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New York Times vs. The Atlantic

It's not every day that the New York Times is fighting someone, it just seems that way. A couple of weeks ago, it's the White House. Now, it's The Atlantic.

Writing in the January issue of The Atlantic, Michael Hirschorn pondered in "End Times" the possibility of the New York Times disappearing as a print entity - maybe as soon as May. With the Times $1 billion in debt and a $400 million credit line due to expire, it seemed fair speculation:

Regardless of what happens over the next few months, The Times is destined for significant and traumatic change. At some point soon--sooner than most of us think--the print edition, and with it The Times as we know it, will no longer exist. And it will likely have plenty of company. In December, the Fitch Ratings service, which monitors the health of media companies, predicted a widespread newspaper die-off: "Fitch believes more newspapers and news­paper groups will default, be shut down and be liquidated in 2009 and several cities could go without a daily print newspaper by 2010."

Clearly touching a nerve, the Times hit back with a letter to The Atlantic, which was distributed to a few industry insiders, including Poynter and Editor & Publisher. Signed by Catherine Mathis, Senior Vice President of Corporate Communications, the letter did not dispute the mounting amount of debt the Times is under, but claimed everything is under control:

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.

The letter went on to blast what it characterized as "uninformed speculation" in The Atlantic piece - though its own assertions seemed just as much speculation. Saying that "we talked to someone and they said they're going to loan us the money in time for us to pay you back" resembles what a desperate gambler would claim while in the presence of a creditor with a crowbar in his hands.

For the time being, the Times continues to insist that it isn't worried about the expiring credit line in May. New York Times Co. CFO James Follo said in December that the Times has two $400 million revolving credit lines and has drawn about $400 million between them. In theory, since the second credit line doesn't expire until June 2011, it should be able to buy some time to maneuver, refinance some of the debt without having to replace the expiring credit line.

Whether Hirschorn was being an alarmist remains to be seen. While he never suggested that the New York Times itself would go out of business anytime soon, there is this nagging sense that the folks at Eighth Avenue are feeling a bit under siege.