But Rick Edmonds, who analyzes the news business for the Poynter Institute, has done a great job of demonstrating that there’s no there there in an attention-grabbing piece in the Atlantic arguing that the Times Co. is rapidly running out of money — and, in a worst-case scenario, could shut down as early as this May.
The Atlantic article, by Michael Hirschorn, is pegged to the writings of financial analyst Henry Blodget, who has been sounding the alarm about the Times Co.’s cash woes for some time now. Hirschorn says even the drastic measures that the Sulzbergers might consider could fall short of being enough: selling their share of the Red Sox (already under way, supposedly), selling About.com (even though it’s one of the few bright spots in their portfolio), even shutting down the Boston Globe.
But Edmonds carefully walks us through the numbers, demonstrating that the payment-due deadline the Times Co. faces in May is not at all what Hirschorn seems to think it is. Edmonds writes:
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…. [C]reditors typically renegotiate the terms — as they have done to much sicklier newspaper companies than the New York Times Co.
Edmonds also shows that Hirschorn’s comparison of print and online readers isn’t just “not apples-to-apples,” as Hirschorn himself acknowledges, but more in the nature of apples to cinder blocks. In other words, Hirschorn doesn’t even come close.
There are three problems with the newspaper business right now: (1) the Internet is destroying its business model; (2) too many newspaper companies took on way too much debt in building their empires; and (3) the worst recession since the early 1980s, if not the ’30s, is wiping out the advertising that Craigslist didn’t already grab.
Right now, it’s the recession and the debt that are taking the biggest toll on the business; without those, newspapers might have some hope of making a downsized but successful transition to online.
The Times Co. took a couple of small but important steps this week, unrolling lucrative front-page ads in the Times and announcing that it will soon do the same in the Globe. The future of legacy media is going to look very different from what we’re all accustomed to, as Edmonds himself acknowledges. But the Times Co. should be able to make it through the recession. After that, we’ll see.