Times Co. expects sale of Sox stake
In earnings call, CEO says Globe is on stronger footing
The New York Times Co. said yesterday it expects by January to sell its stake in the Boston Red Sox and New England Sports Network. But the company’s executives declined to address the possible sale of The Boston Globe.
In a conference call to report second-quarter earnings, Times Co. chief executive Janet Robinson said the Globe is on “stronger financial footing’’ after the last of its unions this week approved a package of pay and benefit concessions that, combined, will yield $20 million in savings.
Robinson, however, would not comment on what she termed “speculation’’ that the Times Co. is trying to sell the Globe.
The company, which owns the Globe and the Worcester Telegram & Gazette, has hired Goldman Sachs & Co. to solicit bids for the possible sale of the newspapers. The Times Co. had previously postponed a July 8 deadline for bids while the Globe’s largest union, the Boston Newspaper Guild, considered the company’s proposal to cut pay and benefits. The union overwhelmingly approved those concessions this week.
The Times Co. is now expecting to receive submissions starting next week, according to people with knowledge of the process.
Robinson said the union concessions, along with the consolidation of printing operations and other cuts, would bring an improvement in annual results for the Globe, which earlier was forecast to lose $85 million this year. Advertising at the Globe has continued to decline, but that has been offset by significant cost cutting.
Yesterday, the Times Co. reported second-quarter net income of $39.1 million, an 85 percent increase over the same period last year. The results benefited particularly from a $37.7 million reduction in estimated income taxes for the first half of the year.
The results were also a vast improvement over the first quarter of 2009, when the company reported a $74.5 million loss.
Still, the Times Co. continues to suffer from underlying weakness in advertising revenues. Overall, revenues from advertising dropped more than 30 percent during the last three months, with those declines shared equally among the Globe, The New York Times, and its group of regional publications.
The dismal news on that front was mitigated by a 1.5 percent increase, to $227 million, in revenues from the sale of newspapers, driven by higher prices at newsstands and home delivery for the Globe, the Times, and some of the regional newspapers. At the Globe alone, revenue from sales increased 7.5 percent in the second quarter after the newsstand price increased to $1 from 75 cents during the week, and to $3.50 from $2.50 on Sunday.
Importantly, Robinson said the company experienced fewer cancellations from readers after the price increase than it had been expecting.
“We believe this shows the value our newspapers provide day in and day out to our readers,’’ she said.
The Times Co. continues to cut costs and sell off businesses to help pay down debt, now at $1 billion. The company raised $45 million this month from the sale of WQXR-FM, a classical music station in New York City, and expects to sell its 17.75 percent share in New England Sports Ventures, which owns the Boston Red Sox and 80 percent of the sports cable network.
Robinson said the company is now talking to bidders for the sports group and expects to close on a sale by the end of the year. But she made a point of not addressing the prospect of a Globe sale. “While there has been speculation concerning the sale of The Boston Globe, we have not and are not commenting on this,’’ said Robinson. “What we will say is that we regularly review our portfolio of properties to ensure that they are meeting our financial targets and remain a strategic fit.’’
The names of three local businessmen have surfaced publicly as potential Globe bidders: Stephen Pagliuca, co-owner of the Boston Celtics and managing director at the Bain Capital private equity firm; Jack Connors, a former advertising executive and chairman of Partners HealthCare; and Stephen Taylor, a former Globe executive and member of the family that sold the newspaper to the Times Co. for $1.1 billion in 1993.
Connors and Pagliuca, who initially were considering separate bids, requested and were given permission by Goldman Sachs, an investment banking firm hired by the Times Co., to join forces and submit a common bid.
None of the potential bidders would comment yesterday.
Meanwhile, representatives of the Boston Newspaper Guild held a meeting this week with a consultant who is advising the union about discussions with potential bidders. The consultant, Chris Mackin, president of Ownership Associates Inc. in Cambridge, previously advised a union at the Portland Press Herald that purchased a 15 percent equity stake in that newspaper.
Mackin and Guild representatives said they are discussing the possibility of the Guild buying an equity stake in the Globe, if the paper is sold, but the union is not currently in direct talks with bidders.
Casey Ross can be reached at cross@globe.com. 