The New York Times Sells The Boston Globe for $70 Million (NYT)
In an effort to continue putting more focus on its core brand, The New York Times Company (NYSE: NYT), according to its flagship newspaper, The New York Times, has agreed to sell The Boston Globe and other related media properties to John W. Henry, principal owner of the Boston Red Sox.
The Times confirmed the potential unloading of The Boston Globe in February.
At a “fire sale” price of just $70 million, compared with an acquisition cost of $1.1 billion, the transaction demonstrates just how far The Boston Globe’s value has dropped. The New York Times bought The Globe in 1993 in one of the highest priced takeovers of an American newspaper ever.
The Boston Globe of 1993, however, was much different from the same newspaper today. In 1993, the Globe had a weekday circulation of more than half a million. Current circulation is less than half that.
UBS analyst John Janedis said the sale was a wise one, even though The Globe was worth $150 million to $175 million on a cash flow basis, not counting pension liabilities.
According to The New York Times, Henry does not have to assume The Boston Globe’s pension liabilities under the terms of the sale. The sale, an all-cash transaction will close in 30 to 60 days The Times reported.
According to The Boston Globe, three groups that lost out to Henry each said their respective bids were higher or better than Henry’s.
They included John Gormally, a Springfield, Massachusetts television station owner and publisher of BusinessWest magazine; Robert Loring, founder of west coast investment company, Revolution Capital; and John Lynch, chief executive of the newspaper, U-T San Diego, who told the Globe Sunday his group was the “highest bidder.”
In addition to the newspaper, Henry, who is making the purchase without partners through his acquisition company, will also assume ownership of BostonGlobe.com; Boston.com; the direct-mail marketing company Globe Direct; the company’s 49 percent interest in Metro Boston, a free daily paper; Telegram.com and The Worcester Telegram & Gazette.
The sale represents the dumping of the last large asset from The New York Times Company’s portfolio, since the company began downsizing several years ago.
As part of the focus on The New York Times brand, the company announced, earlier this year that it planned to expand its global presence by changing the name of The International Herald Tribune to The International New York Times.
Bloomberg reported that the sale of The Boston Globe was only one of two big media transactions announced over the past weekend. IBT Media, which owns the International Business Times, announced it was acquiring Newsweek from IAC/InterActiveCorp (NASDAQ: IACI). Terms of that deal weren’t disclosed according to the Bloomberg report.
In early trading, Monday, shares of The New York Times were down $0.12 at $11.81. IAC/Interactive Corp. stock was up $0.35 at $50.07.
At the time of this writing, Jim Probasco had no position in any mentioned securities.
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