NYT bailout? “They’re churching the old whore.”

The New York Times seems to be in serious trouble advertising revenues have fallen by 20% for the year and circulation has dropped as well as having its bond rating falling to the point according to some reports into junk territory.  Now from 24/7 Wall St. – 

The New York Times (NYT) has to repay $400 million in debt in the first half of 2009. It does not have the money. It plans to mortgage its headquarters, but it is uncertain what that will bring in an uncertain real estatemarket. The firm’s Boston Globe and regional newspaper operations lose money, so they will be hard to sell. NYT is controlled by the Sulzberger family, which has super-majority voting shares. That won’t matter much when the company runs out of money. Another big media operation, perhaps News Corp (NWS) which owns The Wall Street Journal and The New York Post, will come in and auction off what it can and keep the flagship New York Times newspaper and NYTimes.com website.

There have been a few suggestions that failing newspapers should be bailed out notably an effort in Connecticut for a state bailout of a couple of local papers the New Britain Herald and the Bristol Press. The Republican governor and the Democratic attorney general of Connecticut supported government intervention to save them. Following this seven state MPs sent a letter to Connecticut’s Department of Economic and Community Development seeking help for the dying newspapers. The wording by seven legislators included: -
 


We share the sentiments of our nation’s leaders (Presumably meaning founding fathers) who wrote [in] the Bill of Rights that a free press is an essential part of democracy.”


They appear to believe newspapers have constitutional protection from failure.

It is quite likely that Democrats may find the idea of a bail out of the NYT to their liking as it still has some influence left in the community, and lefties need it as an ‘unbiased authority’ that can always be guaranteed to support their views. It would be difficult to choose whether NYT or Huffington Post was the most even handed in coverage of the last election.

NYT has built up a great deal of political capital with the Democrats. Since Grover Cleveland in 1880 they have only endorsed Republicans six times in thirty-two elections, the last being Eisenhower in 1956, therefore nobody under the age of seventy has voted for a Republican nominee on the basis of a NYT endorsement. 



They would be sorely tempted if calls came to save the paper. If the opportunity arose and they felt they could put enough spin on it such as the right of the public to information, saving jobs, preventing the failure of an American icon, etc I feel they would jump at it.

In reality under these circumstances, it would be simply a case of the Democrats, “Churching the old whore.”

Editors note: The term “churching the old whore.” is well known in Australian politics from its use by PM Gough Whitlam, to describe the relationship between the Liberal/NP coalition and the DLP. On the announcement of what became known as the “Gair Affair” Opposition leader Billy Sneddon asked “Who’s churching the old whore now.” The origin is from a play by (I think) Ibsen.

The Gair affair was an attempt by Whitlam to get an extra senate seat by persuading DLP senator Gair to accept the Ambassadorship to Ireland, thus creating an extra vacancy on the eve of an election, giving the ALP a good chance of taking it, as six seats would be vacant instead of five. This was thwarted by a ruse where NP leader Doug Antony and a couple of others invited Gair to a beer and prawn session and got him pissed as a newt, thus preventing him from getting his resignation in, while Queensland Premier Joh Bjelke Peterson held an emergency cabinet meeting declaring vacancies for five senate seats and rushing it to the governor and getting it signed.

Whitlam ridiculed Joh as the Kingaroy peanut and launched a High Court challenge on the basis that Joh knew that another position was vacant, however the court tossed it out as Joh at the time of the meeting “Had not been officially informed.”

Fair dinkum, I’m not making this up.

15 thoughts on “NYT bailout? “They’re churching the old whore.”

  1. “I hope they simply go broke and Punch is the last one to turn off the lights.”

    Of course JC, lots of people thought the same about many of the financial groups too, which you didn’t seem to think that should happen to. Instead you thought it was a good idea for huge amounts to be spent keeping them all alive, presumably so the US could end up like Japan. It’s funny that you can offer harsh medicine to one group but not another. This is the problem with bailouts — everybody has some reason for free money (“too big to fail”, “too important for workers”, “too important culturally”, “too something or other”), everyone asks, and it looks like everyone might get it. First it was banks, then cars, then real-estate developers, now papers. It will be interesting to see how far it all goes.

  2. Conrad:

    The only reason I supported a bailout for the banks is that it actually looked like the credit and payments systems were seizing up. Banks are the arteries that allow the money to get to the various organs of the economy. If arteries get clogged up healthy organs will die.

    Banks are a little different that way.

    I’m more than a little disturbed that you can’t distinguish between a bank and a left wing newspaper.

  3. “Both Nicastro and O’Brien stressed that any state involvement isn’t a “bailout,” as some have charged.

    Help in the form of bringing a buyer and seller together, a low interest loan or other economic incentive, wouldn’t be anything different than the state does for any other business, they said.
    O’Brien said any help would go to a new owner, not the Journal Register Co.”

    If a Rep is able to use contacts to bring together a buyer and a seller, I have no problems.

    Giving “a low interest loan or other economic incentive,” is a case if interfering in the market and picking winners, and is as such a bailout of sorts. Read your own post.

  4. What do ylou actually agree with, Terje?

    You think the banking/payments system is the same as a (hard) left wing newspaper? The payments system was vitually shut down in Oct/sept.

  5. Of course the banking business isn’t the same as the newspaper business. However the argument that banking is “special” is the same old plea for protection from market forces.

  6. Terje

    If the banking system went under as it looked like it was going to in sept/oct it would have meant the great depression replay would have been a certainty rather than a possibility.

    As I said, the payments system and the interbank market was locked up. That would have meant that small and large firms reliant on the system would have failed like they did in the early 30’s.

    Futhermore we have a socialist banking system. The Fed and the various government arms caused this recession primarily through fucked up monetary policy. They fucked it, so they need to deal with their own mistakes.

    IF the Fed hadn’t kept rates too low for too long none of this would have happened.

    The failure of a hard left rag is perhaps a net positive on the economy as it means people’s heads aren’t screwed up with leftist drivel whereas the failure of a citigroup, BAC, morgans stanley etc. is serious business.

  7. Terje — don’t you know the rule? An industry is special if, and only if, you happen to work in that industry. 🙂

    JC — the payment system was still “virtually shut down” (ie high risk premiums) after the bail-out. It didn’t work. But it sure created a huge load of new problems, including more moral hazard and a strong incentive for more regulations.

  8. i agree with jc – the difference is that cars, newspapers, childcare centres and any other industries you care to mention all require the availability of credit.

    it undoubtedly created a new bunch of problems but they are not as severe as the problems that would now be with us if the payments system had failed.

    it’s not a perfect situation but you have to choose the lesser of two evils.

    the major drawback is the precedent that has been set.

  9. no, terje the payments system never shut down after the bailout. That simply isn’t true.

    Terje, at one stage Citi, BAC and morgan stanely looked they were going under. That would have been a $5 trillion problem is a week. Good luck.

  10. Pommy – yes they use credit but this is not the same as requiring credit. And bankers no doubt buy newspapers, use childcare centres and the services of many other industries you may care to mention. For instance bankers need to eat. Also worth noting is the fact that the biggest line of credit is extended by businesses themselves in what is called “Accounts Receivable”.

  11. JC – your comment appears to address a specific point made by John Humphreys so even though you addressed it to me I will assume it was meant for him.

  12. Yea thanks , terje.

    John,

    Commercial banks are different. And yes, I’m quite aware of the moral hazard this creates although not where you think.

    Are you aware the fire wire almost seized up?

    Terje:

    If the payments system seized up the accounts receivables would have been paid by cash

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