New York Times: Revenue Plummets, Debt Is Junk

Is the New York Times (NYT) running on fumes, as Henry Blodget says at Silicon Alley Insider? I would argue that it’s probably even worse than that. It’s not just running out of gas — it’s only firing on one or two cylinders, the points and plugs are shot and the coolant system is about to blow.

In its most recent results, the newspaper company reported that its cash flow (earnings before interest, taxes, etc.) fell by more than 50 percent, advertising revenues collapsed by double digits, and its debt has just been rated “below investment grade” — or what is known in the investment business as “junk” — by the Standard & Poor’s bond-rating agency. (Conference Call Transcript)

Ad revenues for the company’s traditional media operations, including the New York Times newspaper, fell by 14 percent in September. Ad revenues for the online operations, including About.com, climbed by 14.5 per cent — but those operations still only account for 12 percent of the business. The bottom line: Online ad revenues in the year to date climbed by about $10-million to $79-million, but ad revenues for the company’s traditional businesses fell by about $200-million to $1.2-billion. Even if online ad revenues were to increase ten-fold, it still wouldn’t make a dent in those losses. Classified sales alone were down by 25 per cent.

In just the last six months, the company’s stock price has fallen by 50 per cent, to a recent close of about $10, making the New York Times Co. worth $1.5-billion instead of $3-billion. In 2004, the company was worth more than $6.5-billion. In other words, in the past five years the Times has lost over 75 per cent of its value. The ironic thing, of course, is that the newspaper’s website and web operations have become more and more successful, with traffic exploding ever since it removed the pay wall that used to enclose its columnists and other features.

According to Nielsen Online, the paper had 20 million unique visitors in September, an increase of about 37 per cent over the same period last year. When Boston.com and About.com are included, it had about 50 million unique visitors, which makes it one of the largest Web media properties around. But no matter how quickly it grows, it’s still not enough to stem the relentless tide of red ink coming from the newspaper side.

Disclosure: None

Comments

[John Pseudonym:]

Craigslists...

It's killing ebay too. Years back I was an ebay addict; now I rarely visit let alone buy anything.

Totally hate ebay's new system, that Best Match search is so annoying! When I do find what I'm looking for (if I find it's for sale) the price is crazy!

Selection at ebay also sucks...

Last week is was in the market for a tube TV for the kids. I go to ebay and search local as I don't want to pay shipping on a 30" TV.

eBay results: ZERO!

Craiglists: about 10 results and I managed to net a 36" tube TV in perfect working shape for $20!

Now you know why ebay and NYT are dying! Sell that worthless stock!

2008 Oct 24 10:02 AM

[looking:]

The New York Times is a radical leftist propaganda rag that deserves everything it's getting. The world will be a better place when it finally goes belly up.

2008 Oct 24 01:09 PM

[ImHappynBP:]

As my stocks go down the only cheerful note is . . . to watch the NYT drop even further is value.

2008 Oct 25 10:59 AM