Through the glass darkly

Boston GlobeFriday was deadline day for bidders seeking to make an offer to buy the Boston Globe and the Worcester Telegram & Gazette from the New York Times Co. And it appears there’s not much to report.

New York Times media reporter Richard Pérez-Peña writes that it’s not even clear whether the two contenders for the Globe, a group led by former Globe executive Stephen Taylor and California-based Platinum Equity, had submitted bids.

Each had reportedly offered to pay $35 million as well as assume pension liabilities of $59 million. Jessica Heslam had reported in the Boston Herald that the estimate of those liabilities had recently been revised upward to $115 million. Pérez-Peña quotes sources who confirm the upward revision, but suggest the error was not quite as great as that.

It’s hard to know what to believe. I can tell you that I’ve heard the actual pension liabilities may be even higher than what Heslam’s sources told her. The truth may be that such estimates are hard to nail down, and that opinions differ.

Meanwhile, Telegram & Gazette reporter Shaun Sutner breaks the news that former T&G editor Harry Whitin is involved in a group that is seeking to buy the paper separately — the first indication that the Globe and the T&G might be split up. (The Globe runs the story as well.)

The money guy is identified as Ralph Crowley, the president and CEO of Polar Beverages.

The Times Co. bought the Globe in 1993 for $1.1 billion and the T&G in 2000 for $296 million.

Several months ago, a T&G source explained to me all the multifarious ways that Globe and T&G operations had been combined over the years. I was left with the distinct impression that it would be an expensive proposition to try to separate the two at this point.

But if the two papers end up with different owners, I suppose it wouldn’t be that difficult for them to reach an agreement to continue joint operations that make sense.

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13 thoughts on “Through the glass darkly

  1. O-FISH-L

    Dan, how about an autonomous T&G linking with the Boston Herald instead, which already trucks through Worcester every morning (except Friday?) with their papers printed at the Dow Jones plant in Chicopee?

    Additionally, for the most part Boston sports are Worcester sports, most state politics are based in Boston, administrative roles could be combined etc.

    It would seem to me that two lesser entities should collaborate to form a strong one. An autonomous T&G in Worcester still clinging to the all-powerful Globe in Boston would make the T&G appear the stepchild, whereas a T&G – Herald relationship would be more symbiotic.

    1. Dan Kennedy Post author

      Fish: If you could start from scratch it might make sense. The problem is that the Globe and the T&G have a lot of joint operations right now that would have to be unsnarled if you had two separate owners and no partnership deals.

  2. scruff

    Dan,

    The NYT and Globe are much closer aligned in terms of systems (basically for billing and accounting) than the Globe and T&G. Wouldn’t be an issue at all to de-couple Globe and T&G. The Globe – Times connection for expensive new systems is so great that it does make one wonder whether NYT would really actually want to separate from Globe and absorb all of the costs on their own.

    I wonder if NYT put the T&G story out there as an indication that they are now more likely to sell T&G than Globe.

  3. Mark

    Does it make sense to have pension liabilities that staggering? Is the fault of the unions? Is the Globe still operating on a defined benefit pension system?

  4. Wilson Tisdale

    Just what are the pension liabilities, payments to retirees or a retirement fund for current employees?

    1. Dan Kennedy Post author

      Wilson and Mark: Globe employees do indeed get pensions upon retirement. A pension liability is an estimate of how much will have to be paid out over time. Based as it is on actuarial data, it is only an estimate.

  5. Wilson Tisdale

    Thanks, Dan, but does that include both retirees and potential retirees? Wouldn’t the former have been put in some kind annuity?

  6. Newshound

    The pension liability can be calculated to an actual amount.

    If funds were actually available, which they are not and not likely to be, it could be shifted into a more secure entity so that the annuity will be almost totally guaranteed to retired employees.

    Unfortunately, the acquirer of the Globe is most likely going to attempt to assume the obligation rather than fund it at the time of purchase. As such, if that acquirer goes belly-up, the purchaser(s) may lose abut $35 million, perhaps less, and the employees may lose the equivalent value of something in the $100 million range.

  7. Mark

    I think maybe the problem is that the Globe is being held hostage by archaic retirement provisions. How many successful companies out there today are still operating on defined benefit pension systems? I think the answer is not many.

  8. Mark

    According to the AFL-CIO 70 percent of union workers have defined-benefit pension plans, compared to just 16 percent of non-union workers.

    It seems to me that the Globe having to deal with as many unions as it does has put it at an extreme competitive disadvantage.

  9. John A Keith

    I’m late to the game on this so my question may be redundant but what happens to boston.com? Is everyone assuming that it is included in the purchase price?

    Anyone know the make-up of staff people at the website? Union workers? Payscales? All separate?

    The money’s in the site. I, for one, think they could spin it off. Yeah, seems an odd suggestion but no doubt it’s been thought about, a lot.

    1. Dan Kennedy Post author

      John: I should have been more clear, but yes, Boston.com is definitely part of the package. And in darker moments, analysts have suggested that it’s the one part that might actually survive.

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