The Tampa Bay Times bills itself as “Florida's Best Newspaper.” Nationally, it has been held up as a potential model for how journalism might succeed as other newspapers in the U.S. struggle or even close.
Behind the scenes, however, the St. Petersburg-based paper's financial records, loan documents and real estate transactions paint a picture of a shrinking company under increasing financial strain.
Revenue at the Times and its sister publications is half what it was five years ago, and the paper has been selling assets around the region. More recently, the newspaper took out a $28 million loan, backed by its headquarters and other property — due in December 2016.
“That's a pretty short term,” said Edward Atorino, a media analyst with Benchmark Co. “The bank must think this is not a business where they have a lot of long-term faith that it will survive, so they need to get their money back fairly soon. The people who own that newspaper business — they'll need to make enough money to pay that all back, or the lender will just take the company.”
Far from just a financial matter, how this plays out for the Times could significantly affect the local media landscape. The Tampa Bay area remains one of the few U.S. markets with two competitive daily newspapers — The Tampa Tribune and the Tampa Bay Times. Times officials declined to answer questions about the newspaper's finances, but a review of their financial records show a company in declining financial health.
❖ ❖ ❖
Originally, Times' patriarch Nelson Poynter established a nonprofit journalism school in 1975, and his donation of the Times to the school insulated the paper from takeover by outside interests. For years, the Times financially supported its parent, but then the national recession hit, and recently the Poynter Institute for Media Studies said the paper was no longer a “viable” source of support.
In July 2009, the Times started selling assets to raise cash for itself.
The Times sold the publication Congressional Quarterly, in part to “extinguish its debt,” Times officials said. (The Wall Street Journal cited unnamed sources estimating the price was about $100 million.) Four months later, the Times sold niche magazine Governing for an undisclosed sum to e.Republic, a Sacramento, Calif. company with ties to the Church of Scientology.
The Times was able to pay off a $35 million mortgage from Bank of America in May 2011, and yet the paper started selling more properties. In October 2011, the Times began a round of layoffs “to lower our costs in this terrible economy,” according to a memo sent to employees by Editor Neil Brown, and sold a news bureau building in Clearwater to the City of Clearwater for $2.2 million. Then it sold a Pinellas County shopping plaza to a Walmart affiliate for $1 million.
The most rapid-fire transactions came in 2012. The Times announced a deal in February 2012 to sell an employee parking lot to an apartment developer, saying it had shed so many employees it no longer needed so much parking.
The company a month later turned to a smaller lender for more financing. In March 2012, the Times took out a $13 million mortgage from Community Bank & Co. – backed in part by the Times' headquarters building plus the same parking lot the Times had announced it would sell a month before.
In June that year, the Times listed its employee cafeteria for lease or sale, the elaborate Tramor next to the headquarters, because it was underused. Asking price: $2.75 million. Ultimately, the parking lot sold for $6 million.
Late last year, the Times turned to Boston-based Crystal Financial LLC, a lender that says it provides liquidity to companies that require “more debt capital than is currently made available from traditional lenders.”
The Times pledged at least six parcels of land to obtain a $28 million loan from Crystal, including its headquarters. The loan comes due in December 2016.
❖ ❖ ❖
Going with a non-traditional lender typically means higher interest rates, Atorino said.
“When you go non-traditional, it's going to cost you more,” he said. “The worst-case scenario is the newspaper goes out of business and the guy who made the loan ends up owning the building and the land under the building.”
Crystal officials did not respond to requests for an interview, but on their website, they posted a case summary of the Times loan, saying about half the money went to pay off other loans, while the other half went to “operational initiatives.” As a condition of the loan, the Times pledged “their current assets and machinery and equipment.”
Those assets continue to dwindle.
Though the Times changed its name from the St. Petersburg Times to “The Tampa Bay Times,” commercial real estate advertisements show the Times is trying to unload properties around that region. The Times is trying to lease out half a news bureau building in Brooksville that it built only 10 years ago. And the Times is also trying to sell a news bureau and production building in Port Richey, 8.5 acres included. And it is trying to lease out up to 30,000 square feet of unused space in its headquarters.
Meanwhile, there's less revenue. In 2009, revenue for all of the company's publishing interests was $274 million, according to Poynter's most recent tax filings. Then it fell to $159 million in 2010, then fell to $151 million in 2011, and flattened out at $151 million in 2012.
In the meantime, the Times has been exploring new revenue streams. After years of offering online news for free online, the Times began charging for access to its news website in September, even for current newspaper subscribers.