It could have been predicted, though it was looking pretty shaky over the past few days. But barring any last-minute snags, it looks like the New York Times Co. will have its $20 million in union concessions from Boston Globe employees by the (new) deadline of midnight on Sunday (Globe coverage here; Boston Herald coverage here).
Which raises a serious question. Given that the Times Co. will likely be able to declare victory, what will be its next step? After all, the Globe is reportedly on track to lose $85 million this year — or $65 million, presumably, once the concessions are in place.
There’s been a lot of speculation by media observers, including me, that the month-long standoff was a prelude to some dramatic action, including throwing the Globe into bankrupty, letting a judge restructure the paper and then selling it to a local owner. But I don’t see how that can happen if the unions give management what it wants.
Can the Times Co. afford simply to wait out the recession? I hope so. I guess we’ll find out soon enough.
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If you look carefully at the strategy employed by King Arthur and his New York Times Company, you can see the shape of the future.The Globe is being positioned for sale…either a private sale or a fire sale through a Chapter 11 Bankruptcy.The Times is stripping away the poison pills embedded in the structure of The Globe that are preventing them from getting what they see as a “reasonable price” for the paper.A quiet prediction: In three years, the Globe will be alive, under different ownership, New York Times Company will me missing from the Boston market.
I think LK is right. I’d also note that much ($65 million?) of the $85 million loss is probably amortization connected with the original acquisition of the Globe etc. by NYT. Amortization is a non-cash expense. My guess is that the $20 MM in cuts being sought are to make the Globe into a cash breakeven operation.
While it might not bring in $65 million a year, this is the ideal time for the Globe to go entirely behind a pay wall. Some newspaper has to be first, and whatever risks there are to this pale next to the prospect of ceasing to exist. A micropayment system is the way to go, provided it is cheap on a per-story basis and exceedingly easy to use, like itunes. Online readers shouldn’t have to set up their payments other than the very first time. The Globe has an excellent web site with tons of material that readers could not obtain anywhere else on the web. I don’t understand the groupthink that says readers will just go elsewhere for what the Globe provides. Who else has even a quarter as many people dedicated to finding out what’s going on in the Globe’s footprint? What is the risk? That there will be a huge dropoffs in page views? If the price is low enough, like 2 cents a view, I doubt there will be a big dropoff, but if that were to happen, so what? It’s not as though the advertisers are doing such a great job of supporting the product as it is. At least this way, advertisers will know the viewers they get actually might come from the demographic most of them are trying to reach. After all, in the old days every newspaper had a pay wall, called “newsstand sales” or “subscriptions,” and that didn’t keep people from advertising. If I were a union member at the Globe, I would be demanding that pay walls go up post haste. At the very least, the income could make up for the $4.5 million accounting error, and maybe a lot more. Every day the Globe gives away itself is another day of management malpractice.
Pay per story would change my reading habits. Right now, I scan the Globe headlines in the Opera browser and right click ‘open in background’ on what I want to read and so I can continue scanning the hedlines, without having to go back to the first Web page. I then go to the individual tabs and read the individual stories. Since I’m easily led astray, it lets me keep the stories that I want to read “cued up” while I am led to links, video and in search of more information on the story tab that I’m reading. Otherwise, I’d go off on a tangent from one story and forget what I was going to readI’d think twice about clicking if it was pay per click and maybe even try a google news to get the same story free.
I agree with Thomas. Much of the $65 million is most likely depreciation, amortization and debt interest – items that don’t go away by discontinuing publication. Depreciation and amortization are non-cash expenses, most likely, in this case, since the goodwill value of this property is not going to be reclaimed by these owners, and I predict the press is likely to be stopped before it wears out.This current trend of Chapter 11 merely to dispense with binding union contracts as has been proposed by some regarding auto manufacturers, is a last ditch effort to save a company but not stockholder equity. The Globe is better positioned for sale now. At or near break even in a severe recession, it can continue into perpetuity so long as it does not go below break even. Even though this is a mature business in which the future looks bleak the future is still hard to predict. Some things change unexpectedly.
A bit OT but the Globe should switch from its broadsheet format to the Herald-style magazine format. While the broadsheet is more “classy”, the magazine format is easier to handle in confined spaces (trains, restaurants).I’m pretty sure that a significant number of people grab the Herald not for it’s content but for its form.