New York Times Co., which put its Boston Globe newspaper up for sale this year, agreed to sell the publication to John Henry, owner of the Boston Red Sox baseball team, for $70 million in cash.
The deal is $40 million short of the $110 million in pension liabilities said to be owed by the Globe properties collectively known as the New England Media Group, and is expected to close in 30 to 60 days. The sale also includes the Globe website, the Boston.com site, the Worcester Telegram & Gazette, a 49 percent stake in Metro Boston, and the direct-mail marketing company GlobeDirect, the New York Times said in a statement yesterday.
“This is a thriving, dynamic region that needs a strong, sustainable Boston Globe playing an integral role in the community’s long-term future,” Henry said in a separate statement. “In coming days there will be announcements concerning those joining me in this community commitment and effort.”
Times Co. put the Globe up for sale in February and hired Evercore Partners Inc. (EVR:US) to manage the process, part of an effort to focus on its flagship New York Times media brand. New York Times, which bought the Globe for $1.1 billion 20 years ago, mostly in stock, is coping with an industrywide decline in advertising that has caused a drop in sales and stock prices. Bids for the Globe were expected to be in the range of $100 million, people familiar with the matter said this year.
The Globe’s average weekday circulation, including digital editions, reached 245,572 this year, less than half of its readership in 1993 when Times Co. bought the paper, according to the Alliance for Audited Media. The newspaper ranks 24th in circulation among U.S. newspapers, putting it behind the San Diego Union-Tribune, the Las Vegas Review-Journal and the Honolulu Star-Advertiser, according to the Alliance.
“As a result of this agreement, we will be able to sharpen our company focus on and investments in The New York Times brand and its journalism,” New York Times Chief Executive Officer Mark Thompson said in the statement.
Interested parties included Rick Daniels, a former president of the Globe, and ex-Time Inc. CEO Jack Griffin, in partnership with cousins Steven and Ben Taylor, whose family once owned the newspaper, the people said.
John Henry and two partners won the Red Sox in December 2001 with a $660 million offer to the Yawkey Trust, along with the assumption of $40 million in debt. In 2004, the club captured its first World Series championship in 86 years and added a second title three years later.
Henry is also the principal owner of Fenway Sports Group, one of the largest sports, media and entertainment companies in the world. In 2010, FSG bought Liverpool Football Club, the 18-time English soccer champion, and its Anfield stadium. The company also owns the New England Sports Network and a 50 percent share in Roush Fenway Racing, a NASCAR racing team.
Times Co. rose 1.4 percent, or 16 cents, to $11.93 in New York Stock Exchange composite trading on Aug. 2. The shares are up 40 percent this year, headed for the biggest annual advance since 2009.
The publisher, controlled by the Ochs-Sulzberger family, had worked on a plan to sell the Globe since 2012, when it received an unsolicited bid from Daniels, along with Heberden Ryan, a managing director of private-equity firm Boston Post Partners LLC, a person familiar with the matter has said. While their bid was about $100 million, it included contingencies that made it less attractive, the person said.
New York Times has rebuffed proposals that exceeded $100 million in the past. In 2011, Freedom Communications Inc. CEO Aaron Kushner, publisher of the Orange County Register and other California papers, offered more than $300 million, according to another person familiar with the deal who asked not to be identified because the matter was private.
Kushner’s offer included the assumption of both qualified and unqualified pensions. Times Co. turned down the offer because it didn’t include enough cash up front, according to another person, who also requested not to be named because the talks weren’t public.
The New England Media Group, the division that manages the Globe, has about $110 million in pension liabilities, people familiar with the matter said in June.
Times Co. preferred cash to help offset the liabilities, rather than bids that assume even part of them, one of the people said. Such bids would be less attractive because the Globe’s pension liabilities would revert back to Times Co. if a new owner of the Boston newspaper were to become insolvent, the people said.
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