You may have been alarmed to read that it is “certainly plausible” that The New York Times could go out of business as soon as May. Says who? The venerable Atlantic (in an article also featured this week in Poynter Online’s top stories list).
Relax, Times-o-philes. The scenario is not the least bit plausible. Author Michael Hirschorn’s day job is originating programing for VH-1, and you can infer as you read the piece that he is a high-concept idea guy, not a financial journalist. But no one on the Atlantic‘s editing team rescued him from a series of howlers.
The hypothesis of a May closing is pegged to the expiration then of a $400 million revolving line of credit. Hirschorn is aware that if the Times needs cash, it can borrow against the value of its new office building — as it has done now to the tune of up to $225 million. The company also announced on Christmas Eve that it has put its stake in the Boston Red Sox up for sale, which could fetch another $200 million.
New York Times Co. Chief Financial Officer James Follo reported at the UBS Global Media conference in December that the company has two $400 million “revolvers,” the second expiring in 2011. And it has only drawn down a total of about $400 million between the two. So the company could pay off the first entirely and get by on the second, though in practice it will refinance some of the debt to maintain reserves and flexibility.
Long story short, the company will be able to meet the May deadline. And corporate finance is not like an auto loan, in which the repo man comes if you miss a few payments. As discussed in an earlier Biz Blog post, creditors typically renegotiate the terms — as they have done to much sicklier newspaper companies than the New York Times Co.
Hirschorn next turns to the notion that the print-free future is closer than we think, asserting that “already, most Times readers are consuming it online.” Not exactly.
By his calculation, only a little more than “a mere” million readers daily and 1.4 million on Sundays pay for the print edition. But The Times has many more readers than “buyers”. A conservative estimate is that 2.l to 2.5 readers see each copy purchased. So that translates into a print audience of 2 million to 2.5 million daily and well over 3 million on Sundays.
Nytimes.com had 20 million unique visitors in October. But there is a whole lot of difference — 30 times — between per day and per month. Hirschorn acknowledges that “print and Web metrics are not apples-to-apples.” But he didn’t seek out the additional statistic that fills in the picture.
The New York Times leads all newspapers by a wide margin in the average time a typical unique visitor spends online. But that is 36 minutes per month (according to Nielsen’s measure for November) — just a little more than a typical Times print reader would spend with it per day. So where does most New York Times reading take place? By a wide margin, in homely old print (where, not coincidentally, ad revenue remains similarly concentrated).
The misfires in the more futuristic parts of Hirschorn’s piece are milder. He thinks the “post-print Times ... could start mixing original Times reporting with Times-endorsed reporting from other outlets.” Nytimes.com has done just that with the debut of the Extra alternative home page Dec. 4. (In fairness to Hirschorn and the Atlantic, this and some of the details of handling the May debt payment probably developed while the monthly was at the printer.)
He also suggests many of the new breed of Times journalists would be “reporters-cum-bloggers.” Actually, many are already.
In the short run, Hirschorn asserts, a Web-driven product “could support only 20 percent of the staff.” He doesn’t say where that number comes from (and this is a guy who needs to “show your work,” as they used to say in Algebra 1). He refers later in the piece to 80 percent of the paper’s 1,000-plus journalists being put out on the street.
CEO Janet Robinson told the investors’ meeting in December that through the first three quarters of 2008, online activities (including the About.com subsidiary) generated $295 million in revenues — about 13.5 percent of the total, not 20.
But one of the most intriguing issues in considering partial or complete conversion to online is that the cuts would not be distributed equally through the enterprise. Distribution, paper and pressroom costs would be reduced dramatically or eliminated. That could leave a much higher share of the remaining budget for the smaller company to devote to newsgathering.
I don’t begrudge Hirschorn his meditation on a future in which print’s role is minimal or disappears. I don’t happen to think, as he does, that Huffington Post, with its mix of unpaid opinion blogs, news lifted from elsewhere and hype, is the model.
How about getting your political news from Politico, your sports news from ESPN.com, your showbiz news from EW.com, your international news from an assortment of options, and your local news from somewhere to be determined? In short, the news would come from professionally reported and edited sites with standards — just not the single unifying standard of The New York Times or other quality publications.
It all may come to pass within a decade or sooner. Not, however, at The New York Times in May.
