John Ellis at RealClearMarkets -------
In the last five years, the New York Times has declined in value by an astonishing 70 percent. There is no indication that things will get better any time soon. Indeed, as the specter of recession looms, there is every reason to believe that things will get worse.
At some point here in the near future, the market capitalization of the New York Times will fall below $2 billion. At that point, a psychological floor will have collapsed and the company will be in play.
The company that has the most to gain from buying the New York Times is Google.
If it proffered a Murdoch-like, no-auction bid of $4 billion, wouldn't the Sulzberger family have to accept it? Every single class B shareholder would accept the offer. It's their only exit.
It is also likely that Times employees and retirees would enthusiastically support the deal; it's their only exit as well. So it would all come down to whether the Sulzberger family (smaller in number and not as far-flung as the fractious Bancroft clan that owned Dow Jones) would accept the deal.
The choice for the family would be basically this: double your money or double down on "young Arthur," as the NYT's Chairman and CEO is sometimes called.
In the back of their minds, the prospect of doubling down on "young Arthur" could only mean that the company's stock will continue its relentless decline. The prospect of doubling up with Google offers realized value, a global platform and thus a much clearer path to future growth. Everyone would be a lot richer than they are now. Assuming a cash/stock transaction, some might be a whole lot richer in the future.
I am told by smart people who know the business that the Sulzbergers will never sell; that their identity is the New York Times. It's also said that they take their role as stewards of journalistic "excellence" and "integrity" seriously.
They're plenty rich as it is, if not as rich as they once were, so it's not about the money. It's about the Statue of Liberty and justice and righteousness, all of which they feel The New York Times embodies. And I believe that they believe all that.
But as everyone knows, and the Sulzbergers know better than most, the game has changed. Classified advertising has been gutted by Craig's List (and a thousand other web-sites). Department stores have consolidated and newspaper advertising budgets have consequently declined.
The way people access information has fundamentally changed, thanks to the Internet. On and on it goes.
But perhaps the biggest change is that The New York Times is squarely in the cross-hairs of the aforementioned Rupert Murdoch. Mr. Murdoch recently acquired Dow Jones for $6 billion. He did not buy Dow Jones because of its growth potential. It's a mature business, to say the least.
He did not buy Dow Jones because he sees limitless growth opportunities in financial news and business information. It's a crowded field. He bought Dow Jones so that he could own The Wall Street Journal.
He intends to use The Wall Street Journal as a precision-targeted weapon. And the target he has locked onto is The New York Times.
The Sulzbergers understand this. The question they have to ask themselves, knowing that Mr. Murdoch intends to bleed them to death, is this: Can they afford to engage in this battle without a very deep-pocketed partner or do they sell the New England properties (The Boston Globe, NESN, The Boston Red Sox stake and the Worcester Star-Telegram) and use the proceeds to fund the counter-offensive?
Given "young Arthur's" tenure as Chairman and CEO of the enterprise, is there any evidence that he would deploy the proceeds from the sale of the New England properties in a manner that would thwart Mr. Murdoch's siege. […]
Ellis' column extracts end here.
Ellis’ entire column is here.
IMO Ellis is bang on when he says the Times can’t turn it around with “young Arthur” at the helm.
“Young Arthur,” btw, is 56. He’s been NYT publisher for 15 years.
When he got off to a very bad start, the Family decided the thing to do was to also make him NYT chairman.
With the added power of the chairmanship, Sulzberger was able to more speedily head the Times left and down.
Sulzberger’s first job in journalism in the late 1970s was as a reporter for the Raleigh Times, an afternoon paper which was later taken over by the Raleigh News & Observer which folded it.
The Durham Herald Sun’s Bob Ashley also worked at the Raleigh Times.
And in case you’re going to ask, no, Bob Ashley is not referred to as “young Bob,” but I can understand why you’d ask.
Tuesday, January 22, 2008
John Ellis at RealClearMarkets -------
Posted by JWM at 12:52 PM