Is the fact that the New York Times Co. has decided not to sell the Boston Globe good news?
I don’t think so. In fact, it’s probably bad news.
It’s clear to anyone who has been following the Times/Globe saga that the Times Co. regrets its investment of $1.1 billion in 1993. There’s also no doubt the Times Co. wants to get rid of the Globe and would have unloaded it for the right price. The problem? The bids came in way to low to justify selling.
According the Boston Globe, the two suitors in the sale each offered about $35 million for the Boston Globe and its sister newspaper in Worcester, the Telegram & Gazette (where I worked as a reporter for nearly 10 years). Keep in mind the Times Co. spent a total of $1.4 billion for both the Globe and T&G. The sale – at those prices – would have been an enormous loss for the Times Co.
The potential buyers would also have been responsible for $59 million in pension liabilities. So it’s not surprising that the bids came in so low. The market for traditional media – particularly newspapers and magazines – just isn’t there. This week, for example, BusinessWeek was sold to Bloomberg for about $5 million. Talk about a fire sale.
Will the market for traditional media ever recover? Who knows, but it seems unlikely.
So where does this leave the Boston Globe? Apparently in limbo. This non-sale is bad news for one reason: The Times Co. doesn’t want the Globe. This is the equivalent of a wife not divorcing the husband she dislikes because the financial terms aren’t to her liking. The couple stays married, but the relationship is still a bad one.
What does this mean for future labor and union relations? Will there be more cuts and lay-offs? How does the non-sale effect capital spending and resource allocation? Is the Times Co. going to invest in turning the Globe around or are they simply going to wait for the economy to get better and then try to sell it again?
Will it be cheaper – in the long run – for the Times Co. to simply shut the Globe down? They have already threatened to do that in the past.
But no matter how you slice it: It’s never to good thing not to be wanted.