I ducked into a Starbucks in downtown New Haven so I could write this. So, for now, just a few preliminary thoughts about the New York Times Co.’s announcement that it has decided against selling the Boston Globe.
Like most observers, I thought the happy talk last month from Times Co. chairman Arthur Sulzberger Jr. and president Janet Robinson was aimed mainly at driving up the price. So even though I had been hearing since last week that things were not going well with the two interested buyers (Platinum Equity and a group led by former Globe executive Stephen Taylor), it still struck me as plausible that the Times Co. would sell — at any price. In hindsight, it’s now clear there was a price below which Sulzberger and company were not willing to go.
I do think the Times Co. damaged its credibility in Boston this year by being so uncommunicative about its battle with the Globe’s unions (especially the Boston Newspaper Guild) and about the would-be sale. The company’s got some work to do on the community-relations front.
But there were certainly worse possible outcomes than this. Platinum Equity, by all accounts, would have relentlessly focused on the bottom line. I was rooting for a Taylor comeback, but if that group was as under-capitalized as I was hearing, then you can be sure that more cuts would have been the first order of business.
Besides, people who buy newspapers tend to want to bring in their own editor. I think Marty Baron has done a terrific job under incredibly difficult circumstances this year, and if this means he stays, then that’s a good thing.
Overall, today’s announcement is not bad news. Which is not quite the same as good news, but close enough.
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I would feel better if the Globe was “safe”. I wonder if it will be an ongoing sale item, depending on the Times’ financial needs. If there are new demands for cuts and concessions, that will give a whiff of their attitude.
And what did Taylor do with the 1.5 billion he got when he sold it? :-]
While the economic picture for The NY Times Co. may have brightened, they are still saddled with an enormous amount of debt.
If someone is going to pony-up the bucks, they can walk away with The Globe.
Ain’t over yet.. “No” is just the first step in the next negotiation.
Considering the NYT’s behavior throughout the whole Globe fiasco, I would take this announcement with a grain of salt. Everything out of their mouths seems to be a ploy either to extract more concessions from their employees, or drive up bids from possible buyers, so, forgive me if I am skeptical. Let’s see what the next few weeks bring as this drama continues to unfold.
Ikcape and Al: The problem with your theory is that there are no qualified buyers. I am reliably told that Platinum has cooled on the deal. The Taylor group apparently can’t line up financing. If this is a negotiating tactic on the part of the Times Co., then with whom is it negotiating?
Onthaxis – The Mr. Taylor described here did not receive $1.5 billion. The Boston Globe was owned by a holding company which was publicly traded, formed as a group to own other newspapers such as the North Adams Transcript.
The Taylor family, and predominately trusts, owned a significant number of shares in the publicly traded company, Affiliated Publications. In its final years under Taylor management, it held various other interests, including significant shares valued on the market in excess of $2.6 billion in McCaw Communications.
Part of the sale proceeds was paid by assumption of debt, much went to stockholders other than anyone in the Taylor family, some went to charity, and much went to taxes.
There was no Mr. Taylor who walked away with $1.5 billion who has it stashed away for his longevity and safekeeping.
Thus, if your last name is Taylor, and your great-great grandfather had been publisher of the Boston Globe, and you’d like to be a fractional owner, it appears right now the best you can do is accumulate merely a few million, at best, and buy more stock in the New York Times Company.
And, by the way, any investment by the Taylor family and trusts in the New York Times Company at the time of the sale of Affiliated assets, just doesn’t look as pretty today.
Can’t argue with Dan’s take on the latest development.
One larger question that’s interesting to me is: What does this episode say about the viability of out-of-town ownership of newspapers?
When local daily print papers (like ours in New Haven) get in trouble, and people start speculating about possible buyers, the NYT is the gold standard. People figure (with good reason) that it might make the local paper a lot better to have the best newspaper in the business own it.
I wonder if the Globe saga dispels that idea. Maybe there are inherent barriers to even good companies, not just rapacious companies that look to milk local communities, come into town. Maybe corporate chain ownership destroyed local journalism more than the Internet ever did.
And just maybe (not sure about this one), the whole for-profit, consumer-oriented model of daily journalism no longer works at the local level. (I have a self-interested stake in that wild assertion.)
One place to watch that assertion being tested: the NYT’s interesting experiment in San Francisco and possibly other cities, combining a national edition with not just a local bureau, but with a partnership with genuinely locally rooted, mission-driven news organization. Will that fill the gap in cities losing their dailies? Will it create a new kind of hybrid business model? Or will it devolve, after an initial flourish, into the same old out-of-town model milking a distant city with a backwater bureau?
To Newshound: Thanks. My bad on the Taylor financial entanglements. The mention was just snide afterthought – a distraction from the thrust of my post: don’t rest easy and don’t trust the NY Times co.
What a conundrum this presents for the Herald, where the dreams of becoming the only game in town have passed into the dead of night.
A bad economy means ad sales are down… but it also means the real estate market is putrid, so the dreams of vast fortunes from the redevelopment of Wingo Square are on hold.. The ever-shrinking Herald has to hang on a while longer, continuing to print its meager but increasingly strident offerings far outside the city limits. Now, however, it is without the chance dream that its only hope of survival — suspension of Globe publication — will happen before the paper is bled dry.
The NYT has been under great financial pressure (forced to borrow on unfavorable terms) but the major asset is a large newspaper — which is devalued if other (even if lesser) papers have little or no value. And whatever the long-term problems with the business, there’s no doubt that this is a bad time to sell because of the business cycle. So it makes sense that the NYT, having brought the Globe’s losses to presumably sustainable levels, would not sell at any price. If the market sets the Globe’s price too low, the value of the Times drops too.
Onthaxis – I understand – just thought with so much about the Globe in the news it would be fun to look back in what seems like not that many years ago.
If it weren’t for so many siblings, first cousins, second cousins, third cousins, endowments, aunts and uncles and the IRS, a lone Taylor descendant might otherwise be able to make an acceptable offer to buy the Globe without any other financial backing.
Today it is said the Globe is not for sale. John Henry said he would take it off their hands. He is a smart and successful investor.
If someone visited the Arthur and Janet team tomorrow with some number of millions beyond $35 million it would momentarily be for sale and agreement quickly reached. It it really is for sale at some price.
The current Mr. Taylor’s grandfather and great uncle years ago had met up at association meetings with other daily newspaper owners and back then the Taylors raised the concept of joining together in a corporate holding company.
It turned out that Affiliated then owned two newspapers, the giant Boston Globe and the tiny North Adamas Transcript. The Globe flourished and continued to grow in value, at least in the minds of investors, and the Transcript didn’t. It was also observed that because of the disparity in size, there really were no, or too few synergies.
During that relatively short time, the Transcript had not increased in market value but the former owner’s stock in Affiliated had grown enormously.
The Taylors offered to pay them back the $5 million or thereabouts purchase price, but the original owners instead chose to instead retain their much more valuable stock in Affiliated and the Transcript was sold to Ingersoll.
No qualified buyers? I don’t think that you are correct with that statement.
There are qualified buyers…it’s just that no one wants to pony up the asking price or in a way that King Arthur is willing to accept.
Each of the “bidders” in the last round WAS qualified…otherwise the NYT Co. would not have requested bids.
Good grief, Ikcape. I’m not talking about “qualified buyers” as if we were discussing government contracts. I mean “qualified” in the sense of coming up with a sufficient number of dead presidents.
Let me offer some informed speculation: I’ll bet that if we were able to find out what Platinum bid in the end, we’d learn that it failed to match the $35 million plus $59 million in assumed retirement obligations that it had offered earlier. And I’ll bet that the Taylor group couldn’t come up with guarantees that it would have the dough on closing day.
Dan, “qualified buyers” has a very firm definition in the marketplace. It means the buyer has the wherewithal to do the deal. Put in the real estate context: “A ready, willing and able individual.”
In this case, the buyers were certainly able to buy (enough cash available) and ready (they were prepared to buy.) The willing part usually rises and falls on the terms, of which money is but one.
If you don’t recognize that then you need to do a lot more research about the marketplace before you throw the buzz words around.
Qualified buyers walk away from deals for a LOT of reasons, many of which do not include the ability to put up the cash.
Their walking away does not make them any less qualified.
It is clear that the bids did not satisy NYTimesCo’s needs. That’s the bottom line.
I suspect the buyers were willing to pay a significantly higher price if there were fewer unpriced strings attached.
Ikcape: According to one source who’s pretty knowledgeable about what’s been going on, there’s a good possibility that neither would-be buyer was qualified even in that sense.
Without getting neck deep in parsing “qualilfied”, it does give the Times and idea of what SOME entity is willing to pay.
And at the risk of moving from one can of worms to another, the uncertainty about the success of a new industry business model will promote caution amone buyers an sellers.
And the latest is that the Times if talking about the possibility of more cuts at the Globe. Just when you thought…
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