The Bleeding Continues at The NY Times

(MoneyWatch) 

First thing I read this morning was the 8-K filed by The New York Times.

Yikes! The company reported $61.6 million operating loss in Q-1, compared to a $6.2 million operating profit a year earlier. If you set aside all the adjustments like depreciation, amortization, etc., and severance costs (of $25 million!), the company reported an operating profit for the quarter of $16.5 million, down roughly 79 percent from Q-1 '08.

"Like many companies across America and in our industry, the challenges we face intensified in the first quarter," said Janet L. Robinson, president and CEO. "The effect of the global economic downturn, coupled with the secular changes affecting newspapers, resulted in significant declines in revenues. Advertisers pulled back on print placements in all categories ?€" national, retail and especially classified. Digital revenues also declined, although modestly, as a result of the weakening economy."

The bad news is hardly over for The Times. "At this time, and it is early in the quarter, we believe the rate of decline in ad revenues in the second quarter will be similar to that of the first," Robinson stated.

The company did report that it has renegotiated its very heavy debt obligations, so that the bulk of it now will not fall due until 2015, which should allow time for further cost reductions and perhaps exploration of new business models. The company says it plans to trim $330 million in operating costs in 2009, so it would be only prudent to watch for more waves of layoffs, sooner than later.

At the end of Q-1, The Times carried about $1.3 billion in debt and held cash reserves of $34 million, plus $260 million in escrow to pay down obligations due this year.

As of mid-day, shares of stock in the company had shed roughly 13 percent, down from $5.85 at close of trading yesterday to a tad above five bucks today.

Meanwhile, another big newspaper operator is in even deeper trouble. The McClatchy Co. said that the New York Stock Exchange has warned that it faces delisting, according to its filing with the SEC. McClatchy's stock is currently trading at just 55 cents per share.