Local Buyers Most Likely Option in Globe's Unlikely Sale

By Rick Edmonds

While I was on vacation last week watching the chattering white-faced monkeys and a stunning blue-crested motmot in Costa Rica, new chapters were playing out in the Boston Globe saga. Wow. Three potential bidders now, one even specifying a dollar offer.

 

Mark me down, though, as still a skeptic on seeing a deal soon, especially on the likelihood that The New York Times Co. would sell the Globe to Beverly Hills-based Platinum Equity.

 

Another event of note last week was that Times Co. execs Arthur Sulzberger and Janet Robinson broke their silence and gave the Globe's hard-working Rob Gavin an interview. They were right in thinking that their "no comment" default mode was wearing thin, and even in the process of not divulging any state secrets, they did say a few things of note.

 

I was particularly taken by the comment that price alone won't determine whether to go ahead with the sale. "We are sensitive to the impact of a potential sale on the community," Sulzberger said, "and that would be something we would factor into our decision."

 

Sulzberger and Robinson didn't say so, but I take that to mean they would think long and hard about selling to a bottom-feeding breakup specialist like Platinum at any price. And Platinum's reported offer is an underwhelming $35 million, plus assumption of pension liabilities.

 

In its brief tenure as owner of the San Diego Union-Tribune, Platinum came in wielding the ax and has shown no journalistic chops except for a start-up contribution to fund an independent, non-profit investigative unit. Suspicions linger that the company's strategy for recouping its modest San Diego investment of $50 million lies mostly in the real estate.

 

While sentiment and even appearances have little place in an asset sale, unloading the Globe to a private equity firm 2,600 miles away would write an especially dismal ending to the Times' 18-year run in Boston.

 

Conversely, sale to a locally-based group would send just the opposite signal: We tried our best, now it is time to give fresh ownership with deep Boston roots a chance to see what they can do with the franchise.

 

One of the bidding groups is headed by Stephen Taylor from the Globe's founding family, which made out very nicely in the 1991 sale for $1.1 billion. A second is headed by a successful retired ad agency exec and the owner of the Boston Celtics. Like Brian Tierney's group in Philadelphia, either would be in it, at least partly, as a community good deed rather than a straight moneymaking proposition.

 

Sale to a local group has a second advantage as an exit strategy, which I haven't yet heard discussed out loud. Has the Times Co. simply worn out its welcome as an absentee manager inside the Globe and in the Boston community as well? I think so and think that could be an important factor tilting management toward a sale.

 

Still, the financing needs to be attractive or the Times Co. will likely follow the example of Cox with the Austin American-Statesman sale and pull the property off the market even with a field of interested bidders.

 

Sulzberger and Robinson said as much in the Globe interview.

 

The counter-argument, voiced by former Poynter National Advisory Board member Lauren Rich Fine in an interview with Editor & Publisher, is that holding onto the Globe entails continuing losses that the parent company can ill afford when there is plenty of work to be done on its flagship news operation.

 

In that event, a nominal take-it-off-my-hands offer could carry the day.

 

But it is worth putting a Globe sale in perspective with other financial options open to the Times. The company's 17.75 percent share of the Boston Red Sox and its television network has been on the market for some time, but Robinson said in the company's most recent earning conference call with investors and analysts that she expects to complete a deal by January 2010.

 

Informed estimates put the value of that stake not at $35 million or $50 million or even $100 million, but at least $200 million, perhaps more. That's a difference-maker for the parent company's financial condition that a Globe sale likely would not be.

 

Does the Red Sox value depend on big Papi rediscovering his stroke or the team otherwise turning around an alarming August swoon? That would sweeten the deal, but the Sox faithful, unlike Globe readers and advertisers, can probably be counted on as customers for 2010 and beyond, whatever the temporary disappointments.