Are Newspapers Going To Ask For Bailouts Next?

12/08/2008 06:31:00 PM

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As more and more companies cut their marketing budgets because of the economy, more and more companies are choosing to cut their advertising costs, which includes TV stations, magazines, and newspapers.  More and more people who have to watch their budget choose to cut out the newspaper as an “luxury” expense.  And in the digital age, more and more readers are turning to the Internet to read up on the news, rather than pay for a newspaper.  Why pay for something you can get free?

Also with less and less jobs available, thus the classified for employment also go down.  I know my paper’s employment section has gone from about 12-15 pages a year ago, to 4-6 pages on Sunday.


The New York Times, the third-largest U.S. newspaper, is facing a $400 million debt repayment in May and may borrow as much as $225 million against its Manhattan headquarters although it only owns 58% of the building.

The NYT, which finished the third quarter with $46 million in cash and equivalents, must refinance or repay a $400 million credit line that expires in May.  The company has about $366.3 million remaining under a second credit agreement that becomes payable in June 2011.

Last month, the NYT said October ad revenue at its newspapers fell 17.2% and classified sales dropped nearly 35%.

In the third quarter, NYT’s total advertising revenue dropped 14% and classified sales dropped 29%.

What the NYT Has (Short Term)

  ■  $46 million in cash
  ■  $366 million owned to it by advertisers

What the NYT Owes (Short Term)

  ■  $398 million of short-term debt due in May
  ■  $161 million of accounts payable (Newsprint, travel, etc.)
  ■  $100 million of payroll 
  ■  $159 million of other expenses
  ■  $50 million owned on long-term debt and rent

Grand total:  $865 million

Short Term Bottom line:  The NYT owes $453 million more than it has, thus it has a negative net wroth in the hundreds of millions.

What the NYT Has (Long Term)

  ■  $1.355 billion of buildings, real-estate, printing presses, trucks, etc.
  ■  $146 million of investments in joint ventures (Red Sox, etc.)

Total:  $1.501 billion

What the NYT Owes (Long Term)

  ■  $673 million of long-term debt
  ■  $7 million of long-term rent
  ■  $284 million of pension benefits
  ■  $214 million of retiree healthcare and other benefits
  ■  $290 million of other liabilities

Total:  $1.468 billion

Bottom Line:  The NYT has only about $33 million more than it owes.


The publisher of the Chicago Tribune and the Los Angeles Times declared bankruptcy on Monday.  Tribune Co., which owns eight major daily newspapers and several television stations, filed for Chapter 11 bankruptcy protection after collapsing under a heavy debt load just a year after real estate mogul Sam Zell took it private.  It too is suffering from declining advertising revenue and circulation and maybe just bad business.

A year ago Zell loaded up the privately held publisher with about $8 billion in additional debt when he took the company private in a transaction largely financed by company contributions to an employee stock option plan.

As it sits, Tribune Co. had about $7.6 billion in assets and $12.97 billion in debt as of December 8, according to its bankruptcy filing.

The filing however, does not include Tribune’s Chicago Cubs Major League Baseball team or its ballpark, Wrigley Field – both of which Zell has struggled to sell.

Tribune Co. has said its unsecured creditors include J.P. Morgan Chase & Co’s JPMorgan Chase Bank with an $8.57 billion claim under a senior faculty, and Merrill Lynch & Co Inc’s Merrill Lynch Capital Corp with a $1.6 billion claim under a bridge loan facility.

Tribune Co. wholly owns “”, and partially owns CareerBuilder and Topix.  They are also owners of the Chicago Cubs and Wrigley Field, Tribune Media Services, Brass Ring, Zap2it, Chicago Magazine, Channel Guide Magazine, and partial owners of Classified Ventures, LLC.

The newspapers that Tribune Co owns are:  AM New York, Los Angeles Times, Chicago Tribune, RedEye (Chicago), Baltimore Sun, South Florida Sun-Sentinel, Orlando Sentinel, Hartford Courant (CT), Morning Call (Allentown, PA), Daily Press (Newport News, VA), Hoy (Chicago, Los Angeles), and El Sentinel (Orlando, South Florida).

In addition to owning the WGN-720 radio station, Tribune Co. also has assets in TV shows such as Andromeda, Mutant X, BeastMaster, Family Feud, South Park, Soul Train, Candid Camera, Ron Hazleton:  House Calls, Pet Keeping, City Guys, and Earth:  Final Conflict.

Tribune Co, owns 23 television stations, which are expected to be hit by the typical advertising declines that follow major elections and also owns Chicagoland’s Television, better known as CLTV, a 24-hour cable news station based in Oak Brook, IL.

The stations that Tribune Co owns are:

New York City WPIX 11/33 CW
Los Angeles KTLA 5/31 CW
Chicago WGN 9/19 CW
Philadelphia WPHL 17/54 MyNetworkTV
Dallas-Fort Worth KDAF 33/32 CW
Washington DC WDCW 50/51 CW
Houston KIAH 39/38 CW
Tacoma-Seattle KCPQ 13/18 Fox
Tacoma-Seattle KMYQ 22/25 MyNetworkTV
Miami-Ft. Lauderdale WSFL 39/19 CW
Denver KWGN 2/34 CW
Sacramento - Stockton - Modesto KTXL 40/55 Fox
St. Louis KPLR 11/26 CW
Salem – Portland, OR KRCW 32/33 CW
Indianapolis WXIN 59/45 Fox
Bloomington, IN WTTV 4/48 CW
Kokomo, IN WTTK 26/54 CW
San Diego KSWB 69/19 Fox
Hartford – New Haven, CT WTIC 61/31 Fox
Waterbury, CT WTXX 20/12 CW
Grand Rapids – Battle Creek – Kalamazoo, MI WXMI 17/19 Fox
York – Harrisburg – Lancaster – Lebanon, PA WPMT 43/47 Fox
New Orleans WGNO 26/15 ABC
New Orleans WNOL 38/40 CW


Media reports say McClatchy Co has approached potential buyers about a sale of the Miami Herald; The Minneapolis Star-Tribune is restructuring while its owner, private equity firm Avista Capital Partners, has skipped debt payments.


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