Times Co. seeks Globe bids
Potential buyers say paper's owner has hired firm to manage possible sale
By Keith O'Brien, Globe Staff | June 10, 2009
(boston.com would be worth something but the Guild is blowing smoke. The Globe could lose as much as $85 million this year alone.)
The New York Times Co. has hired an investment bank to manage the possible sale of The Boston Globe, and the company plans to request bids for Boston's major daily in the next couple of weeks, according to two people who say they may make offers on the newspaper.
The Times Co., which has declined to comment in recent months on whether it is selling the Globe, has hired Goldman Sachs, the same Wall Street investment bank the Times Co. has hired to sell its 17.5 percent stake in the Boston Red Sox, the potential bidders say.
In recent weeks, Goldman Sachs representatives have told interested parties that the Times Co. would begin accepting bids for the Globe after June 8, no matter which way the Boston Newspaper Guild, the Globe's largest union, voted on $10 million in pay and benefit cuts demanded by the company.
"The New York Times has indicated to interested buyers that once the June 8 vote had taken place, once everybody knew what was going to happen -- up or down -- they would expect bids a couple weeks later," said one of the interested buyers. Both requested anonymity because they are not ready to speak publicly about the potential sale.
"That doesn't mean they have said they are going to sell it. They've just said they are willing to entertain bids. But it sure indicates an interest," said one potential bidder.
This same person said bids would be taken on "any and all" New England properties, including the Globe and the Worcester Telegram & Gazette. The other potential buyer added that the process may take some time, with the Times Co. "exploring options over the summer."
Both Times Co. and Globe executives declined to comment yesterday.
"It's our longstanding policy not to comment on rumors concerning potential acquisitions and divestitures," said Times Co. spokeswoman Catherine Mathis.
No one has publicly declared an interest in buying the Globe, which lost $50 million last year and is on pace to lose money this year with the economy struggling and more readers getting their news online. However, since early April, when Times Co. executives threatened to shut down Boston's 137-year-old newspaper if Globe unions didn't accept $20 million in concessions, many industry analysts believed the company was angling to shore up the Globe for a sale.
By demanding steep wage cuts and stripping employees of their lifetime job guarantees, analysts said, management was making the money-losing Globe less of a financial drain on the Times Co., but also more attractive to suitors considering buying New England's largest paper. Most of the key unions at the Globe approved those changes.
In the last two weeks, three of the newspaper's four major unions -- representing the mailers, the pressmen, and the delivery truck drivers -- ratified concessions giving $10 million back to the Times Co. The Guild -- the paper's largest union representing nearly 700 editorial, advertising, and business office staff -- fell 12 votes short of ratifying another $10 million in concessions on Monday. However, the Times Co. said yesterday that it will get $10 million it needs from the Guild by imposing a 23 percent across-the-board wage cut, effective Sunday, the start of the next pay period.
Two other people who declined to be identified but are involved in potential bids on the Globe said they don't expect buyers will submit bids until the Guild situation is resolved. Guild leaders want to go back to the negotiating table to get a better deal for members and have threatened legal action to block the 23 percent pay cut.
Whatever the timing, the wage cuts announced this week have made the Globe "marginally" more attractive to sell, said Tom Fiedler, former Miami Herald executive editor and the dean of Boston University's College of Communication.
The Globe, he said, would still probably be seen as a "money-losing proposition," and new ownership might need to roll out "draconian plans" to make it more financially viable. But even knowing that, Fiedler said, someone will probably find the Globe - along with Boston.com - worth owning.
"The Boston Globe franchise - the brand of Boston Globe journalism - is extremely valuable," Fiedler said. "Right now, it just has to find the business model to sustain it."
Media outlets across the country are struggling in this difficult economy, and major metropolitan newspapers, like the Globe, have been particularly hard hit. Circulation numbers are in decline. More and more, readers are getting their news online. And with online advertising revenues not making up what papers are losing in print ad revenues, newspapers have been shedding jobs, cutting sections, or going online altogether.
Given these problems, civic leaders and readers have called on locals to step up and reclaim papers owned by large corporations. But recent buyers of newspapers have struggled to stay in business, much less stay in the black, weighted down by debt.
The publishers of the Minneapolis Star Tribune and Philadelphia Inquirer - as well as the Tribune Co., publisher of the Chicago Tribune and Los Angeles Times - have all filed for bankruptcy protection in recent months. And new ownership hasn't always had local roots. In many cases, like that of the San Diego Union-Tribune this year, the buyers are private equity firms.
With this in mind, Fiedler said he feels like "holding his breath" when he thinks about who might take over control of the Globe, if the Times Co. were to sell. But given the problems and mounting tensions between the two in recent weeks, maybe a new owner, with new ideas, might be best for the Globe, Fiedler said.
"The old saying about how the devil we know is better than the devil we don't know -- I'm not so sure," Fiedler said. "Maybe the next owner will have the civic good at heart. But in achieving that civic good there's going to be some extremely difficult decisions that have to be made, decisions that will affect the lives of people at the Boston Globe." |
