A Brief History of Pinch

Globe layoffs: the latest

Talking points on today's Globe salary cut

8 Comments

• Dan Kennedy said:

  I have not read Bowden's profile yet, and I'm looking forward to it. That said, would it have mattered if Sulzberger were a genius? The only smart business move a newspaper company has made in 15 years was the Washington Post Co.'s acquisition of Kaplan Testing.

  March 30, 2009 1:30 PM

• Adam Reilly said:

  Yo, Dan--By way of an answer, here are a couple long grafs from Bowden that suggest the answer is yes:

  In 2001, The New York Times celebrated its 150th anniversary. In the years that have followed, Arthur Sulzberger has steered his inheritance into a ditch. As of this writing, Times Company stock is officially classified as junk. Arthur made a catastrophic decision in the 1990s to start aggressively buying back shares ($1.8 billion worth from 2000 to 2004 alone). This was considered a good investment at the time, and had the effect of increasing the stock’s value. Shares were going for more than $50. Now they are slipping below $4—less than the price of the Sunday Times. Arthur’s revenues are in free fall: the bottom has dropped out of both newspaper and Internet advertising. He has done more than anyone in the business to showcase newspaper journalism online. It hasn’t helped much. The content and page views of the newspaper’s Web site, nytimes.com, may be the envy of the profession, but as a recent report from Citigroup explained, “The Internet has taken away far more advertising than it has given.” Layoffs have occurred in the once sacrosanct newsroom.

  Having squandered billions during the newspaper’s fat years—buying up all that stock, buying up failing newspapers, building a gleaming new headquarters—Arthur is scrambling to keep up with interest payments on hundreds of millions in debt, much of it falling due within the next year. To do so, he is peddling assets on ruinous terms. Arthur recently borrowed $250 million from Carlos Slim Helú, the Mexican telecommunications billionaire, who owns the fourth-largest stake in the Times Company. Controlling interest is held closely by the Sulzberger family, which owns 89 percent of the company’s Class B shares. These shares, not traded publicly, are held by a family trust designed to prevent individual heirs from selling out, and ultimately to shelter editorial matters from strict concern for the bottom line. The family owns about 20 percent of the Class A shares, which is about the same percentage owned by the hedge funds Harbinger and Firebrand. The third-largest Class A shareholder is T. Rowe Price, with 10 percent. Slim comes next, with 7 percent. Given the current state of the investment and credit markets, Slim would appear to have the inside rail should the paper ever be sold, a prospect once unthinkable. It is now very thinkable. Among the other prospective buyers whose names have surfaced in the press are Michael Bloomberg, the billionaire mayor of New York; Google; and even, perish the thought, the press baron Rupert Murdoch, whose Wall Street Journal has emerged as journalistic competition for the Times in a way it never was before. (Murdoch has publicly dismissed reports of his interest in the Times as “crap,” which has served only to heighten speculation.) This quarter, for the first time since Times Company stock went public, in 1969, the fourth- and fifth-generation Sulzbergers who hold shares (there are 40 of them in all) received no dividends. As recently as last year they divvied up $25 million.

  March 30, 2009 2:34 PM

• Dan Kennedy said:

  It strikes me that Sulzberger's mistakes exacerbated an impossible situation but didn't create it. As I said, I look forward to reading it. But show me a healthy newspaper company and I'll show you one that doesn't exist.

  March 30, 2009 3:27 PM

• Ron Newman said:

  Hmm, I wonder how healthy Phoenix Media is?

  March 31, 2009 3:41 PM

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