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Posted by: Jon Fine on May 12, 2009
(The following item was written by BusinessWeek’s Los Angeles Bureau Chief Ron Grover. Thanks, Ron.)
It’s the hottest topic on two coasts. Why in the world would David Geffen, perhaps the shrewdest investor Hollywood has seen in years, want to plunk down $200 million or so for the 19.9% stake in the New York Times Co. held by hedge fund Harbinger Capital Partners? Like most newspapers, The New York Times, which owns its fabled Gray Lady flagship, the Boston Globe and other assorted assets, is losing tons of money. Worse yet, with ad sales that make up 59% of its overall revenues tanking and not likely to fully recover, the Times is fast becoming a non-profit institution.
This is exactly what David Geffen understands. For $200 million, the Hollywood financier, who generously contributes hefty amounts to the arts and hospitals in the LA area, would be making a financial contribution to a national institution that likely will never be a large money maker.
Geffen, who in the last year has stepped down from his job as chairman of Steven Spielberg’s Dreamworks studio and from the board of Dreamworks Animation, doesn’t so much see this as a business venture, but rather as a civic investment. Hard to believe, but after years of watching Geffen operate behind the scenes, it is clear that at 66, he has little left prove in the business world. He is worth . . . well, who knows. But likely north of $6 billion since he presciently took all his money out of the stock market a year before the crash.
I suspect that Geffen would love to make another billion somewhere, but he clearly knows that The New York Times isn’t that place. Last year, the company lost $57 million. This year it has already lost nearly $75 million.
But a Times investment would be deeply personal for the billionaire. Geffen came from New York, having been born to immigrant parents who lived in Brooklyn, and he has become for the last three decades a fixture in the power structure of the city. He grew up reading The New York Times, and knows its power as a national oracle. (He, after all, helped hobble Hillary Clinton’s fundraising efforts with a well-aimed barb to Times columnist and friend Maureen Dowd in which he said the Clintons lie with “with such ease, it’s troubling.”)
With its annual haul of Pulitzer Prizes, The New York Times is a journalistic giant and a national treasure. And, as I am sure that Geffen knows well, it is also an impassioned voice for the liberal causes that Geffen likely holds dear. Would he like to make sure it continues as the Oracle of the Big Apple? Does a Hollywood mogul live behind a large gate (and Geffen’s walls are the largest in town)? You betcha.
Harbinger would not comment, but a source close to the matter says that the firm “hasn’t made a decision concerning The New York Times.” This source also confirms that Geffen approached Harbinger and that Harbinger declined the offer. Geffen’s overture was first reported on Fortune's Web site.
So does Geffen make another bid for the Times, or was his offer to Harbinger just a passing fancy? That’s harder to say. He tried in 2006 to buy The Los Angeles Times, and I suspect that, too, would have likely gone from its alleged status as a profit-seeking venture to non-profit status had he won it. He backed out because the asking price was too high.
So, this is not a new idea to him. And while Geffen famously refuses to over-pay, my bet is that he and the Harbinger folks are likely still talking, or that they will before too long. Geffen these days is spending a lot of time on the 453-foot-long (yes, you heard that right) super-yacht he shares with Oracle founder Larry Ellison, and recently returned from Thailand.
Eventually he would likely run out of places to visit. But that doesn’t mean there aren’t voyages he still wants to take.
The media, entertainment and marketing worlds continue to shapeshift on a near-daily basis, as new forms arise and old assumptions erode. Where is it all going? No one really knows. But on this blog BusinessWeek’s media writers Tom Lowry and Ron Grover promise to provide ample helpings of scoop, provocation, and sharp analysis as they track and annotate this constantly changing terrain.