Did Michael Hirschorn's article for The Atlantic on the fiscal disaster perhaps awaiting The New York Times hit some kind of nerve?
I blogged briefly about Hirschorn's article here -- and I'd really like to see the blogosphere, in particular the arts-centric blogo- and theatrosphere, begin kicking around how our community would be affected if the Times did fall into Chapter 11 and/or wound up operating on a Web-only model someday down the road. Does it thrill me? No, of course not -- I'm a traditionalist. I love the feel of a newspaper in my hand, of newsprint on my fingers. But Hirschorn carefully and, I think, daringly explores the Times abandoning print as a scenario. As for accuracy, well...
Hold on! says Catherine Mathis, senior vice president of corporate communications, who posted a letter on Romanesko attempting to refute Hirschorn. Here's the meat of the matter:
Your article refers to the paper's credit crisis (never mind the fact that the debt is at the corporate level). We disagree with that characterization. Here's our situation.Smackdown! Yes it is -- one that is starting to be examined by mainstream outlets focusing on media, such as Editor and Publisher and FishBowl NY.
We have two revolving credit agreements.
These are agreements with banks that allow us to borrow up to $400 million under each agreement, or $800 million in total, whenever we need it. We repay what we have borrowed as cash comes in and the amount we can borrow is then replenished.
One of our agreements will expire in May 2009 and the other in June 2011.
As we have said publicly on more than one occasion, because we believe we need significantly less than the total $800 million available credit, we do not plan to replace the full $400 million that is expiring in May. There is no need to do so.
We have not already borrowed money against our building's value as your article states. Rather we are in the process of pursuing a sale-leaseback for up to $225 million for some of the space we own in our headquarters building.
The proposed transaction for our building gives us the right to buy back the space at the end of the lease. In the meantime, we would continue to occupy our headquarters. We plan to use the proceeds from the sale-leaseback to repay some of the long-term debt we currently have. So the sale-leaseback would not add to the debt of the company, but rather is a way to refinance some of our existing debt. We have chosen to pursue this form of transaction because it is one of the less expensive forms of borrowing in this difficult credit market.
While credit markets remain tight, we have been talking with lenders and, based on our conversations with them, we expect to get the financing to meet our obligations when they come due. And please remember, we continue to generate good cash flow from our operations.
With regard to the specific point made about the demise of the print edition of The Times in May, it may make for a good a story but it is poor analysis. We have 830,000 loyal readers who have subscribed to The New York Times for more than two years, a number that has increased by about a third over the past decade. They like reading the print edition and pay a substantial amount of money to do so. That's not to say they don't visit NYTimes.com or read our journalism on their mobile devices. They do. But they would be unhappy if they couldn’t pick up a print copy. And since it's profitable for us to print these copies, we will continue to do so.
Do check out, by the way, Felix Salmon's take-down of Hirschorn's piece at Conde Nast Portfolio.
Now the question: Who is right?
Personally, I think the most interesting commentary about Mathis' letter is on FishBowl:
Nothing earth shattering there. Though ("warranting" aside) one wonders why the Times felt the need to respond at all since it was pretty clear from the get that Hirschorn's piece was mostly intended to be a conversation starter — even in this uncertain environment no one really believes that the Times will cease printing in five months (even those of us who never see it in print!). What is also of particular interest is that they waited a week and then chose this forum. Or maybe this is all just evidence they are beginning to smart a little from all the doom-and-gloom coverage of late.What do you think? Sphere: Related Content
And then there is the tone of the Times' response — it's a bit tongue-in-cheek (similar to, dare we say it, a blog post!) and it's posted on a media website as opposed to say, being sent to The Atlantic to be printed in the next issue. The whole interaction in fact resembles exactly sort of back and forth posting and linking that is common in online world conversations.