Local group may bid for Globe
Retired GE chief, adman involved; paper not on block
Two of Boston's best-known businessmen -- retired
While neither Welch nor Connors would comment, several executives who have participated in the discussions caution the plans are preliminary. But the executives are working with the investment bank JPMorgan Chase & Co. to analyze a potential deal. They say JPMorgan has valued the Globe at $550 million to $600 million, well below the $1.1 billion the Times Co. paid in 1993.
Times Co. has said repeatedly that the Globe, despite its continued poor financial results, is not for sale.
In a statement yesterday, Catherine Mathis, Times Co. vice president of corporate communications, said, "It is our policy not to comment on potential acquisitions or divestitures. We constantly review our portfolio of properties to assess their continuing relevance to our strategy. We view the Globe as an important asset, and we have taken many steps that we believe will improve its performance," most recently naming a new publisher, P. Steven Ainsley, who previously headed the company's regional newspapers.
An effort to return the Globe to local ownership would put Boston in line with what is going on in several other cities as pressures from the Internet remake the newspaper industry. Earlier this year, a group of Philadelphia business leaders, headed by advertising executive Brian Tierney, bought the Philadelphia Inquirer and Philadelphia Daily News from McClatchy Co. for $515 million. In Los Angeles, a number of wealthy executives have expressed interest in buying the Los Angeles Times from
Welch, who grew up in Salem and moved to Boston in his retirement, and Connors, co-founder of the Boston advertising firm Hill Holliday, are looking to assemble a small group of local business people for a bid that would include debt and equity, the executives involved in the effort say. Each man has tentatively committed $25 million to the deal, the executives say. A third partner, Boston concessionaire Joseph O'Donnell, also has committed $25 million, the executives said. O'Donnell also declined to comment.
Like business leaders in other cities who have explored buying their local newspapers from large media companies, Welch, 70, and Connors, 64, see buying the Globe as a civic investment as much as a financial one, say the executives involved in the effort. Welch and Connors hope to return the paper to its community roots and stem continuing cutbacks in the editorial budgets and losses in advertising and circulation.
It is unclear whether the Boston group is willing to sign a formal pledge not to interfere in the editorial process, as the new buyers in Philadelphia did. The pledge was an attempt to preserve the traditional boundaries meant to prevent business considerations from influencing news coverage.
Welch and Connors first discussed the possibility of buying the Globe at a lunch about six weeks ago at Boston's Four Seasons Hotel. Also at the lunch was former Boston Globe and Boston Herald columnist Mike Barnicle, who was forced out of the Globe in 1998 over charges, which he denied, that he had fabricated a column. Barnicle, friends with both men, now does a radio talk show on WTKK-FM, and worked as a consultant last year with a group that sought unsuccessfully to buy the Boston Herald.
Welch subsequently turned to old friend James B. "Jimmy" Lee Jr., vice chairman of JPMorgan, who has been analyzing a potential offer for the Globe, the executives said. A JPMorgan spokesman declined to comment.
Welch and Connors are said to be interested in the Globe, not the Worcester Telegram & Gazette, which Times Co. also owns. It is unclear how the Globe's website, Boston.com, figures into their calculations. They have yet to approach Times Co. with an offer, the executives say.
Even if Connors and Welch can raise the money to buy the paper, persuading Times Co. to sell -- at their price -- and turning the business around would be challenging.
When Times Co. bought the Globe, making a big bet on the Northeast, the industry and the newspaper itself were riding high. But in the last several years, the Globe's financial performance has lagged that of many other metropolitan dailies.
The Globe's Sunday circulation, for instance, has fallen 25 percent to about 600,000 since Times Co. bought the paper. Advertising revenue for the New England Media Group, which includes the Globe and the Worcester Telegram, is down 10 percent for the year through September.
Welch and Connors are no strangers to the media business. GE, which Welch ran for two decades, owns NBC-TV. Welch's wife, Suzy Wetlaufer, is a former editor of the Harvard Business Review and was a reporter for the Associated Press. Connors has been one of the top forces in Boston advertising for decades, and Hill Holliday currently handles the Globe advertising account. Connors is scheduled to retire from the firm at the end of the year.
Their strategy, say the executives involved in the talks, would be to use their local roots to build revenue at the Globe and invest in the product. As a private company, the group could accept operating margins considerably less than the 20 percent that Wall Street expects from mature newspaper companies, they say.
But local ownership does not change the basic direction of the business as the Internet shifts readers -- and thus, advertisers -- from print editions to online.
In Philadelphia, the new local owners are already saying layoffs are "unavoidable" because of a "permanent" decline in national newspaper advertising. The company's cash flow, Tierney said in a letter to employees last week, is expected to be about $50 million this year, half of what it was in 2004.
"Without immediate and dramatic changes to the business, in 2007 we will not only miss our performance requirement," Tierney wrote, "but we will also not have enough cash to make our interest rate payments." One of the newspaper's major unions, The Newspaper Guild of Greater Philadelphia, was planning to respond with radio ads denouncing management.
Steve Bailey can be reached at bailey@globe.com.
(Correction: Because of a reporting error, a Page One story and headline yesterday about a group of local business executives exploring a bid to purchase the Globe incorrectly stated that The New York Times Co. has repeatedly said the paper is not for sale. Times Co. executives have not commented publicly on any potential sale of the Globe.) 