Wall St. doubts likelihood of Globe sale

Wall Street yesterday was skeptical that The New York Times Co. would sell The Boston Globe, even as some community leaders said they would welcome the idea of local ownership.

The Globe's falling circulation and revenue have been viewed by investors and analysts as hurting Times Co. stock, but the share price hardly moved in response to the news that a group of Boston businessmen were exploring the possibility of making a bid. Times Co. shares closed up 7 cents to $22.89.

The Globe and the Boston Herald reported yesterday that a local group, led by former General Electric Co. chief executive Jack Welch and Jack Connors, co founder of the Boston advertising firm Hill Holliday, were considering making an offer to buy the Globe. The Globe reported the group is working with investment bank JPMorgan Chase & Co. to analyze a potential deal, and has valued the Globe at $550 million to $600 million, about half the $1.1 billion Times Co. paid in 1993.

Times Co., however, is unlikely to sell, particularly with New England business conditions showing signs of improvement, said Edward Atorino , a media industry analyst at the New York investment firm Benchmark Co. For example, said Atorino, the Globe was particularly hard hit over the past year as Federated Department Stores Inc. took over rival May Department Stores Co. in 2005, closing stores, including Filene's; consolidating brands; and cutting its advertising spending.

But other major retailers, such as the department store Nordstrom, are expanding in the market, and advertising should follow, Atorino said. In addition, the Globe and its online affiliate, Boston.com, appear to be solid assets as Times Co. expands its online reach.

"The Times is committed indefinitely to the Globe," Atorino said. "It's been a rough ride, but advertising is starting to stabilize. I just can't see them unloading it."

But Lou Ureneck, chairman of the Boston University journalism department, said the Times Co. might indeed sell.

Among the reasons he offered for his theory: Cash from the sale could help take Times Co. private, ridding the controlling Sulzberger family and the flagship New York Times from the pressures of meeting Wall Street expectations.

"The Times is undergoing a massive self-examination, ranging from its cost structure, to its commitment to print and online platforms, to even going private," Ureneck said. "I don't think they'll walk away too quickly. It could work for Boston and the Times."

Times Co. officials had no comment yesterday. In a memo to Globe employees, recently appointed publisher P. Steven Ainsley said federal securities laws prohibited Times Co. officials from commenting on potential mergers and acquisitions, regardless of whether the rumors "are true or not."

But he added, "I am committed to improving the performance of the Globe. We have a great newspaper. We can make it even greater. "

Connors, in a statement, said, "The current speculation is very premature. I have conversations about possible business deals all the time and 90 percent of them never move forward."

Welch couldn't be reached.

Speculation about the Globe's future has run rampant in recent months as Times Co.'s New England Media Group has experienced sharp revenue declines and underperformed the company's other units.

A contract dispute with the Boston Newspaper Guild, which represents editorial, advertising, and other Globe workers, recently prompted local political leaders to send a letter to Times Co. management calling for an end to "disinvestment" at the Globe.

One of the signers, US Representative Stephen Lynch, yesterday called the emergence of a potential local buyer of the Globe, a "positive development, a very positive development." He said the leaders of the group appear to have "the interest of the city at heart."

"Local ownership can mean better treatment of employees, sharper focus on local issues, and greater commitment to the paper," he said.

Another signer, Boston Councilor at Large Felix D. Arroyo of Hyde Park, agreed local owners might think "more about the implications for the community," while adding more to the Boston economy. "The profits stay in the area and are invested locally," he said.

Senator Edward M. Kennedy, who also signed the letter, declined to comment. Boston Mayor Thomas M. Menino, who was not part of the group, also declined to comment.

Globe union officials had no comment on a possible ownership change. Dan Totten, president of the Boston Newspaper Guild, said the union "remains committed to getting the best possible deal for its members, no matter who is the owner. That commitment doesn't change with the speculation."

Robert Gavin can be reached at rgavin@globe.com.