John Ellis, who knows his stuff, believes the best option for the Boston Globe is a prepackaged bankruptcy.
A Bush cousin and venture capitalist who used to write a column for the Globe, Ellis writes that he recently worked with a group that was considering buying the paper — and that they all walked away after concluding that the situation was “hopeless.”
“No one will buy it unless the unfunded liabilities are made to go away and the union contracts are voided,” writes Ellis, who pegs those liabilites at $100 million. “That isn’t an opinion, it’s a fact.”
No one is saying that things aren’t very bad at the Globe. When you look at the numbers, you come to the inescapable conclusion that the $20 million in cuts the New York Times Co. is demanding will only tide them over for a few months.
Still, Ellis isn’t predicting that the Globe will fold. That’s important to keep in mind. When I say that I’m cautiously optimistic — and I am — I’m not suggesting that we readers are going to live happily ever after.
The Globe that emerges from all this will be substantially smaller than even the shrunken paper we’ve become accustomed to. It may have a different owner. The print edition may be cut back to three or four days a week (but not eliminated, given that print ads are still the revenue-generators). But it will, I think, still be in business.
Gallows humor: Before I could post this item to Facebook, the anti-spam robot instructed me to type “assuage Times.”
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looking forward to more of your informed analysis. Thanks
If a company owns multiple newspapers, how can it put just one of them into bankruptcy? I thought bankruptcy was for whole corporations, not particular sections of them.
Ron: Good point. Ellis and I talked about this recently, and what he means is that the Times Co. would have to find a buyer who would take the Globe into bankruptcy and restructure it.
It’s vital to get the Globe away from the Times — because on the Web they are head-to-head competitors to a much greater extent than in hard copy.
Ellis may be right, but he still resents being taken to task when he wrote pro Bush pieces for the OP-Ed page during the Bush versus Gore Presidential race in 2000 and neglected to disclose his family connection. He resigned from the paper shortly thereafter.
acf: The facts don’t support that. Here is the lede of the first column Ellis wrote (6/17/99) after Bush became a presidential candidate:Last Saturday in Iowa, Texas Governor George W. Bush (who is my first cousin) announced that he would be a candidate for the Republican presidential nomination. Yesterday in Tennessee, Vice President Gore announced his presidential candidacy. Bush’s launch was widely regarded as successful. Gore’s weeklong launch has met with somewhat less enthusiastic reviews.The parenthetical is not mine — it’s Ellis’.On July 3, Ellis wrote that he would no longer write about the presidential campaign because “there is no way for you to know if I am telling you the truth about George W. Bush’s presidential campaign because in his case, my loyalty goes to him and not to you.”And on July 29, the Globe published Ellis’ farewell column, in which he wrote that he was leaving in part because of his relationship to Bush and in part because he had left the Boston area.So Ellis wrote a grand total of one column on the 2000 presidential campaign after Bush joined the race. And he disclosed his relationship.I also sampled a few columns Ellis wrote about the campaign before Bush officially joined the race. In every instance, he made the proper disclosure.
What’s also going to be interesting is what happens to The Worcester Telegram which is also owned by the NYT. That newspaper does pretty much zilch for news reporting on events during the weekend, and even during the week the coverage is pretty much sub-bare bones.
I was stunned by the frontpage headline in yesterday’s Globe–I happen to be one of those who believe the paper’s troubles are exaggerated. Someone will buy it, and yes it’ll be even smaller, but it’ll live. But what do I know.
Dan, Is the Globe in significantly worse shape than major metro dailies in comparable cities?…Is the demise Ellis predicts industry-wide?Maureen
Maureen: The numbers the Times Co. is reporting for the Globe seem to be unique, certainly for the No. 1 daily in a large market. Jay Fitzgerald and I are coming to the same conclusion: the numbers make no sense.Although Ellis, who’s gotten as close to the real numbers as any outsider, does seem to think things are pretty hopeless.
Creditors and the bankruptcy courts may not look favorably upon an attempt to break a company up into ‘good’ and ‘bad’ parts, then send the ‘bad’ part into bankruptcy while shielding the assets of the ‘good’ part.I’m no expert in bankruptcy, but this seems like a risky path to take.
Ron: I’m not an expert on this stuff by any means, but I don’t see why the courts would be upset if the NYTCo sold the Globe to someone who then took the paper into bankruptcy.
It is the matter of concern for all the products not only the one. I think, still conditions can be controlled if the analytical steps are taken by the group collectively. Govt help is a short term measure to survive but it is not a permanent solution.
Ron brings up a good point. The whole “fraudulent conveyance” issue comes up when a company NOT trying to survive receives the same protections as one that is. BTW Dan, spot on re Ellis. Nice to see that you still value the truth more than you hate Bush. (Would that some of your progressive colleagues did the same!)
Dan: Thanks for the feedback. I still seem to remember a couple of earlier pieces that didn't make the family disclaimer, but can't cite any specifics. I don't like him or his cousin & probably created my own memory out of that.
I’m not going to look up the Times/Globe situation, but it could be the Times is set up as a holding company, or the Globe remains a separate legal entity, with a separate P/L. If structured that way — as a wholly owned subsidiary, not a division — the Globe could go into bankruptcy. I’ve been a part of a company that has done that.