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The New York Times Company (NYT) will mortgage its building in the hope of getting as much as $225 million to help it through a cash crunch.

According to The New York Times, "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."

A look at the NYT 10-Q shows that the firm had long-term debt of $673 million and $398 million drawn on revolving credit facilities. NYT had only $46 million in cash on September 30. Backing out impairment of assets, the company would have made about $10 million on $687 million in revenue. With the industry losing about 15% of its revenue year-over-year, NYT is likely to move to an operating loss next year.

The mortgaging of the building is a mistake, although it may be too late for the Times to have any other alternatives. The company has insisted on operating money-losing papers, especially The Boston Globe, instead of selling them or sharply cutting their expenses. The firm’s regional newspaper group almost operates at a loss.

NYT does have one asset it could sell, the About.com internet group which has no real relationship to the newspaper part of the company. In the last quarter, About made over $10 million on $28 million in revenue. It is not hard to imagine the division fetching over $100 million due to its high operating margins. About.com revenue and net income are still growing in the double digits.

By holding onto ancillary products for too long, The New York Times has put its flagship property and the company’s independence at risk. Its building is the last really valuable asset that the firm has.

Douglas A. McIntyre