New York Times Sells Boston Globe For 95% Loss
A business move that signals the continuing death of the newspaper industry.
Back in 1993, The New York Times Company, the parent company of The New York Times, bought The Boston Globe for $1.1 billion, at the time one of the largest sales of a newspaper in American history. Last week, they sold the whole thing for, much, much less:
The New York Times Company, in its latest move to shed assets and focus more on its core brand, has agreed to sell The Boston Globe and its other New England media properties to John W. Henry, principal owner of the Boston Red Sox.
The sale, for $70 million, would return the paper to local ownership after two decades in which it struggled to stem the decline in circulation and revenue. The price would represent a staggering drop in value for The Globe, which The Times bought in 1993 for $1.1 billion, among the highest prices paid for an American newspaper.
At the time, The Globe was one of the nation’s most prestigious papers in a far more robust newspaper environment. But like other newspapers, it began to lose readers and advertisers to the Internet, and revenue plummeted. The Times Company has taken several write-downs related to the New England Media Group, and in February it said it was putting The Globe and other assets in the group up for sale.
For The Globe, the planned sale restores a Boston connection that prevailed for 120 years under the Taylor family, which owned the paper from 1873 until its sale 20 years ago. While not from Boston, Mr. Henry has for the last decade been active in local sports, and his Fenway Sports Group owns the Red Sox, Fenway Park and 80 percent of the New England Sports Network. It also owns the soccer club Liverpool F.C. in the English Premier League.
“This is a thriving, dynamic region that needs a strong, sustainable Boston Globe playing an integral role in the community’s long-term future,” Mr. Henry said in a statement about the sale. “In coming days there will be announcements concerning those joining me in this community commitment and effort.”
In addition to The Globe, the sale includes BostonGlobe.com; Boston.com; the direct-mail marketing company Globe Direct; the company’s 49 percent interest in Metro Boston, a free daily paper; Telegram.com and The Worcester Telegram & Gazette. The Times bought the Telegram & Gazette for $295 million in 1999.
Factoring what the Times Company paid for the Worcester paper into the equation, we see that Henry is purchasing for $70 million a group of assets that the Times page $1.4 billion for. That represents a total loss of some $1.3 billion and represents a drop of 95% from the original purchase price. Add into this the fact that the Times Company will remain liable for the hundreds of millions of dollars in pension liabilities associated with the Globe, and the full scale of the loss that they took on this sale is really quite staggering. This isn’t just a phenomenon limited to Boston, though. All around the country, newspapers have been selling for pennies on the dollar compared to what they used to be worth. As the linked article notes, last year Philadelphia’s two newspapers, both owned by the same company, sold for just $55 million after having been purchased for over $500 million just six years previously. The Tampa Tribune was recently sold for only $9.5 million. And some estimates put the entire value of the Tribune Company, which owns both The Los Angeles Times and The Chicago Tribune at just $623 million.
All of this, of course, is just another sign of the decline of the American newspaper industry. Circulation of even the most widely read newspapers has fallen precipitously over the years and, along with it, advertising revenue has dried up significantly. Most of the big newspapers have made the transition to providing content online and have established some form of a paywall. Some papers, such as Cleveland’s Plain Dealer and New Orleans’ Times-Picayune have taken the drastic step of only publishing a print edition on certain days of the week, leaving subscribers to rely on the website on other days of the week. Other papers have folded entirely, or transitioned into online-only endeavors.
Newspapers like the Times and the Globe are unlikely to fade away anytime soon. They’ve both got national reputations that ensure that they’ll survive in some form, most likely online, for some time to come. It’s clear, though, that this business model isn’t going to provide the same kind of revenue that the good old days of print used to, especially given the fact that there are countless numbers of news sources available on the Internet, many of which charge nothing for access. At some point, we’re likely to see one or both of them completely end their print editions. As Rick Moran notes, there’s something unfortunate about that:
[W]atching the death of the daily newspaper in America is painful. When their history is written, it will reveal an industry and an institution that played a vital role in America’s growth and in knitting communities together. There was also the disseminating of information, the for good or ill, led to an informed electorate. It’s hard to imagine an America without the daily newspapers that fought tooth and nail for readership and where reporters would sell their mother to scoop a rival.
That’s the world we’re headed toward, though.