Is the New York Times running on fumes, as Henry Blodget says at Silicon Alley Insider? I would argue that it’s probably even worse than that. It’s not just running out of gas — it’s only firing on one or two cylinders, the points and plugs are shot and the coolant system is about to blow. In its most recent results, the newspaper company reported that its cash flow (earnings before interest, taxes, etc.) fell by more than 50 per cent, advertising revenues collapsed by double digits, and its debt has just been rated “below investment grade” — or what is known in the investment business as “junk” — by the Standard & Poor’s bond-rating agency.

Ad revenues for the company’s traditional media operations, including the New York Times newspaper, fell by 14 per cent in September. Ad revenues for the online operations, including About.com, climbed by 14.5 per cent — but those operations still only account for 12 per cent of the business. The bottom line: Online ad revenues in the year to date climbed by about $10-million to $79-million, but ad revenues for the company’s traditional businesses fell by about $200-million to $1.2-billion. Even if online ad revenues were to increase ten-fold, it still wouldn’t make a dent in those losses. Classified sales alone were down by 25 per cent.

In just the last six months, the company’s stock price has fallen by 50 per cent, to a recent close of about $10, making the New York Times Co. worth $1.5-billion instead of $3-billion. In 2004, the company was worth more than $6.5-billion. In other words, in the past five years the Times has lost over 75 per cent of its value. The ironic thing, of course, is that the newspaper’s website and web operations have become more and more successful, with traffic exploding ever since it removed the pay wall that used to enclose its columnists and other features.

According to Nielsen Online, the paper had 20 million unique visitors in September, an increase of about 37 per cent over the same period last year. When Boston.com and About.com are included, it had about 50 million unique visitors, which makes it one of the largest Web media properties around. But no matter how quickly it grows, it’s still not enough to stem the relentless tide of red ink coming from the newspaper side.