So much for the native New Yorker fantasy that The New York Times' white knight might be billionaire Mayor Michael Bloomberg.
The Wall Street Journal reported that Carlos Slim, owner of Mexican communications company Telmex (TMX) and one of the world's richest men, is in talks with he New York Times Co. (NYT) to take a substantial investment in the company. One scenario under discussion, according to the Journal, would be for Slim to inject hundreds of millions into the cash-strapped company in exchange for preferred shares, which would pay Mr. Slim a special dividend.
In September of last year, Slim disclosed he had taken a 6.4% stake in the Times Co.'s common stock. At that time, a Slim spokesman told the Financial Times that Slim's interest came about solely because "it's a great company, the price is cheap, and it gives a good dividend." But in November, the Times Co. cut its dividend from 23¢ per share to 6¢ per share.
A New York Times spokeswoman declined to comment on any aspect of the Journal's story, and representatives of Mr. Slim's Telmex did not immediately respond to an inquiry.
Large Debt Payment Due in May
The Times Co. is still controlled by descendents of the Sulzberger and Ochs families, who own a special class of stock, and the Journal said that Mr. Slim's preferred shares would lack the "super voting" status of the families'.
Unlike with the Bancroft family, which formerly controlled The Wall Street Journal's parent company, Dow Jones, but sold to Rupert Murdoch's News Corp. (NWS) in 2007 for $5 billion, there has been no public sign of family dissension within Times ownership. (Bancroft family members Billy Cox and Elisabeth Goth went public with their concerns over Dow Jones management in the late 1990s, albeit to no avail.)
Still, the fact that the Times Co. owns what is likely the world's most renowned journalistic franchise has not insulated it from the destruction being visited upon the U.S. newspaper industry. Company ad revenues continue to shrink—in November, they fell 20.9%. Late last year, the company had $46 million in cash and a $400 million debt payment due in May 2009; the company also had an untapped credit facility and had signaled that it was discussing that debt situation with its lenders.
The company is also mulling selling its 17.5% stake of the parent company of the Boston Red Sox baseball club, and last year signaled it would plan to borrow up to $225 million against its landmark Manhattan building, which was completed in 2007. Perhaps most significantly, it cut its dividend on both classes of stock. (Dividends represent the income that keeps the family owners of a publicly traded newspaper company rich.)
Not the Usual Last-Ditch Buyer
Slim's move, and others, suggest a shift in where newspapers find their investors of last resort. Newspaper industry lore long held that any newspaper's last-ditch buyer or investor was the local real estate tycoon. But now big-city trophy newspapers are attracting interest from international moguls. London's 171-year-old Evening Standard is nearing a deal to sell a controlling stake to Alexander Lebedev, one of Russia's richest men (and a former KGB agent). Lebedev has also discussed the possibility of buying British national newspaper The Independent as well.
Last May, it was disclosed Mr. Slim had taken a 1% stake in the Independent's parent company, Ireland's Independent News & Media (INME.I). In the U.S., Slim also owns a sizable stake in another New York institution: Saks Inc. (SKS), operator of the Saks Fifth Avenue stores.