It is reported by The Wall Street Journal last night that the New York Times will be looking to liquidate assets in order to meet debt obligations. A couple of those assets are very important to our region.
The Times joined John Henry in a consortium that bought the Red Sox. Of the 700 million dollar purchase price, the Times reportedly put up 75 million dollars in 2002 for nearly 18% of the team, the park and the sports network. It is reported that the current value of the stake may be as much as 166 million.
Given the condition of the economy it may be a difficult task to get that kind of money. It is made all the more difficult because the Times will be viewed as a distressed seller. They have some where in the vicinity of 400 million dollars in bonds that are maturing near the middle of the year and the closer they get to that date the harder negotiations are going to become.
The sale of the Red Sox will have little or no effect on the region and none on the Sox. Minority partners come and go with little fanfare and no impact on the controlling interests in a company. The Times has another interest however, that has a lot to do with what goes on around here or more accurately, what gets reported on what goes on around here.
That interest is the complete ownership of the Boston Globe. In what was an epic blunder, the Times purchased the Globe in 1993 for what now seems to be an idiotic price of 1.1 billion dollars. Over the past 15 years the paper has dropped in value by approximately 80 million dollars a year and is now said to be worth about 20 million dollars according to published comments from Barclay's.
The Times apparently had a chance to dump this mistake back in October of 2006 when it was reported that former General Electric CEO, Jack Welch was interested in acquiring the paper for between 500 and 600 million dollars. Jack is counting his lucky stars that he was rebuffed.
There are many different reasons for the continued demise of the Times. Certainly the rise of the Internet as an advertising vehicle as well as a free source of a variety of information has significantly hurt the media business.
The reverse Midas touch of Arthur "Pinch" Sulzberger Jr. should not be overlooked. Almost every business decision that Pinch has made has gone to Hell in a hand basket. Bad business decisions plus a declining reputation for accuracy and a blatant tilt to the Left has turned the Times into an issuer of junk bonds. Since his rise to the top of the Times management, Pinch has watched the value of the company drop from approximately $7.5 billion down to today's market cap of about 900 million dollars.
What it probably means is that sooner than later the Boston Globe will have a new owner. With any luck a new owner will bring a house cleaning the paper so desperately needs.
