Times Co. rejects local bid for Globe
Prospective buyers called undeterred
The New York Times Co. has rejected a proposal by a group of Boston businessmen to buy The Boston Globe.
In a Nov. 17 letter, Times Co. chief executive Janet Robinson said the Globe remains an important Times Co. asset, and said the company was not interested in pursuing the sale, according to two executives who have seen the letter. Robinson's letter was in response to a previously unreported letter from retired General Electric chief executive Jack Welch asking for exclusive rights to negotiate with the Times Co. to buy the Globe.
Welch could not be reached for comment. But executives close to the Welch group, which includes longtime Boston advertising executive Jack Connors and Boston concessionaire Joe O'Donnell, said the three had no plans to abandon their effort. A Times Co. spokeswoman declined to comment.
Welch, Connors, and O'Donnell began discussing a potential bid for the Globe several months ago. An analysis done for them by JP Morgan Chase & Co., the investment bank, valued the Globe at $550 million to $600 million, about half the $1.1 billion the Times Co. paid for the paper in 1993. The three men tentatively had committed $25 million each to the bid and intended to borrow much of the rest.
The effort is similar to those in other big cities where local interests have sought to buy their hometown newspapers from big media chains that are under increasing pressure as the Internet remakes the industry. Earlier this year, a local group bought the Philadelphia Inquirer and Philadelphia Daily News from McClatchy Co. for $515 million. Local buyers also have expressed interest in buying the Tribune Co.'s newspapers in Los Angeles, Baltimore, and Hartford.
In her letter last week, Robinson said she had taken the Welch proposal to negotiate to the Times Co. board of directors, but said the company had no interest in pursuing the proposal, said the executives who had seen the letter. The letter seemed unequivocal, one executive said.
The Times Co. rejection comes as the company is under pressure from some shareholders. One big shareholder, Morgan Stanley Investment Management, which owns 7.6 percent of the Times Co.'s stock, has submitted a proposal seeking governance changes. Among them: putting the Times Co.'s dual-class share structure, which concentrates control in the hands of the Sulzberger family, to a shareholder vote and separating the jobs of chairman of the company and publisher of The New York Times. Both jobs are now held by Times Co. Chairman Arthur Sulzberger Jr.
Times Co. stock is down about 8 percent this year in a market that has been hard on newspaper companies. Dow Jones & Co. is up slightly while Gannett Co. is flat and the Washington Post Co. is down slightly. By contrast, the broader stock market, as represented by the Standard & Poor's index of the country's 500 largest companies, is up 12 percent for the year.
Last week, the Times Co. reported that total ad revenue from continuing operations was down 4.9 percent for October and 0.4 percent for the year. As has been the case for months, the Times Co.'s New England group, which includes the Globe and the Worcester Telegram & Gazette, was particularly weak. Ad revenue for New England was down 11.8 percent in October and 10.2 percent for the year. Globe circulation also has been weak. Daily circulation fell 7 percent to 386,000 in the six months ended Sept. 30; Sunday circulation fell 10 percent to 587,000.
Daily newspaper circulation in Massachusetts has fallen faster than the national average in the past year, according to the Audit Bureau of Circulations, as the state's technologically sophisticated population migrated to Internet news sources. Average daily newspaper circulation in Massachusetts fell 6 percent in the past year, while daily circulation nationally fell 2.8 percent.
Steve Bailey can be reached at bailey@globe.com or at 617-929-2902. 