What David Geffen Sees In The New York Times

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.

Reader Comments

Lisa Dowda

May 13, 2009 10:25 AM

My Faith in Hollywood, The Times, Printed Media and, generally, Humanity has been restored. Thanks for the Good News.

xxoo,
Lisa

Frank

May 13, 2009 11:18 AM

Question: Since none of Geffen's investment would go to the Times, but would buy out Harbinger, how would the Times benefit. A friendly board seat? Seems like a long way from salvation.

John Griffiths

May 13, 2009 1:20 PM

I'd pay quadruple for the NYT if I had to.

Richard Cummings

May 13, 2009 2:38 PM

Nothing can save the Times without a new publishers. If Geffen does invest, he should ask that "Pinch" step down. That would be a real public service. The family that has owned and run the New York Times has dwindled to nothing. In fact, the best thing that could happen is for them to sell the paper to someone who knows how to run it.

I wish David Geffen well. He should think hard about throwing good money after bad.

seanmac

May 13, 2009 3:41 PM

A civic investment and not a business one?

Such a great idea.

As a New Yorker who reads New York Times daily, it has become my worry that my beloved NYTimes may not be able to survive financially in the foreseeable future. I have always been proud of the newspaper bearing the name of the city I have lived for more than 20 years.

Due to the Internet, people's reading habit has changed, the newspaper industry is confronting a life-and-death challenge. Even so, nobody should deny NYTimes' value as a voice for justice and common good, a watch dog that holds government and public servants accountable, as a publisher aiming at truth seeking and at enriching readers' lives and knowledge base. Needless to say, NYTimes as an institution whose very existence has been so intertwined with our nation, society, culture and tradition.

It is heart-breaking to think if one day this revered institution may vanish from our collective consciousness.

Hopefully, many institutional investors will see it as their civic duty to ensure NYTimes longivity.

It is unthinkable to let this national treasure vanish in front of our eye simply because the balance sheet. Even in a capitalistic society, there must be something more valuable than profit.

Jimi

May 13, 2009 3:44 PM

I would gladly pay more for my morning read of the NY Times. It is a great paper that I would hate to see diluted. Besides, America will always need good investigatvie reporting. Remember - Watergate.

Go David Geffen, and if not - I'll pay $2 starting tomorrow for my daily read rather than the current $1.50. No doubt all media delivery is changing and will never be the same but please save the NY Times.

csh

May 13, 2009 4:33 PM

He helped "hobble" Hillary's fundraising? Really? She raised almost 200 million which is more than anyone, except Obama, managed to raise.

And she got 18 million votes - which is more than anyone, including Obama, ever got in a primary.

Geffen is not nearly as important as he thinks he is - and he is hated by most in Hollywood for his ruthless ambition and pettiness. Plus, for a gay guy, he's just plain ugly!

Jeremy Wa

May 13, 2009 5:39 PM

Gosh, why does Business Week simply not give the NYTimes a free page to advertise.

It is "giant" and a "treasure" a "Oracle of the Big Apple" etc.

Please spare me the blather. It is a monster of a problem for a leader who has never been able to be a real leader. If Pinch had been in an other company, he would have been pitched out years ago for his ineptness.

This is a poorly run business by a lax and lackadaisical priesthood who acted as if it was Microsoft.

The only thing that might save it is a government bailout from Schumer and the other guy in Massachusetts for whom the Times always chants approvingly.

Makasu

May 13, 2009 6:19 PM

Hey! Why did you pull the UFO story?

Jon Fine

May 13, 2009 6:28 PM

Makasu:

It was the result of someone hacking into the site.

Jon

Steve A

May 13, 2009 6:40 PM

Perhaps Geffen is coming in too early. Let this clearly inept team run it more firmly into the ground chasing their Statist ideals and perhaps twenty-odd million will buy the whole thing. Turn it into a non-biased paper, or even a conservative blowtorch, and watch the advertising dollars return.

LAO

May 13, 2009 8:09 PM

Doesn't anyone care that the 4th leg of Democracy -- journalism -- is dying but for private saviors (any one of whom could easily have their own political agenda)? It is a desperate state of affairs, if you ask me, no matter how civic minded the deep pockets are. I would rather sign on to a public radio model and contribute a pittance toward their survival. Just don't force me to buy all that unnecessary paper.

John Sees Truuf

May 13, 2009 8:11 PM

Note that he's pictured in front of a bunch of wine bottles in the online picture. That speaks volumes.

Axl

May 13, 2009 8:36 PM

YES! now we'll finally get the Guns N' Roses coverage we've been deprived of for so long.

SEG

May 13, 2009 9:14 PM

Even as a nonprofit, it likely won't survive unless the people who read it and 'love' it are willing to pay substantially more for the product they are receiving. Its merely a matter of money. Advertisers won't pay for a medium that is losing eyeballs, so the eyeballs have to pay more. But something tells me that those readers would rather watch it go under than pay the market value to keep the NYT afloat.

jerdawge2

May 14, 2009 12:06 AM

I never read the NYT. I prefer non-fiction.

Mediadavid

May 14, 2009 11:48 AM

I agree with the poster above. I don't see how this provides any particular benefit to the The Times.
thier business model is still in trouble, they'll lose more money and unless all the stockholders decide to fund that, the business problems don't go away.
I guess perhaps he would put less pressure on the board to make more cuts, but those seem inevitable.

jon jeung

May 14, 2009 5:14 PM

He is NOT doing it out of the kindness of his heart. My guess is he is doing it because he realizes the potential of NY Times online to distribute his content (vis-a-vis Dreamworks). For those of you who don't know, NY Times is one of the first news organizations to establish a coherent online outlet for it's content. NY Times online has been around nearly ten years and was innovating in this field before any other 'traditional' news organization had done after their model.

They have a great looking site, great branding and enough online adverts to offset the now useless newsprint group. The type of audience NY Times online attracts every single day will also accept 'Hulu' style content and programming as part of it's news experience and THIS is why he threw good money at it.

This guy could care less about the news organization -- he doesn't come from media and as essentially an old school music bizness dude and a new school cartoon guy realizes that a new audience exists that will tune in and pay for hyped up content that an old brand like NY Times online can bring.

You watch....

BTW -- journalism is NOT dead. The website you are on right now IS JOURNALISM. The only difference is we, the readers, talk back and become part of the news. No more freekin' gatekeepers who think that their version of the truth is overarching above our own opinions.

Dov Matz

May 14, 2009 9:41 PM


Geffen was fortunate over his career to hook up with some talented people who helped him make this money. He is helping the NY Times because he is a typical Holywwod Left Wing waco who wants to see this paper who makes up all the news that's fit to print and then prints it. The world should let this paper go out of business. We are all better off reading the Wall Street Journal.

4Q

May 15, 2009 10:48 AM

The NYT is very useful as fish wrap.

Aside from that, it is nothing more than yet another press secretary for a corrupt administration and their blind pursuit of socialist policy, which only serve to destroy liberty and freedom.

But it does make good fish wrap
...as well as lining for the bottom of bird cages!!

Geraldine

May 18, 2009 11:23 AM

I work for The New York Times and find it difficult to read all of these virulent comments. After experience working at most existing media networks and several publications, I will say that The New York Times is an absolutely outstanding company and I find utmost pleasure during my days here. I wouldn't work for any other company, to be honest. We are struggling like most other media at the moment, but will continue to strive none the less.

If you think print is dead, please go and sit on a plane, ride the public transportation, dine at a coffee table in the south of France or any place else for that matter, on a Saturday morning. Disagree with me then.

Or, if you feel as though The New York Times is not an outstanding news source, why do we continually win Pulitzer prizes? Why is it that every single time that I travel (albeit frequently), the people that I meet are constantly in awe of my job and stunned to be speaking with a person who represents The New York Times? Let's also take in mind that I'm not even a journalist and work in fashion/jewelry advertising! The New York Times delivers astonishment and respect from people across the globe and if you don't believe me, travel with me!

Thank you, David Geffen. Thank you a million times over for seeing our value-I couldn't agree with you more.

Peter

May 22, 2009 10:19 AM

Quote:
Dov Matz
May 14, 2009 09:41 PM


"... because he is a typical Holywwod Left Wing waco who wants to see this paper who makes up all the news that's fit to print and then prints it. The world should let this paper go out of business. We are all better off reading the Wall Street Journal."

Spoken like a typical Right Wing ignoramus to whom the only information that is true is his own opinion, not facts.

additionally, it is absurd to think that the times makes up what it prints, and that the Wall Street Journal isn't run by a bunch of self serving fat cats that will print anything to make their stocks improve by another couple of points before the ditch it.

it is clear that you have very little understanding about how the world works. but i do hope that that financial bubble that you are living in doesn't pop too soon. oh wait, it already has thanks to people like you.

PS - check your spelling

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