New York Times Co. – Page 7

Show us the money

Will the Taylor group really be able to pull off a deal to buy back the Boston Globe from the New York Times Co.? Today’s Globe piece on Stephen Taylor’s quest to acquire the paper his family sold in 1993 reports that he’s having some trouble scaring up enough money. Beth Healy writes:

Some wealthy Bostonians spurned Taylor’s early overtures, wary of investing in what they consider a dying industry, according to people involved in the bid. With final offers due tomorrow, Taylor is still scurrying to raise money. He has to convince investors he has what it takes to make it in a radically shifting newspaper landscape, despite having been out of the business for nearly a decade.

That fits with information I reported two weeks ago, when I wrote that the Taylor group was still trying to line up investors.

Meanwhile, the Boston Herald’s Jessica Heslam reports that the price of purchasing the Globe and the Worcester Telegram & Gazette may have risen substantially. Both Taylor and Platinum Equity, the only other serious bidder, have reportedly offered to pay $35 million and to assume $59 million in pension liabilities. Now, though, Heslam quotes anonymous “insiders” who say that the esimate of pension liabilities has nearly doubled, to $115 million.

Hard to tell what’s going on here. Heslam quotes a Times Co. spokeswoman who says something that sounds vaguely like a denial, but not really. So, for the moment, let’s proceed under the assumption that Heslam’s sources are right. Will this kill the deal? Especially with the under-capitalized Taylor bid?

It’s possible that the Times Co. will be forced to eat some of that $115 million, like Theo Epstein getting rid of another overpaid, under-performing shortstop. Even though the Globe carefully notes that it’s “conceivable the Times Co. won’t sell the paper,” Poynter Institute media analyst Rick Edmonds recently noted that the Times Co. would lose substantial tax advantages if it doesn’t sell by the end of 2009.

It will be fascinating to see what gets announced tomorrow. That is, if there’s an announcement.

Stayin’ alive with Platinum Equity

One can only imagine the glee that folks at the Boston Globe must have felt when they came across a photo of prospective owner Tom Gores looking like he’s starring in the community-theater remake of “Saturday Night Fever.” The photo leads a long piece on Gores’ tenure at the San Diego Union-Tribune.

Wearing a flamboyantly pinstriped black suit jacket over a black shirt strategically unbuttoned to show off his smooth chest (and don’t miss the black-and-white polka-dot handerchief), Gores comes across as an exceedingly unlikely candidate to stabilize the Globe’s finances while preserving its journalism. The story dwells in some detail on embarrassing facts about Gores’ personal life as well.

I should note that the photo is credited to Gores’ firm, Platinum Equity. So he must be quite proud of it.

Still, you never know. Platinum is one of two groups in the running to purchase the Globe and the Worcester Telegram & Gazette from the New York Times Co. The other, favored by most people I talk with, is headed by former Globe executive Stephen Taylor and former Globe publisher Ben Taylor, prominent members of the family that sold the paper to the Times Co. in 1993.

Platinum Equity has been the subject of fascination since it acquired the Union-Tribune earlier this year. But as the Globe story notes, though the paper’s staff has been slashed to ribbons, the Union-Tribune is now on track to turn a small profit this year. Quality matters; but nothing is possible at a paper that keeps bleeding cash.

The non-profit news site Voices of San Diego, which has been keeping a watchful eye on Platinum, recently ran a piece containing what might be described as cautious praise. The story quotes an anonymous staff member following a meeting with management: “I went into the meeting not super-receptive, given that this is the management team that had laid off more than 100 people the day before. I came out feeling better about the future of the paper than I have in two years.” The story continues:

Two other newsroom workers agreed with that assessment, and all three said they were hopeful and impressed by the new management’s willingness to criticize the old regime. (The staff members requested anonymity for fear of antagonizing the new bosses.)

The positive feelings are remarkable considering how the U-T has been plagued by poor morale and severe financial troubles in recent years. The paper has physically shrunk by about half since 2006, and several rounds of layoffs and buyouts have eliminated about half of all jobs companywide.

To be sure, there is a lot of low-hanging fruit at the Union-Tribune. Employees still paste up pages manually, a labor-intensive practice that is now being eliminated. But for the Union-Tribune to achieve financial stability so quickly, and for management now to be talking about growth, is an impressive achievement given the dire straits in which the newspaper business finds itself.

Still, I’d certainly feel better if the Taylor group prevails. Yes, the Globe has to succeed as a business. But with the Taylors, I’m more confident that managers would seek to define the journalistic mission first, then figure out how to pay for it.

The Globe’s coming back tomorrow with a look at the Taylor group. I expect to see a photo of Steve and Ben dressed in tasteful, non-ostentatious business suits, their jackets off and their sleeves rolled up, serving meals at a homeless shelter before heading in to work.

Meltdown at the Boston Newspaper Guild?

I will confess that I have been following contretemps within the Boston Newspaper Guild from afar, at best. But from the looks of an e-mail sent to Guild members this afternoon and obtained by the Phoenix’s Adam Reilly, it appears that a total meltdown is under way.

Dan Totten, the controversial president who led the union in talks with the Boston Globe’s corporate owner, the New York Times Co., during the spring and summer, has had his financial authority suspended, and an audit is being conducted, according to the e-mail from the Guild’s executive board.

This comes on top of a recall effort led by some Globe staffers who have accused Totten of inadequate communication — which another way of saying that the $10 million in concessions approved during the summer cut health benefits by considerably more than union members say they’d been led to believe.

Dropping the paper in order to save it

Maybe I’m part of the solution after all.

Media Nation has learned that the Sunday-versus-weekday revenue split at the Boston Globe may be more dramatic than I had previously heard. In 2008, the Monday-through-Friday editions brought in $113 million. The Saturday and Sunday papers’ take was $259 million — just a shade under 70 percent of the total.

I don’t have separate numbers for the Sunday paper alone. But, traditionally, Saturday papers are the smallest and least lucrative of the week, which means that the Sunday Globe accounts for the overwhelming majority of those weekend revenues. Several days ago, I wrote that the Sunday Globe was thought to account for 60 percent of revenues; it now appears that figure might have been low.

Given that, it makes sense for the Globe to push electronic distribution for its weekday papers as long as it’s done with an eye toward preserving the Sunday print edition. If the Globe could save on printing and distribution costs and entice weekday advertisers into the Sunday edition, its revenues might drop, but its profit margin could rise. (Or, since this is a newspaper we’re talking about, rematerialize.)

Also this morning, a couple of tidbits on the New York Times Co.’s efforts to sell the Globe:

• A bid by former Globe executive Stephen Taylor, a member of the family who sold the paper to the Times Co. in 1993, may be facing some obstacles. Word is that the group is still trying to line up investors. Not that those investors won’t be found, but it doesn’t sound like Taylor is ready to write a check just yet.

I also hear that the San Diego-based Platinum Equity group may be losing its ardor for the deal — which puts Taylor in a strong position if he can come up with the money. People are buzzing about the addition of former Globe publisher Ben Taylor (a cousin of Stephen’s) and longtime Boston journalist Mary McGrath to the Taylor group. But they’ve got to find the dough.

Given that the Taylors sold the Globe for $1.1 billion, and that they are now trying to buy it back (along with the Worcester Telegram & Gazette) for a mere fraction of that, you’d think money wouldn’t be a problem.

But the $1.1 billion was split among many, many members of the Taylor family. And investors these days aren’t exactly clamoring to get into the newspaper business.

• On the other hand, Poynter Institute media-business analyst Rick Edmonds writes that recent statements from the Times Co. suggesting it might hold onto the Globe are, in all likelihood, so much malarkey (via Ralph Ranalli at BeatthePress.org).

The reason: the Times Co. needs to take a loss by the end of 2009 in order to offset capital gains it’s realized by selling off other properties. In addition, Edmonds says:

I don’t think taxes alone would impel a sale. The Times Co. may also fear getting stuck with another round of operating losses (or find itself forced to lay off more employees, with renewed labor upheaval). Also, the company may have worn out its welcome both inside the paper and with Bostonians, who would welcome a Taylor family restoration.

As Ranalli notes, Edmonds is the guy who cracked the code earlier this year in explaining the Times Co.’s claim that the Globe was on track to lose $85 million. According to Edmonds’ analysis, though that number was real, the paper’s actual cash operating loss for 2009 would probably be around $20 million. All of a sudden, the Times Co.’s demand for $20 million in union concessions made sense.

When Times Co. chairman Arthur Sulzberger Jr. told Globe employees in August that the paper’s finances had improved and the company was in no hurry to sell, it struck me mainly as a ploy to drive up the price. Edmonds’ latest fits right in with that.

Photo (cc) by Tony the Misfit and republished here under a Creative Commons license. Some rights reserved.

The Taylor group gets two boosts

The Stephen Taylor-led group that’s seeking to buy the Boston Globe from the New York Times Co. is getting more interesting by the day.

Last week the Globe reported that the group includes Mary McGrath, who’s best-known for producing two Christopher Lydon-hosted shows on public radio, “The Connection” and “Open Source,” and who is a formidable journalist in her own right.

She also hails from a legendary family of journalists that includes her brother Charles “Chip” McGrath, a staff writer for the New York Times; her brother Jim McGrath, an editorial writer for the Albany Times Union; and her nephew Ben McGrath, a staff writer for the New Yorker.

On Saturday the Globe revealed that Stephen Taylor, a former high-level executive at the Globe, has been joined by his cousin Ben Taylor, a former Globe publisher who was removed by the Times Co. in 1999. (The Taylors sold the Globe to the Times Co. in 1993.)

Is it OK to start feeling optimistic?

Arthur and Janet’s $70 million question

Here’s the latest edition of On the Record, an e-mail circulated to employees of the New York Times Co. by chairman Arthur Sulzberger Jr. and president Janet Robinson. A copy was obtained by Media Nation. Enjoy.

On the Record … From Arthur & Janet

Vol. 3 Our Circulation Strategy

September 14, 2009

To Our Colleagues,

A reader recently wrote, “I feel that the importance of The Times is so great that I would pay $70 million for access to the most important paper in the free world.”

We appreciate the thought but while things are difficult for newspapers, they haven’t reached that point.

As our advertising revenues have declined, we have asked our readers to bear more of the cost of our journalism, as many other newspapers have done with their readers. They have demonstrated a willingness to do so. As a result, in the first half of this year we have seen gains in circulation revenues at The Times, the Globe, the Sarasota Herald-Tribune, the Santa Rosa Press Democrat and some of our other regional newspapers. In this issue of On the Record, we’ll talk about our circulation strategy and how it has improved our financial results.

Let’s start with our underlying premise. We believe that we provide very high-quality news, information and entertainment to our readers. We also believe that our premium quality journalism warrants a premium price. This is why we have experimented in the past with online subscription models. It’s also why we continue to explore ways to derive more revenue from our digital content than we get from the advertising and other secondary revenue streams we have today. We plan to discuss that in a future issue of On the Record.

Today circulation revenues make up a greater percentage of the Company’s revenues than they did in the past. Five years ago, advertising accounted for 67 percent of our total revenues and circulation made up 27 percent. In the second quarter of this year, advertising totaled 54 percent of our revenues and circulation was 39 percent. Circulation revenues have grown to the point that last year they were the highest they have been in our history.

We don’t mean to suggest that there have not been any cancellations or that circulation volume hasn’t declined. It has. But there have been far fewer cancellations from price increases than we expected at both The Times and the Globe. The reader retention rates for The Times and the Globe are enviable — for subscribers of two years or more, the rate is roughly 90 percent for both papers. In fact, The Times has more than 830,000 readers who have subscribed for two years or more, up from 650,000 in 2000.

Some of the volume declines at our newspapers are attributable to our deliberate strategy of focusing on individual readers who pay to get their paper rather than discounted copies, such as those distributed at hotels, conventions and other venues. Advertisers value these individual readers since they are deeply engaged with our newspapers.

Why do readers continue to embrace print? The reason newspapers have endured for more than 400 years is because they work. People understand how newspapers are organized — if a story is above the fold, it’s more important than below the fold. If it appears on the front page, it’s more newsworthy than one inside the paper. Readers enjoy the serendipity of finding something new that they didn’t realize they were interested in but discovered in the pages of their paper. Newspapers are portable. They offer a point in time assessment of the news.

In order to get The Times in the hands of even more readers, we are working with organizations across the country to print and distribute the paper. Most recently we announced a new agreement to print The Times in Nashville, enabling us to expand newsstand and home delivery to readers in the area and to better serve our current readers in Tennessee, northern Alabama, northern Mississippi, eastern Arkansas and western Kentucky. Today The Times is printed at 26 locations across North America.

We expect the print editions of The Times, the Globe and our regional newspapers will be around for years to come. But we are a news company, not a newspaper company. We are committed to offering our consumers our content wherever and whenever they want it and even in ways they may not have envisioned — in print or online — wired or mobile — in text, graphics, audio, video or even live events. Because of our high-quality journalism, we have very powerful and trusted brands that attract educated, affluent and influential audiences. These audiences are a true competitive advantage as we move into an increasingly digital world.

We hope this is helpful in understanding our circulation strategy. If you have any questions on this or other issues, please send us an e-mail at: arthur_and_janet@nytimes.com.

Arthur & Janet

The latest on the Times Co. and the Globe

New York Times Co. chairman Arthur Sulzberger Jr. and president Janet Robinson met with employees of the Boston Globe yesterday. And it appears there is nothing new to report.

According to stories in the Times, the Globe and the Boston Herald, Sulzberger said the Globe is still for sale, though an improving financial picture means there’s no hurry.

It also sounds like folks at the Globe remain angry over the way they were treated earlier this year, when the Times Co. threatened to close the paper if the unions failed to approve $20 million in concessions.

I could go on. But you get the idea. Ralph Ranalli has more at BeatthePress.org.

Another bump for Stephen Taylor

Boston Herald business reporter Jay Fitzgerald talks with newspaper-industry analysts who say a group headed by Stephen Taylor — a member of the family who sold the Boston Globe to the New York Times Co. in 1993 — may be emerging as the leading candidate to buy the Globe from the Times Co.

That would fit with the Globe’s own recent reporting, which identified the Taylor group and a California-based real-estate investment company, Platinum Equity, as serious contenders. All things being equal, Times Co. chairman Arthur Sulzberger Jr. would presumably rather sell to a newspaper guy than to an out-of-state company that may be more interested in the property than the news.

Times Co. executives to visit Globe

New York Times Co. chairman Arthur Sulzberger Jr. and president Janet Robinson will visit the Boston Globe on Sept. 9, according to an e-mail sent to Globe staffers that was obtained by Media Nation. The full text of the e-mail follows:

Please mark your calendars!

Arthur and Janet will visit the Globe on Wednesday, September 9th to hold business update meetings that are open to all employees.

The meetings are scheduled for 10:00 AM and 2:00 PM. Each meeting will be held in the Link.

All employees are encouraged to attend. There will be time for Q&A’s.

[Globe publisher] Steve [Ainsley] will begin the meeting with a brief overview of The Boston Globe and Boston.com business plan.

No doubt the number-one question on most folks’ minds will be the status of Times Co. efforts to sell the Globe, Boston.com and the Worcester Telegram & Gazette.

Update: For what it’s worth, Media Nation has received a revised e-mail stating that Ainsley “will hold a series of separate employee meetings in mid-September” in order to “ensure that all employees have ample opportunity to both meet with and
ask questions of Arthur Sulzberger and Janet Robinson.”

A Taylor-made Globe?

In what may prove to be very good news for readers of the Boston Globe, a group led by Stephen Taylor — a prominent member of the family that sold the paper to the New York Times Co. in 1993 — has, if I’m reading the tea leaves correctly, moved into the pole position to buy the paper.

Beth Healy reports in today’s Globe that Taylor and California-based Platinum Equity have made it to the next round, and that both groups will tour the paper around Labor Day. Meanwhile, a group led by Partners HealthCare chairman Jack Connors and Boston Celtics co-owner Stephen Pagliuca — pointedly described as having submitted “the lowest bid” — will be on the outside looking in. Whether that might change is unclear.

No new owner of the Globe, not even a Taylor, is going to restore the glory days. But the Taylors were very good stewards of the paper, and Stephen Taylor, a former Globe business executive, is said to be one of the sharper members of his family. In addition, a Media Nation source who knows him tells me he’s a good guy.

Connors, too, is a good guy. But he’s also involved in just about every civic and business group in Greater Boston, and it’s hard to believe he could offer the Globe the sort of independent leadership it needs. Given that he and Pagliuca are said to be interested in pursuing some sort of non-profit arrangement, you also have to wonder whether they’ve got enough capital to pull it off.

According to Healy, both the Taylor group and Platinum submitted bids to buy the Globe, the Telegram & Gazette of Worcester and Boston.com for about $35 million (a far cry from the $1.1 billion the Times Co. paid 16 years ago for just the Globe) and agreed to assume $59 million in pension liabilities.

Given that Times Co. chairman Arthur Sulzberger Jr. recently said price will not be the only consideration, I would think a group with deep roots in both Boston and journalism would have an advantage over Platinum, whose executives may be interested mainly in the real estate.

For big-money investors, $94 million is not an enormous sum. I suspect that what will separate the winner from the losers in this deal is the willingness and ability to keep losing money until the paper can be restructured into a profitable business. And yes, I’m confident that someone can do it.

More: Over at Beat the Press, Ralph Ranalli laments the exclusion of the Connors group, arguing that non-profit is the only viable model for the newspaper business moving forward. Ralph and I agree, though, that Platinum would be bad news all around.