Newspaper's potential sale piques interest

The Times Co., which also owns The Boston Globe, bought the Telegram in 2000, putting it under the umbrella of its New England Media Group. The Times Co. has hired Goldman Sachs to solicit bids for its New England properties.

While at least three prominent Boston businessmen have emerged as potential bidders for the Globe, there has been speculation about possible buyers for the Telegram and public expressions of interest from a handful of suitors, including Bruce S. Bennett, former Telegram publisher who retired in 2006, and David G. “Duddie’’ Massad, principal owner and chairman of Commerce Bank & Trust.

In interviews, the two men emphasized that any interest they might have would be as members of a group of investors.

Massad, of Westborough, was guarded in comments about his interest in acquiring a stake in the Telegram. At 81, he said, he is too old to take a lead role in running a newspaper and has no experience in publishing.

“I’d have to buy it as part of a group,’’ he said. “The management is the important thing.’’

Another name that crops up frequently in speculation is Frederick H. Eppinger, chief executive of Hanover Insurance Group Inc. in Worcester. He declined to be interviewed on the subject.

Telegram publisher Bruce Gaultney declined comment on the possibility of the newspaper’s sale, referring questions to the Times Co.

Catherine Mathis, spokeswoman for the Times Co., said the company has a strict policy prohibiting comment on “rumors about potential acquisitions or divestitures.’’ She also would not comment on any scenario in which the parent company would maintain ownership of the Telegram while selling the Globe and other corporate holdings in New England.

Like other media companies, the Times Co. has been grappling with the prolonged recession, which has sapped advertising revenues, and a reader shift to the Internet for news. This year, the company suspended its dividend program, cut jobs, and reduced salaries.

Revenues of individual newspapers owned by the Times Co. are not broken down in its public filings, but industry sources say the Telegram realized a profit of about $1 million last year. In that same period, the Globe lost about $50 million. It should be noted, the sources stress, that Telegram revenues, generally estimated at between $40 million and $50 million in 2008, have been falling in recent years and that the 2008 profit figure is primarily the result of expense reductions that have included staff cuts.

Like that of other newspapers, Telegram circulation has been declining, as readers and advertisers migrate online. According to the most recent report by the Audit Bureau of Circulations, circulation of the Sunday Telegram was 90,769 for the six-month period ending March 31. The Telegram’s six-day average weekday circulation was 78,479 for that same period.

More encouraging, however, is the growth of the newspaper’s website, telegram.com, which had 629,704 unique visitors in March, according to the Audit Bureau of Circulations.

Analysts and other newspaper industry sources say the Times Co. has made clear that it prefers to sell its New England holdings as a package. A strong possibility, the sources suggest, is that a deal could be struck by a group of investors who might spin off the Boston and Worcester papers after purchasing the New England Media Group. Some potential bidders are also looking at buying the Times Co.’s 17.5 percent stake in the Red Sox as part of the package.

The sale of any or all of the New England media businesses, however, is not considered likely before July 20, when members of the Globe’s largest employee union, the Boston Newspaper Guild, will vote again on a new contract.

The Globe was projected to lose so much money this year, about $85 million, that the Times Co. threatened in April to close the paper unless it got $20 million in concessions from Globe unions. All of its major unions except the Guild agreed to deep cuts. When the Guild rejected proposed contract concessions earlier this month, the Times Co. imposed a 23 percent pay cut. The Guild and management are working on a new agreement.

While shedding the Globe and its mounting losses makes sense financially, the parent company’s motivation for selling off the Telegram is less clear.

The newspaper that the Times Co. paid nearly $300 million for in 2000 now carries a price tag estimated at $10 million to $50 million, according to analysts. The Telegram’s main office on Franklin Street in downtown Worcester is valued at about $3 million and the printing plant in Millbury is valued at about $7 million, according to tax assessors’ records.

“Someone in the community may step into that situation, but they won’t have an endless supply of money,’’ said Mike Simonton, a newspaper industry analyst for Fitch Ratings in Chicago. “They would have to address the costs. I think it’s going to be difficult to find a buyer.’’

The high-end valuation is from Bennett, the Telegram’s former publisher, who believes that the newspaper business in general and the Telegram in particular can return to profitability by reinventing themselves primarily on the Internet. Interest in newspapers has diminished, he acknowledged, but interest in news itself remains high.

But even he remains a wary potential buyer. Bennett, who now lives on Cape Cod and in Florida, said that “I’d have to take a close look at the books’’ before fully committing to the venture.

Also said to be interested in owning a piece of the newspaper are children of the late John W. Spillane, a well-known Worcester lawyer who died in 2007. His estate received about $55 million from stock he owned in Commerce Group Inc. of Webster, which was sold in 2008 to Mapfre SA of Madrid.

“Without commenting on whether we have an interest or not, I do think it would be noble for a group of local investors to keep an eye on the developing situation regarding their local newspaper,’’ said his son, Joseph W. Spillane, assistant clerk of Worcester Superior Court and a former candidate for state representative.

Another possible investor is James Donnelly, a lawyer with the local law firm of Mirick O’Connell. He told the Telegram that he has an interest, but has not been approached by anyone nor has he initiated any discussions.

Massad, chairman of Commerce Bank, said a recent series of Telegram stories about his role as an investor in LBM Financial LLC of Marlborough has nothing to do with his interest in the paper.

LBM and people associated with it have been accused of orchestrating schemes intended to ensure that borrowers fail, thus enabling LBM to either take over their projects or drastically raise loan interest rates and fees.

“I hope I’m bigger than that,’’ Massad said. “That has nothing to do with the price of rice.’’

No matter who buys the Telegram, civic leaders say the new owner should remain committed to local news.

“I couldn’t conceive of a city that is the second biggest in New England not having a daily newspaper,’’ said City Manager Michael V. O’Brien of Worcester. “All of us are watching closely the shakeout in the newspaper industry. It is necessary for us to have a strong paper to maintain our regional identity.’’