http://www.theatlantic.com/doc/200901/new-york-times
January/February 2009
The Atlantic
Can America's paper of record survive the death of newsprint? Can
journalism?
End Times
by Michael Hirschorn
Virtually all the predictions about the death of old media have assumed
a comfortingly long time frame for the end of print--the moment when,
amid a panoply of flashing lights, press conferences, and elegiac
reminiscences, the newspaper presses stop rolling and news goes
entirely digital. Most of these scenarios assume a gradual
crossing-over, almost like the migration of dunes, as behaviors change,
paradigms shift, and the digital future heaves fully into view. The
thinking goes that the existing brands--The New York Times, The
Washington Post, The Wall Street Journal--will be the ones making that
transition, challenged but still dominant as sources of original
reporting.
But what if the old media dies much more quickly? What if a hurricane
comes along and obliterates the dunes entirely? Specifically, what if
The New York Times goes out of business--like, this May?
It's certainly plausible. Earnings reports released by the New York
Times Company in October indicate that drastic measures will have to be
taken over the next five months or the paper will default on some
$400million in debt. With more than $1billion in debt already on the
books, only $46million in cash reserves as of October, and no clear way
to tap into the capital markets (the company's debt was recently
reduced to junk status), the paper's future doesn't look good.
"As part of our analysis of our uses of cash, we are evaluating future
financing arrangements," the Times Company announced blandly in
October, referring to the crunch it will face in May. "Based on the
conversations we have had with lenders, we expect that we will be able
to manage our debt and credit obligations as they mature." This
prompted Henry Blodget, whose Web site, Silicon Alley Insider, has
offered the smartest ongoing analysis of the company's travails, to
write: "`We expect that we will be able to manage'? Translation:
There's a possibility that we won't be able to manage."
The paper's credit crisis comes against a backdrop of ongoing and
accelerating drops in circulation, massive cutbacks in advertising
revenue, and the worst economic climate in almost 80 years. As of
December, its stock had fallen so far that the entire company could
theoretically be had for about $1 billion. The former Times executive
editor Abe Rosenthal often said he couldn't imagine a world without The
Times. Perhaps we should start.
Granted, the odds that The Times will cease to exist entirely come May
are relatively slim. Many steps could be taken to prolong its
existence. The Times Company has already slashed its dividend, a major
source of income for the paper's owners, the Sulzberger family, but one
that starved the company at precisely the moment it needed significant
investments in new media. The company could sell its share of the
brilliant Renzo Piano-designed headquarters--which cost the company
about $600million to build and was completed in 2007, years after the
digital threat to The Times' core business had become clear. (It's
already borrowing money against the building's value.) It could sell
The Boston Globe--or shutter it entirely, given what the company itself
has acknowledged is a challenging time for the sale of media
properties. It could sell its share in the Boston Red Sox, close or
sell various smaller properties, or off-load About.com, the resolutely
unglamorous Web purchase that has been virtually the only source of
earnings growth in the Times Company's portfolio. With these steps, or
after them, would come mass staffing cuts, no matter that the executive
editor, Bill Keller, promised otherwise.
It's possible that a David Geffen, Michael Bloomberg, or Carlos Slim
would purchase The Times as a trophy property and spare the company
some of this pain. Even Rupert Murdoch, after overpaying wildly for The
Wall Street Journal, seems to be tempted by the prospect of adding The
Times to his portfolio. But the experiences of Sam Zell, who must be
ruing the day he waded into the waking nightmare that is the
now-bankrupt Tribune Company, would surely temper the enthusiasm of all
but the most arrogant of plutocrats. (And as global economies tumble
around them, the plutocrats aren't as plutocratic as they used to be.)
Alternatively, Google or Microsoft or even CBS could purchase The Times
on the cheap, strip it for parts, and turn it into a content mill to
goose its own page views.
Regardless of what happens over the next few months, The Times is
destined for significant and traumatic change. At some point
soon--sooner than most of us think--the print edition, and with it The
Times as we know it, will no longer exist. And it will likely have
plenty of company. In December, the Fitch Ratings service, which
monitors the health of media companies, predicted a widespread
newspaper die-off: "Fitch believes more newspapers and newspaper groups
will default, be shut down and be liquidated in 2009 and several cities
could go without a daily print newspaper by 2010."
Full at: http://www.theatlantic.com/doc/200901/new-york-times
Michael