Sunday, April 05, 2009

The Future of The Boston Globe.

The problem with the Boston Globe is this: (1) it has very large unfunded ($100mm-plus) liabilities, (2) it has union contracts that are unsustainable, (3) it's advertising revenue is down more than 60% from just two years ago, (4) it loses (it says) about $7 million a month, and (5) its parent company is in acute financial distress.

I happen to know this because I recently worked with an investor group that was interested in acquiring the Globe from the New York Times. We did as much open source research as we could (the Globe is not officially for sale) before deciding that the situation was hopeless. No one will buy it unless the unfunded liabilities are made to go away and the union contracts are voided. That isn't an opinion, it's a fact. So the only option is some kind of pre-packaged bankruptcy.

The Globe's situation is made more perilous by the fact that The International Herald Tribune is likewise losing money hand over fist. For some reason, NYT's management believes that it would cost more to shut the IHT down than it does to keep it going (and losing money). I am at a loss as to how this could be true, but perhaps someone can explain it to me.

Anyway, both the Globe losses and the IHT losses are dragging down the New York Times Company. The company needs to get one of them (at least) off its balance sheet. Quickly. If they don't, Carlos Slim will be the new owner of the New York Times in 2010.