What price legacy?
Why would The New York Times Co. sell The Boston Globe? Start with the number $1 billion.
A potential bid by the two Jacks, Jack Welch and Jack Connors, to buy the Globe from Times Co. has become the talk of the town. But despite all the talk, the only opinion that really matters is that of Times Co.'s board, and the company is saying precious little beyond calling the Globe "an important asset." So is my house. But make me an offer.
The two Jacks, working with one of Welch's JP Morgan investment banker pals, have valued the Globe at $600 million, according to executives involved in the Boston group. But if Times Co. chairman Arthur Sulzberger Jr. were to entertain a sale it would be just one step in a retreat from the company's New England strategy. And that could raise $1 billion, maybe more -- money Times Co. could use to prop up its sagging stock price by buying back shares, reduce its debt, make another big digital deal like the $410 million purchase of About.com, or even take the company private, an option most Wall Street analysts discount.
Here's how you get to $1 billion -- hardly chump change for a company with a market value of $3.4 billion.
Begin with the premise that the two Jacks are pretty sharp businessmen, and they are not going to lead with their best offer. Times Co. paid $1.1 billion for the Globe in 1993, and $600 million is probably not going to get it done, even in this depressed newspaper market. (What, for instance, is Boston.com, the Globe's future, worth?) But the two Jacks are just the kind of buyers willing to pay a vanity premium. Think of the Globe as their Boston Red Sox. What price do you put on your legacy?
If the Globe were sold -- still a long shot -- Times Co.'s other New England properties wouldn't be far behind.
Times Co. paid nearly $300 million for the Worcester Telegram & Gazette in 1999; one newspaper executive estimated its value at about $200 million today. Times Co. paid $16.5 million for a half-interest in Metro Boston, the free paper. The company's real home run of an investment has been in the Red Sox. Times Co.'s original $75 million investment in the entity that owns the team and a majority stake in New England Sports Network has roughly doubled, to $150 million, say other Sox investors.
A decision to redeploy its assets out of New England could raise $1 billion. An auction could up that price, but as Tribune Co. is finding, maybe not. How taxes would affect the payout to Times Co. would probably depend on how the deals are structured.
A Times Co. spokeswoman declined to comment, referring me to previous statements, which talked about the company's commitment to growing Globe revenues, but acknowledging it is constantly reviewing its portfolio.
Some Wall Street analysts would like to see Times Co. get out of slow-growing New England. But Alex Roepers, president of Atlantic Investment Management in New York, which owns about 2 percent of the stock, thinks that would be a mistake. "It would be foolish, in my opinion, to sell it at the prices I have seen indicated," he said. "You don't sell a major property at the bottom of its performance cycle."
Everything in life is compared to what. In September, Times Co. said it was selling its television stations to focus on print and digital properties. Take Times Co. at its word: Like every other media company today, it is reviewing its portfolio. If it decides the assets can be better deployed outside of New England, it will do just that. If not -- or not now -- it won't.
Sulzberger's legacy lies in New York. His decision about Boston will be strictly about the numbers.
Steve Bailey is a Globe columnist. He can be reached at bailey@globe.com or at 617-929-2902. 