BROOKE GLADSTONE: This week, The New York Times announced its fourth-quarter earnings, a decline in profits of 48 percent. The Times’ money woes highlight its position as a newspaper trailblazer, both in the quality of its reporting and as harbinger of the industry’s financial future. After all, if the family-owned paper of record can't stay afloat, who can? Wall Street Journal reporter Matthew Karnitsching has been following The Times’ money trail of tears. Welcome to the show.

MATTHEW KARNITSCHNIG: Thank you.

BROOKE GLADSTONE: I think it’s fair to say The Times is in a fix.

MATTHEW KARNITSCHNIG: Well, over the next couple of years they have about 1.1 billion dollars in debt that they're going to have to repay. They have 400 million dollars that’s coming due in May, and then they have another 250 million in 2010. But I think the real issue here is that it’s very difficult for them to borrow more money because of the global financial crisis and the fact that their business is performing so poorly right now, they have a junk bond credit rating. Few people are going to want to give them money without a huge interest payment in return.

BROOKE GLADSTONE: Now, as of last week, the paper announced that it had struck a tentative deal for something called “a sale-leaseback” of their headquarters. It’s a year-old building they just moved into on 42nd Street. That is a real asset. But what’s a sale-leaseback?

MATTHEW KARNITSCHNIG: Well, what that basically means is that they sell a portion of the building to an investor and then they lease that back from the investor, and they continue to occupy the building. It’s somewhat similar to taking out a second mortgage on your home or something like that. But if you’re doing it in an environment like this, you’re not going to get as much money for it than if you were to do it when housing prices or, in this case, commercial real estate, was much more valuable.

BROOKE GLADSTONE: So far there are only a few visible signs that The Times is suffering. There’s the banner ad on the front page, and there’s the consolidation of a couple of sections and the elimination of its sports magazine, Play. What do you think readers may see in the future, if things continue to get worse?

MATTHEW KARNITSCHNIG: What I'm hearing is going to be inevitable if the economy doesn't improve and if the advertising market doesn't improve over the next couple of quarters, which few people think will happen, is that they're going to have to start cutting into the core of the paper, really, meaning reporters and editors. They have a very large newsroom staff, still, compared to a lot of other newspapers. I was told this week, for example, that they still have people transcribing the evening news broadcasts, which might seem like an anachronism and something that might not affect the quality of their journalism. To the family’s credit and to the company’s credit, they've done all of these other things first. They've cut the dividend and they've borrowed more money, but it seems inevitable that they're going to have to take more drastic measures in the months ahead.

BROOKE GLADSTONE: So for the average reader, do tough times auger no more Book Review?

MATTHEW KARNITSCHNIG: All you have to do is open it and see that there are no ads in it, so it already is something of a public service that they're providing with that. And we don't really know which of the sections are making money and which aren't.

BROOKE GLADSTONE: You know, it’s become something of a parlor game for media watchers to figure out what it would take for the extended family of the Sulzbergers, who control The Times, to sell their special shares of the trust. You've seen this process at work firsthand at The Wall Street Journal. Do you have any insight into what it might take for The Times’ family to succumb?

MATTHEW KARNITSCHNIG: Well, the Sulzbergers, they control the company through these super voting shares, but they really aren't a majority shareholder in the sense that they own a majority of the equity in the company. I think their overall stake is around 20 percent, actually. They have to also think about the other shareholders in the company and what’s best for them. And if somebody were to come along and offer a 50 percent premium or a 75 percent premium to where the stock is now trading, I think it would be very difficult for them to say no, especially if it were somebody like a Michael Bloomberg or a Warren Buffett, or somebody of that stature, where they could say, well, we're really, we're leaving the paper in good hands. This is a public trust and we're passing it on to somebody who we really think is going to take care of it.

BROOKE GLADSTONE: The Times does seem to have taken one step in the direction of the tycoon model in striking a deal with a Mexican telecom mogul named Carlos Slim Halu.

MATTHEW KARNITSCHNIG: Well, Mr. Slim has agreed to give The Times 250 million dollars, in return for a 14 percent interest rate that they're going to pay him back over the next several years. The big question about this deal is, why is Mr. Slim lending them the money, and is he really interested in playing a more active role in The Times going ahead? And I don't think that that’s really clear at this point.

BROOKE GLADSTONE: All right, thank you very much.

MATTHEW KARNITSCHNIG: Thank you.

BROOKE GLADSTONE: Matthew Karnitschnig is a reporter for The Wall Street Journal.