporting on what it MEANS is unbelievable.
What it means is that they are truly in trouble.
Anyone know the Woolworths story in the UK?
Bought by an asset stripper, who sold off their excellent high street properties and then rented them back to Woolworths who have now gone bust - because they lost their way and couldn't find anymore finance and had nothing to borrow against as a last chance while they sorted themselves out because all their properties had been sold through a gross act of greed.
Unlike the NYT they didn't have the opportunity to fall back on a building, a building which the NYT VASTLY overpaid for and which contributed to the pile of debt the NYT currently has. (In contrast HSBC has just bought for about what the NYT's is borrowing their office HQ in London from the bank that owned it, turning a tidy profit because, naturally, in this market the Spanish bank they bought it from had paid way over the odds for the building in a boom market, just as the NYT did the same.)
The NYT HQ was, they say, Michael Golden's baby this, this temple to a lack of innovation.
If in doubt as what to do about really huge problems facing your business.....go into the property development business at the top of the market. Insane. (Reminds me of 90s Asia pre-crash when people like brewing companies were borrowing millions to finance their new great expansion plans: property for their new HQ instead of a state of the art brewery.)
So the NYT is hawking the family jewels to pay the bills. And no more comment than a straight report from their media guy.
Just wait for round 2 of this which will be the NYT selling their 58% stake in the building to Forest City Ratner (when Forest or whoever buys them out finds the liquidity in the market to borrow to buy and lease back to NYT).
3. And to make it nearly certain that this will be my last post on this blog about the NYT Company, because I don't want to spend my time watching a train crash in slow motion of an institution that I love (the IHT), guess what has happened to about the most innovative person at the NYT?
The woman in charge of http://www.nytimes.com/ - clearly the most innovative part of their business - has left to join NPR to run their digital operations. Which is what?
A not for profit news media organisation!!
So one of their most talented operative leaves to a not for profit!
And I've been blogging for ages now about how the NYT Co. should and could consider some sort of public to private move with either a not for profit model OR what I think more likely and better, a sort of Capitalism 2.0 model where investors are not expecting alpha returns nor big dividends.
I could link all the posts I've made about this but I can't be shagged.
Over at PaidContent.Org Lauren Rich Fine has had this BRILLIANT idea all by herself!!!! Shows how easy it would be for a humble blogger like me to get a job there as their research director.
By Lauren Rich Fine - Thu 04 Dec 2008 01:00 PM PST
If you want to watch news travel fast, make sure it’s about the newspaper industry. Fitch, a credit-rating service, has predicted that some daily newspapers will go out of business as their parent companies default on their debt and are forced to liquidate. But this prediction is extreme: There are interim steps that papers can take to stave off the cash drain.
More after the jump…
Even if Fitch is right, what if instead of liquidating the assets, the papers were reclassified and/or contributed to a not-for-profit? Presumably, someone could benefit from the tax write-off. Sam Zell, owner of Tribune, sold Newsday earlier this year; perhaps there was a gain he wants to offset. He could contribute the Baltimore Sun to a newly established not-for-profit. There was a group in Baltimore that wanted to buy the paper when Tribune was originally for sale--that group could serve as management for the paper and oversee the not-for-profit.
While converting to a not-for-profit won’t improve the financials, it would allow the paper to ask for philanthropic support, not unlike public radio or television stations. This isn’t meant to be a solution to the industry woes but instead a thought that came about after reading that McClatchy (NYSE: MNI) was collaborating with the Christian Science Monitor, a not-for-profit, in some of their overseas news bureaus. I hadn’t realized there were any not-for-profit papers. I’m also encouraged by the establishment of ProPublica, a not-for-profit investigative-journalism organization led by former Wall Street Journal managing editor Paul Steiger.
Recently, I had an on-air personality from one of the local PBS radio stations present to my media-management class at Kent State University. Listening to him discuss the support for the station and the support for National Public Radio, I have to believe there’s enough support out there for a newspaper. If the goal is to save some of these daily newspapers, perhaps this idea could save a few.
Ironically, just after we learn the NYT web lady has jumped to NPR (you can find her resign. memo on Gawker and the Denise Warren memo from the NYT btw) Bill is on NPR worried amongst other things about being tarred with the same brush as other newspapers (which presumably means the others are going bust and his won't):
Opinion: NYT' executive editor - shortage of "quality journalism"
Posted by Katherine Thompson on December 8, 2008 at 10:53 AM
Bill Keller, the New York Times' executive editor, told NPR's Steve Inskeep that, "there's a real shortage of the kind of information that I would call quality journalism."In a comment about the financial health of the newspaper industry and the rise of blogs, "Good journalism does not come cheap. And, therefore, you're not going to find a lot of blogs or nonprofit Web sites that are going to build a Baghdad bureau."He also said that the venerated newspaper is, "Competing for audience with different people." Keller went on to say the Times sometimes gets "tarred with the condition of the industry that we're in."Source: NPR
Quality journalism BILL ME OLD MUCKER these days means not getting things right AFTER THEY HAPPEN but getting things right and LETTING US KNOW BEFORE THEY HAPPEN.
And that is what blogs do SO MUCH BETTER than you and your lot. That's what you can't grasp - that everything has changed and we are living in a conditional information age. Your journalists look BACK - but Bill, sorry to shatter a lifetime's training and experience, but the time line is now FORWARD.
RE-EFFING-TOOL.
The subprime meltdown? HOOCOODANODE?! Not you, but quite a lot of bloggers knew it damn straight and were telling their readers long ago.
As is evident from the fact that there is NO definition from you to your people at the NYT as to what a blog should be and how it should distinguish itself from their regular Newspaper 1.0 reporting, we know you're in trouble. (Maybe Denise can write that memo - see below.)
Here's a freebie: send out a memo telling all NYT bloggers to write conditional information - what might happen, today, tomorrow, next month. Leave yesterday to yesterday's industry - your newspaper and traditional news site.
4. But the icing on the cake as to true depths of the problems facing the NYT Company is who they have replaced her with! You'd think in these difficult media times you could find some real talent, someone with an outstanding track record in digital publishing.
No, apparently not.
Instead they have turned to their advertising sales VP who, apart from working out how to sell a few ads on the site (not hard) has basically NO experience in digital publishing!!! Is there NO ONE at the NYT Company even who is better qualified or innovative than her (Yasmin N. for example or the IHT's Tech editor Shannon)?
Denise Warren is however a loyal NYT lifer and widely loved and respected by IHT and NYT senior ad sales operatives (probably, umm.)
So you're digital talent, can smell a sinking ship when you're on one and you know the stock options are worth very little. What do you do?
Run for the dry ground of NPR - smart woman; NPR know how to recruit first class talent in a sinking market - smart organisation; and the NYT Company which has forever being telling people that the future of the NYT is digital is only able to muster up an ad sales person to be in charge!! It's beyond belief.
What's also beyond belief is all their talk of personalised NYT.com and aggregated news, adding Twitter etc etc. Are analysts (probably yes) supposed to believe this will drive up revenues on nytimes.com and get readership and CPMs up to replace the sinking into oblivion demographics and revenue of the gray mother? It's laughable.
During this recession which could happily last two full financial years, advertising is not only going to shrink but migrate to the Internet, a place during which those people still in business are going to get their advertising technology better and better. When the recession ends, even if the NYT Company is still floating as a public company, that display advertising ain't coming back, the readership will look only worse.
Tipping points I've blogged about - readers, advertisers belief and now we've reached the final ones: mortgaging the house to keep the family business afloat, talent realising what's going to happen, organisation unable to react intelligently.
No, this is my last post unless about all this. (2008 was my year for blogging and I've learnt all I can about it, or at least, all I think I need to learn which probably isn't nearly enough.) I've had an absolute gutful and I need to stop before I come abusive through frustration and regret something I write!
I'll come back in December 2012 and see if I'm right.
I'll come back sooner if a newspaper company contacts me asking for an idea or two. (And yes, I do have some, and no, I haven't put them on this blog. Emails from private equity companies and investors in NYT Company stock will be answered!! As to lenders to NYT Co. I haven't checked your spreads recently but I'd be making sure you've got your credit default gobbleygook paper lined up. As to Moody's, given the slagging off the NYT gave you yesterday, I'd just get on and join S&P: junk paper- nothing to be gained by being nice any more is there?)
P.S This article by David Carr at the NYT would be funny in his lack of awareness of the future of his industry and his employer, if the underlying realities for so many people working in newspapers weren't so breathtakingly awful. To begin with you think, oh, that's good for him, he's got it - then you read on and realise he really hasn't at all. An article of infinite ironies.
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