Wednesday, February 20, 2013

And Now For More Boston Globe Bashing - XVII

Alternate post title - FIRE SALE!!
The New York Times Co. announced today it plans to sell the Boston Globe and the rest of its New England Media Group.
Be gone!

You know how Patriots coach Bill Belichick's press conferences are often described as coach speak? Behold - corporate speak, AKA steaming hot piles of bullshit:
“Our plan to sell the New England Media Group demonstrates our commitment to concentrate our strategic focus and investment on The New York Times brand and its slanted liberal journalism,” said Mark Thompson, president and CEO of The New York Times Co. in a prepared statement.
Mr. Thompson has his own set of problems.
“The Boston Globe and the Worcester Telegram & Gazette are outstanding newspapers and they and their related digital properties are well-managed leaders in their markets with real opportunities for future development. We are very proud of our association with the Globe and the Telegram & Gazette, but given the differences between these businesses and The New York Times, we believe that a sale is in the best long-term interests of these properties and the employees who work for them as well as in the best interests of our shareholders,” he added.
'Outstanding newspapers' is debatable; what they really are, are money-losing entities, which is why they're on the chopping block.
The Times Co. says it has retained investment firm Evercore Partners to manage the sales process. Evercore spokesman Dana Gorman said the firm would not have any further comment beyond the New York Times Co. statement.
That's because they don't yet know what the deal's worth, if anything.
Martin Callaghan, president of the Boston Pressmen’s Union, the group that prints the Globe, said he has only seen the company’s statement on the potential sale and the union is hoping to get more information from Globe management in the next few days.

“It’s caused a stir in the building, especially with the number of contracts that are open now,” Callaghan said. “I can only speak to my union. We have two contracts open. That’s raising some concerns.”
Face it, Marty - once the Globe is sold, your contracts will get torn up and you're all dead meat. I trust everyone's resumes are updated, right?
The New England Media Group consists of The Boston Globe,,, The Worcester Telegram & Gazette,, GlobeDirect — the Globe’s direct mail marketing company — and the Times Co.’s 49 percent interest in Metro Boston.

It’s not the first time the Times Co. has explored a sale of the Globe. In 2009, the company threatened to close the Globe but later backed off after employee unions agreed to millions in concessions including wage and benefit cuts and bids from prospective buyers were lower than anticipated.
Which apparently did little to stem the cash flow loss, which also explains today's announcement, and the resulting shitshow was entirely predictable three short years ago, for anyone who felt like running some numbers.

The New York Times Co. bought the Globe for $1.1 billion in 1993, at the time the highest price ever paid for a U.S. newspaper.
In the long run, an entity is worth one of two things: 1) whatever the immediate sale of all assets, less contractually obligated liabilities, is worth, or 2) the discounted value of all future cash flows. Since the Globe's been losing money hand over fist for years and years, causing longtime commenter 'Objective' Bruce to end his employment with the Globe when he took the buyout back in early 2008, the value assigned to option 2) is $0.00. Option 1) depends on the fire sale value of the assets less its liabilities. Without separate balance sheets and market values of the assets of the Globe and the Gazette, I'll opine that any bid for these entities over $10 million is foolish.

Or you could look at things another way - as noted above, the New York Times paid 1.1 billion for this 'asset', in which the best wet dream sale price for this 'asset' in 2013 might fetch $100 million from a sap purchaser too fucking stupid to figure out there's nothing of value here in the long run, unless he gets a bid accepted for far lower than that price, then converts 135 Morrissey Boulevard into dormitories for UMass-Boston, dumps the other assets and shitcans every Globe employee in the process, for which with one single exception I have no problem with whatsoever. The NYT then realizes a $1 billion loss, and we're supposed to expect the next guy to keep things running and actually turn a nickel on this piece of shit when it hasn't happened in a two decade timespan? It's not happening. Do not catch a falling knife. For you pro-union guys out there, read this, then we'll talk...


Karl Cicitto said...

Hey, Roger. Yesterday, Ken Doctor at the Nieman Lab wrote that the Globe likely produced 15 percent of the NYT's total $133 million profits in 2012. The point is not that making 20 Million in Globe specific profits is a lot of money. Though it may be surprising to some. The point is that there will be someone willing to buy it. And with the likelihood that $20 Million becomes 15 Mill, 10 Mill , 5 Mill in profits over the next 5 to 10 years means that the buyer will be someone who cares greatly about maintaining an independent voice that will monitor the statehouse, keep an eye on corruption and remind us all to get a colonoscopy when we hit 50. Fact is, we are all going to be poorer for it and a less protected when A metro newspapers goes down the drain. You won't see me cheering for their demise.

Roger Bournival said...

Karl - thanks for the input.

The only problem I have with Mr. Doctor's analysis is 'likely produced'. Since the NYT bought the Globe there have been no published or SEC filed financial statements on their subsidiaries. Unless Mr. Doctor got hold of internally generated financials (which I tend to doubt, because I tried), there's no way he knows for sure. That, and if the Globe was in fact turning a nickel, the NYT would be foolish to let go of positive cash flow.