• by Erik Sass , December 8, 2008

Pressed by the same secular trends afflicting the rest of the newspaper industry, the New York Times Co. is borrowing $225 million against a portion of its new headquarters in Manhattan, the newspaper Web site reported Monday. It has retained Cushman & Wakefield as the agent to arrange the borrowing, which can take the form of either a mortgage or a sale-leaseback agreement, according to the same report. 

The company has to raise money to make a $400 million payment on one of its revolving lines of credit this coming May; the other $400 million line of credit, as yet untapped, may very well be canceled by financiers spooked by the credit crunch and economic downturn.

The NYTCO owns 58% of the building housing its headquarters on Eighth Avenue in Manhattan--which measures about 1.5 million square feet, most of it office space. Altogether, the company spent about $500 million on building the tower, prompting criticism from investors and analysts who said the company should focus its investments on expanding its digital operations. NYCO may also be able to sell About.com, which could raise as much as $500 million.

The company is being forced to resort to mortgaging and asset sales by the continuing decline of print ad revenues. In the first three quarters of 2008, total ad revenues declined 11.3% to $1.3 billion, compared to the same period last year. That drove a 6.5% decline in revenues overall, to $2.17 billion. Operating profits tumbled from $126 million in the first three quarters of 2007 to just $56 million in 2008--a 55% drop.

It is now apparent that the newspaper industry is trapped in a perfect storm combining secular shifts in media consumption, an economic downturn and a credit crunch. The NYTCO news came on the same day the Tribune Co. declared bankruptcy, and two days after reports that McClatchy is trying to find a buyer for The Miami Herald. Even the sale of big properties like Newsday waas unable to save Tribune from bankruptcy. Both Tribune and McClatchy have also laid off thousands of employees, to no avail.