Is the New York Times only months away from declaring bankruptcy?

What happens to the journalism industry if the answer is "Yes?"

Such questions were posed by the Atlantic in its January/February edition:

Earnings reports released by the New York Times Company in October indicate that drastic measures will have to be taken over the next five months or the paper will default on some $400million in debt. With more than $1billion in debt already on the books, only $46million in cash reserves as of October, and no clear way to tap into the capital markets (the company’s debt was recently reduced to junk status), the paper’s future doesn’t look good. [...]

The paper’s credit crisis comes against a backdrop of ongoing and accelerating drops in circulation, massive cutbacks in advertising revenue, and the worst economic climate in almost 80 years. As of December, its stock had fallen so far that the entire company could theoretically be had for about $1 billion. The former Times executive editor Abe Rosenthal often said he couldn’t imagine a world without The Times. Perhaps we should start.

Although the author points out the chances of this occurring by May are slim, drastic changes at the Times are a metaphysical certitude:

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.”

And what does this mean for journalism as we know it?

Most likely, the interim step for The Times and other newspapers will be to move to digital-only distribution (perhaps preserving the more profitable Sunday editions). Already, most readers of The Times are consuming it online. The Web site, nytimes.com, boasted an impressive 20 million unique users for the month of October, making it the fifth-ranked news site on the Internet in terms of total visitors. (The October numbers were boosted by interest in the election, but still …) The print product, meanwhile, is sold to a mere million readers a day and dropping, and the Sunday print edition to 1.4 million (and also dropping). Print and Web metrics are not apples-to-apples, but it’s intuitively the case that the Web has extended The Times’ reach many times over.

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.

Yet, this might not be the end of the world for the Times...or for journalism:

Forced to make a Web-based strategy profitable, a reconstructed Web site could start mixing original reportage with Times-endorsed reporting from other outlets with straight-up aggregation. This would allow The Times to continue to impose its live-from-the-Upper-West-Side brand on the world without having to literally cover every inch of it. In an optimistic scenario, the remaining reporters—now reporters-cum-bloggers, in many cases—could use their considerable savvy to mix their own reporting with that of others, giving us a more integrative, real-time view of the world unencumbered by the inefficiencies of the traditional journalistic form. Times readers might actually end up getting more exposure than they currently do to reporting resources scattered around the globe, and to areas and issues that are difficult to cover in a general-interest publication. [...]

In this scenario, nytimes.com would begin to resemble a bigger, better, and less partisan version of the Huffington Post, which, until someone smarter or more deep-pocketed comes along, is the prototype for the future of journalism: a healthy dose of aggregation, a wide range of contributors, and a growing offering of original reporting.

Interesting. Yet, to make this happen, mightn't original content at the website have to be exclusive thereby requiring nytimes.com to charge other sites for reproduction?

As was discussed on last Sunday's "Reliable Sources," one of the things killing the print media is their content being accessible without cost all over the Internet. There is currently so much information available on the web that folks aren't willing to pay for it. The failure of "Times Select" is a perfect illustration.

With this in mind, the old media model of advertising dollars as revenues is still the key. Yet, if your website isn't offering exclusive reporting or opinion, how do you generate hits that increase ad costs?

As such, something that folks hoping for the death of old media should consider is the enactment of legislation that aids this exclusivity. Put more simply, if print goes away, there may soon be stricter rules concerning the use of others' content.

If that occurs, the more popular websites offering the best product would likely begin charging subscription fees, meaning that old media effectively took over new media.

Are they smart enough to pull this off?

Stay tuned.

*****Update: Mark Finkelstein got Thomas Lipscomb's opinion (Annenberg Center for the Digital Future) of the Times's fate. 

—Noel Sheppard is the Associate Editor of NewsBusters. Follow him at Facebook and Twitter.