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Boston Capital

Will they pull the trigger?

By Steven Syre
Globe Columnist / April 24, 2009
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NEW YORK - There are a few questions that come to mind when someone puts a gun to your head, figuratively speaking, and the first one is pretty obvious. Would he really pull the trigger?

So I went to The New York Times Co. annual meeting yesterday to find out if my boss's boss, Arthur Sulzberger, would really shut down The Boston Globe if he couldn't get $20 million in union concessions soon.

The short answer: I don't believe so. But the Globe is facing serious business trouble, confirmed again this week in the Times Co.'s first-quarter financial report. The longer-term future of the newspaper remains uncertain, no matter what happens in the next few weeks.

I talked briefly with Sulzberger and Times Co. chief executive Janet Robinson in the company's swanky new Manhattan headquarters. They were pleasant, for people threatening to shut my newspaper down.

"I do love the Globe," Sulzberger said. Annual meetings are otherwise dreadful events for the people running public companies. They answer real questions from shareholders, but also must deal with assorted yahoos. They field unflattering job evaluations from strangers in the audience when the stock is down.

Sulzberger and Robinson took their share of guff yesterday from stockholders who remember their shares were worth $50 seven years ago, not the $5.13 they commanded yesterday.

I can sympathize with Times Co. shareholders, who are upset to see their investments plunge in value. I used to be one of them. I sold my shares a couple of years ago when they were still worth more than $20, in part because I needed the money. But I also couldn't stand the losses, even then, and saw big trouble in the future for the newspaper industry.

Very poor business performance demands answers at a shareholder meeting. Times Co. executives described all of the forces working against the company, but they left no doubt what ranked as Problem Number One: The plunging business performance of the Globe.

"The Boston Globe has been most dramatically affected by the secular and cyclical forces that are roiling the entire media industry," Sulzberger said. All you need to know: Ad sales at New England Media Group, which is dominated by the Globe, were down more than 31 percent, in comparison to terrible numbers from a year ago.

That's not an encouraging statistic to read when someone is pointing a gun at you.

But the few times Sulzberger got off the no-comment script, he sounded like someone trying to save something valued. He spoke admiringly about the Globe as a newspaper. "This is about finding the [business] model to sustain that," he said.

There seems to be a new effort to articulate that, rather than simply threatening to close the newspaper. Executives at the Globe, and at the Times Co., are trying to put union give-backs in context with other company cost cuts. They are talking about ways to boost revenues.

In short, they are describing a plan to get the Globe back off a ledge.

Whether it can work is a question for another day. The point-blank threats served a purpose - everyone is paying attention - but I think that time has passed.

That's not to say that any of the business problems facing the Globe have diminished in any way. Some of the Globe's revenue declines are the product of a terrible economy and are temporary. But many of them are permanent losses.

One stock analyst, Craig Huber of Barclays Capital, issued a report this week suggesting Times Co. shares could fall to $1 each within the next year. That's cheaper than the price of a daily Times.

"In our opinion, newspapers cannot cost cut themselves to prosperity and an online-only newspaper model is not profitable, not even close," Huber wrote. "We do not have a solution on how to solve the difficulties newspapers face."

I don't have a solution, either. Sulzberger spoke encouragingly yesterday about efforts at the Times Co. to boost revenue from online news and promised more on that subject soon. All I can say is good luck.

The future is very uncertain for many newspapers, including the Globe. But the next week should be about negotiations and plans, not desperate ultimatums.

Steven Syre is a Globe columnist. He can be reached at syre@globe.com.