End Times: A Response

A letter from The New York Times Company

To the Editor,

Your article “End Times,” which speculates on whether The New York Times can survive the death of journalism, leaves a lot to be desired from the standpoint of . . .  well, journalism.

It’s not unusual that a journalist calls the subject of a piece before actually publishing the article or column.  In fact, in some areas of journalism that’s standard practice.  We wish that had happened with this story.  We could have helped.  Here are some of the things we would have told you.

We fully recognize that our industry is undergoing unprecedented change as technology alters the habits of our readers and advertisers.  At the same time, the cyclical downturn in the U.S. economy has exacerbated advertising declines. But The New York Times Company is in a better position than many others in the newspaper industry because of the steps we have taken to improve our performance.  In the last five years, we have focused on developing our digital properties and carefully reducing costs while continuing to provide our readers with great journalism both in print and online.

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.

• 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.

This is a challenging time in our industry and for the U.S. economy. Employees are concerned about their jobs.  People in the media industry are working extraordinarily hard to find creative solutions to the issues they face.  It is a time for clear thinking and analysis, not uninformed speculation.


Catherine Mathis
SVP, Corporate Communications
The New York Times Company

Michael Hirschorn responds:

The analysis in my column was based on the New York Times Company's public statements. As Catherine Mathis acknowledges, The Times has announced plans to borrow up to $225 million against the value of its building, but I should not have suggested that this borrowing had already begun. The information about revolving credit agreements referred to in Ms. Mathis's letter was announced on December 9, as it happens the day my column (for the current print edition of The Atlantic) went to press.

Given the subject matter, I will happily grant that this is, if nothing else, densely ironic. And I will also grant that these recently announced conditions may slow down the doomsday clock. However, additional numbers released by the New York Times Company since the piece went to press do not inspire confidence in the paper’s long-term prospects. According to The Times, advertising revenue for the month of November declined more than 20 percent compared to the same month a year earlier, and revenues from ongoing operations declined almost 14 percent. Given the steepening decline in the overall economy, and broader shifts brought on by digital media, there is little reason to believe these declines will stop anytime soon. And subtleties in credit facilities notwithstanding, ongoing double-digit declines do not a viable long-term business make.