Former Boston Globe columnist John Ellis, a venture capitalist who disclosed earlier this year that he’d done some work for a potential buyer, warns that things are still bad at 135 Morrissey Blvd. and likely to get worse.
“How long can the NYT afford to carry the net operating losses?” he asks. “When does it make more sense to just shut it down?”
Ellis also argues that the Globe must do everything it can to hang on to what’s left of its big-name sports talent, namely columnists Dan Shaughnessy and Bob Ryan.
I revere Ryan, who, despite his veteran status, happens to be one of the hardest-working folks at the Globe. Shaughnessy’s a good read even when he’s sending me over the edge. But the idea that management might have to shell out more money to keep its stars from jumping to the Internet is galling at a time when everyone else is being asked to sacrifice.
Which is not to say Ellis is wrong. He’s probably right.
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I don’t get it. Things are so bad at the Globe, the NYT has decided not to sell it.
Treg: Is it really that difficult to understand why the Times Co. wants to wait until the economy improves and perhaps it can get a better price?
Sure, that occured to me. But I don’t know that that’s consistent with the point made by Ellis here. He’s implying things are so bad they could have to shut down. If that’s realistic, I’d think NYT would want to sell while the thing is still up and running.
“management might have to shell out more money to keep its stars from jumping to the Internet”
This puzzles me. Is there so much money to be made as free-lancers “on the Internet”? I know a couple of minor sports pundits who are “on the Internet”, but they’re keeping their day jobs.
Steve: Ellis was referring specifically to ESPN Boston, but I broadened it to “the Internet” when I thought about Gordon Edes having left for Yahoo Sports and some Herald people jumping to WEEI.com.
This is what I was referring to in the other thread when I said that, being a skeptic, we wait a while to see what other things happen in the drama that is the Globe. I’m not suggesting that I have any special knowledge (I don’t), or don’t accept Dan’s info about the viability of the Platinum and Taylor bids, just that there always seems to be another shoe to drop in the story. There never seems to be a final word.
As for Ellis’ quotes:
“How long can the NYT afford to carry the net operating losses?” “When does it make more sense to just shut it down?”
How long could any potential buyer carry the losses?
InsiderNegot: Ellis is a very smart guy, but I think you’ve put your finger on a fundamental flaw in his analysis. There has to be a point at which the Globe can get small enough to break even or actually turn a profit. It could be that the Times Co. doesn’t have the stomach for it. But that break-even point exists. Pat Purcell, who owns the Boston Herald, is supposedly making a profit. If the Globe can’t find a way to do it with a far larger readership and advertising base, then there’s something awfully wrong.
The question is, does anyone buy the Globe to read Shaughnessy or Ryan? I’m sure there’s a few, but I highly doubt it’s a number worth keeping them for.
They are way past their prime. (If they ever had one.)
Stop the average guy on the street and ask him to name the first two Globe writers who come to mind, and I’ll bet that a significant number mention Ryan and Shaughnessy first–and maybe only those two. I enjoy reading both of them, and the Globe has already lost so many talented writers that I think the paper should make every effort to keep these two on the job.
BillH, there’s a difference between knowing they write for the Globe and buying a paper because you want to read what they wrote.
A very big difference.
Dan:
Purcell, as you note, is reportedly making a profit. But his product has suffered with the printing moved to Chicopee. One needs to only look at the Red Sox West Coast games, no scores!
Despite this, it appears that as long as they keep doing what they do best, ie Coakley, they will continue to sell newspapers.
By the way, the Times still has the print facility in Billerica. A perfect fit for the Herald and Murdoch. They can produce what they do now in Chicopee, closer to Boston and have room to grow.
As for the Globe, yes they will need to get smaller. I do think the Times has the stomach, but will they do what they did last time and wait too long?
InsiderNegot: I think one of the dumbest things the Times Co. did in recent years was refuse to print the Herald. It was predicated entirely on the presumption that it could drive the Herald out of business. Instead of making a hard-headed business decision that would have been good for both the Globe and the Herald, the Times Co. was blinded by the false notion that the Herald was on its last legs.
I doubt the Herald is in any danger at all, because there’s really no limit to how small it can get. The Herald no longer competes with the Globe on news (or a better way of putting it would be that the Herald competes with the Globe not one-on-one, but in the same way that the Phoenix, the television and radio stations compete with the Globe), but it’s making money doing its own thing.
Dan:
I could not agree more. In an industry that is looking for revenue streams, this was a no-brainer. It is my sense that local management wanted this to happen but they were rebuffed by Times management.
There is some speculation that that there is lingering animosity between the Sulzbergers and Rupert Murdoch relating to business in New York and as a result, the Times won’t do anything that would appear to be helping him and/or his allies. While Purcell is not Murdoch, he is cetainly very close to him.
I agree it is a flawed theory. I have felt for at least the last 5 years that the Globe and Herald are not competitors at all. The Herald has its niche and will continue to do so.
A huge gaffe by the Times that still has time to be corrected with the printing capacity in Billerica.
The question will be, assuming the Times gets off its high horse and makes some prudent business decisions, whether it is beneficial to sell the plant or negotiate to print other products.
Dan, was talking at my son’s football game today with one of the other dads (who is on the Boston.com sales side), and your idea of waiting for a better price is on the money. The $20m (plus assumption of $80m in pension and other debt) essentially represented a price for the real estate. Waiting for things to get better (Worcester is still on the table). Whenever this all plays out, think the NYT won’t be paying taxes forever (1.1b less 20m is a modest capital loss).