Henry Blodget and The New York Times (NYT)

Dec 7th, 2008 | Filed under: Industry, Investing

Whether you own stock in the New York Times or another newspaper company or not, you owe it to yourself to read the timely analysis and commentary Henry Blodget at Silicon Alley Insider has been doing on the venerable media property over the past 6 weeks. Much like Michael Lewis (Liar’s Poker, New New Thing, Moneyball), one of my favorite modern non-fiction writers, Henry has that unique ability to blend industry analysis, financial acumen, with pop-culture swagger and, yes, sarcasm.

He has been ahead of the curve on the financial challenges of the NYT, whose debt obligations, poor operating environment and subsequent lack of cash, have put the company on the brink of a crisis without further capital. As a die-hard Sox fan, I hope and expect this to mean they will be forced to sell their stake in The Nation. I’m buying.

The choice quote:

Not sure how it came to this so fast, but the New York Times (NYT) is approaching the point where it will have to manage its business primarily to conserve cash and avoid defaulting on its debt. This situation will only get worse as advertising revenue continues to fall, and it will be very serious by early next year.

The company has only $46 million of cash. It appears to be burning more than it is taking in–and plugging the hole with debt. Specifically, it is funding operations by rolling over short-term loans–the kind that banks worldwide are cancelling or making prohibitively expensive to save their own skins

I suggest starting at the beginning and then reading the more recent posts to get up to speed on the situation, here, here, and here.

Update: No sooner had I written this and Henry has an update on the situation this morning. It is getting a mortgage for their building!