In End Times, Michael Hirschorn of The Atlantic who gazes into his crystal ball and sees the death of The New York Times.

It’s certainly plausible. 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 $400 million 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.

Times spokeswoman Catherine Mathis responds with a mighty bitchslap:

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.

Granted Hirschorn is being a bit irresponsible because, as he himself admits, the chances that the Times will go under are very slim, but methinks Mathis doth protesteth too much.

The Times is in trouble: The paper recently announced plans to borrow $225m against its beautiful, brand new steel-and-glass 52-story headquarters to deal with a cash crunch of its own making.

You would think that given what’s going on in the industry, the Times would tighten up operations, but American Thinker points out that in March 2007 the company increased its dividend 31 percent to 23 cents a share to “return more capital to shareholders.”

Twenty-three cents a share may not sound like a lot but it cost the company $132m a year. Of that, $25m went into the accounts of the Ochs-Sulzburger family that controls the paper. The family rode that gravy train until November, when the dividend was slashed to 6 cents.

But the Old Grey Lady isn’t exactly sitting on a pile of cash like, say, Microsoft. While the family was collecting its dividend checks, the Times was trying (and failing) to slash its costs by about $140m a year, almost exactly the amount of the dividend.

The Times couldn’t right the ship, so it has been tapping $400m from its two revolving lines of credit to pay expenses, including the dividend. One of those credit lines is expiring in May and no one’s willing to lend these days. So the Times is now borrowing against its headquarters to pay the bills. (Mathis points out that technically, the Times isn’t borrowing but arranging a sale-leaseback, but I think that’s a distinction without a difference.)

The Times borrowed to pay its investors with money it doesn’t really have. Somebody please explain to me how this is different than a Ponzi scheme.

Corporate debt is a bit like the piece of ricotta torte I had for dessert last night: it goes down very easily, but chronic overindulgence will constrict the arteries, strain the heart, and possibly even kill you. And that’s exactly what is happening to Lee Enterprises, which publishes nearly 50 daily newspapers including the North County Times in San Diego County.

Lee Enterprises swallowed a staggering amount of debt over three years ago when it bought Pulitzer Inc., publisher of more than a dozen daily papers including the St. Louis Post Dispatch, founded in 1879 by Joseph Pulitzer. That turned out to be a disastrous move, as Lee is now in grave condition. Nearly 10,000 employees may find that come April, their employer can no longer survive in its present condition.

I decided to write about Lee after a friend who works for the chain asked what I thought of the company’s finances. Management was sugarcoating things, and my friend had no idea where things stood. (Full disclosure: I worked for the Lee owned Quad-City Times in the 1990s.)

Reading the company’s Dec. 31st 10-K filing led me to the conclusion that Lee Enterprises is already dead. A balloon payment of $306 million dollars is coming due April 28 and Lee, which posted a loss of nearly three times that amount last year, has flat-out admitted that it doesn’t have the cash.

The newspaper company can’t borrow its way out of this because its lenders have put it on a strict debt diet — no more sweets for you, Lee! They can’t borrow, they don’t have the cash, so Lee is left with few options. The company could sell assets to pay down debt but there’s not much of a market these days. Another option is a debt-for-equity swap, with the lenders becoming owners of the company.

Ultimately, it comes down to this: Either institutional investors that hold the secure notes will show mercy, or a bankruptcy judge will have to carve up the company’s bloated corpse and sell off the parts.

Lee’s stock closed at 56 cents today, down from $15 a share a year ago, and many on Wall Street think it hasn’t hit bottom. Lee’s short interest, a measure of pessimism in the company’s future, is one of the highest for any publicly-traded U.S. firm.

The Davenport, Iowa-based company’s difficulties are a symptom of the pain experienced by newspaper chains that used debt to finance growth in recent years. Tribune Corp., publisher of the Los Angeles Times and the Chicago Tribune, is in bankruptcy. McClatchy Corp., which loaded up on debt to buy Knight-Ridder in 2006, is struggling for survival.

When it acquired the St. Louis Post Dispatch in 2005 for $1.5 billion, Lee also assumed a $306 million debt, which is a twisted tale in itself.  Pulitzer borrowed the money in 2000 to gain control of the Post Dispatch and buy out almost all of the stake held by the Newhouse family’s Advance Publications. (Privately-held Advance owns Conde Nast, publisher of The New Yorker, Vanity Fair and others, and also publishes major metro dailies in Portland, Ore., and New Orleans.)

For 16 years, Pulitzer had been paying Newhouse half of the Post Dispatch’s profits under a “joint operating agreement” with a newspaper that no longer existed. Newhouse sold the St. Louis Globe-Democrat in 1984, and somehow got Pulitzer to keep paying it, even after the Globe-Democrat stopped printing a few years later. (Newhouse still gets 5 percent of the Post Dispatch profits.)

The bad news doesn’t end in April because the Putlitzer debt just keeps on dealing out pain. The $306 million is only the principal on the loan, which carries 8.05 percent interest annually. So the total bill is more than $600 million. And counting.

That’s the story of how a bad deal to buy out one newspaper chain is about to destroy two others.