Whither the newspaper, Part 2

In early December, I wrote a post about the financial troubles facing the newspaper industry as it faces a recession and a transition to a more digital-centric world.

In the post, I mentioned reports that the New York Times was facing crippling debt at a time when they couldn’t pay it off, and conditions were unfavorable for them to borrow more. Those reports seemed correct when word came that the Times was going to borrow against the value of their relatively new Manhattan skyscraper.

Marc Ambinder and Michael Hirschorn of the Atlantic have some new views on the subject that I thought I’d share with you. Hirschorn is of the opinion that the outlook is grim for the Times, but that they won’t be shutting down anytime soon. Hirschorn writes:

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.

More controversially, Hirschorn thinks that the Times print edition will become untenable, and that they will be forced to become digital only except for maybe Sundays.

But within Hirschorn’s own article he undermines that argument:

The conundrum, of course, is that those 1 million print readers, who pay actual cash money for the privilege of consuming the paper, and who are worth about five figures a page to advertisers, are far more profitable than the 20 million unique Web users, who don’t and aren’t. Common estimates suggest that a Web-driven product could support only 20 percent of the current staff; such a drop in personnel would (in the short run) devastate The Times’ news-gathering capacity.

And this is where Ambinder comes in. He has word from the Times that the print side is not suffering. This is part of what they sent him:

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.

The letter also went in to details about their finances. The Times claim the financial situation is not nearly as dire as it seems and that they haven’t borrowed against the value of their headquarters.

So, maybe the NY Times isn’t in the bind a lot of us thought they were in, but there is always the question of how they’re handling decreased ad revenue. Long term, I’m not sure these sorts of organizations will be viable without massive restructuring, unless internet advertising explodes in value.

4 Comments

  1. Andrea

    What does Ryan think?

  2. Chris

    I should ask I suppose… off the record…

  3. Ian

    I think it would be interesting to see the real numbers on this supposed 1/3rd increase in number of people who receive the print edition. I’m personally surprised that number is only 830,000. For some reason I expected more. I know that the NYT is printed by local papers and distributed from there. Does the increase in availability of local presses being willing to print the NYT account for this? What happens to the NYT around the country when these papers shut down their printing? You can always twist statistics to say whatever you want, and I guess the only people who know the truth are those with the real raw data. My guess is that the NYT might end up being one of the last print editions standing, but that the switch to 100% online is inevitable.

  4. Chris

    Ian,
    I was surprised by that 1/3rd number too. But I think it could be that a decrease in the availability of local papers has made the NY Times more attractive to newspaper readers who need their fix.