Not much to say about the ongoing drama at the Boston Globe, and I don’t imagine there will be until some actual news is announced. It’s now pretty clear that this is going to go down to midnight on Thursday, something I hadn’t expected when the New York Times Co. first issued its demand for $20 million in concessions from the Globe unions.
Reuters gives a boost to the John Henry angle, first reported by the Boston Herald. I’m intrigued. I don’t really see any synergistic possibilities between the Red Sox and the Globe (it hasn’t exactly worked out to this point, has it?), but Henry’s obviously a very smart guy. If he thinks he can make a go of it, then that’s pretty encouraging.
Coincidentally (or not), the Globe’s Names column today has some fun with a frothy feature in the new Boston Magazine on Henry’s romance with a much younger woman.
Meanwhile, the Herald reports on tensions between the newsroom and the union leadership. The best quote is from Globe reporter Scott Allen, who tells the Herald, “The union says we need to control leaks. It strikes some of us as Nixonian.”
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How has ownership of the Cubs worked out for the Chicago Tribune?
Ron: The Tribune is in bankruptcy.Fundamentally, the problem with a Red Sox-Globe alliance is that they are in different businesses. Of course, if Henry owned the Globe, he would have both the paper and NESN under his total control. The Times Co.’s share of NESN is too small for it to do much good. The Globe couldn’t even convince NESN to keep Bob Ryan’s excellent “Globe 10.0” show on the air.If you look at the business landscape over the past 10 or 20 years, you’ll see that synergy rarely works. What the Globe needs is what the Washington Post has — a completely unreleated business (Kaplan Testing) that makes lots of money and that helps subsidize the paper.Baseball teams generally lose money on a year-to-year operating basis. You don’t get to cash in until you sell. How does that help the Globe?If Henry buys the Globe, it will be because he thinks he can manage it in a way that makes money, not because he thinks it will somehow help his other businesses.
The Cubs are the most valuable asset that the Tribune Corporation has. They are being sold to cover Sam Zell’s enormously over-leveraged purchase of the company. Another lucrative profit center has been WGN TV and Radio. Both have raked in cash as the on-air home of the Cubs. If new owners negotiate deals with other eager competitors in the future, the company could take yet another hit.
The Post has been lucky to find an unrelated business that makes piles of money. Not all of them do. Remember AOL Time Warner? Time Warner finally officially filed to spin off AOL.
Does AOL have any business left to spin off?
This is starting to remind me of December 1982 when I stayed up late to watch the fate of the Boston Herald. Then, I truly believed the odds were against the paper surviving for even one more day. Then the headline came “You Bet We’re Alive”, and 26 remarkable years later, the drama is on the other side of town. But it doesn’t seem as real this time. Somehow I can’t believe the Globe may disappear on Saturday morning.
I remember that time 26 years ago, too. It is hard to say if everybody isn’t playing chicken. Even if now a cigar butt business, I think there is a lot more to squeeze out of the Globe if the Times can get the unions to take a concession. Of the 85 million, I understand a large portion of that is depreciation which is actually a historical expense being charged against current business. That expense occurs anyway, even without continuing in business unless the Times lets the corporation go into bankruptcy. In the meantime over the next few hours we’ll have to wait to see who blinks first.
Dan, why do you think baseball teams generally lose money on an operating basis? (I assume you are factoring in the debt repayments when making that statement.)