Thursday, October 15, 2009

No Sale.

The New York Times announced Wednesday that the Boston Globe was no longer for sale. It appears that the reported offers of $35 million in cash and the assumption of $59 million in unfunded liabilities collapsed when the two remaining bidders, Team Taylor and Platinum Equity, learned that the unfunded liabilities were actually north of $100 million.

The New York Times says that because of concessions made by its labor unions, paycuts for management, higher subscription rates and operational consolidation, the paper is on the "path to profitability." One hopes that that is true. It would be a very bad day indeed for everyone who works there if the paper collapsed.

That said, it is not clear how the "path to profitability" will lead to actual profitability. The Globe continues to lose money, advertising revenues are "less bad" but still dreadful, the paper's cost structure is not sustainable and's business model isn't working. Perhaps a rising economic tide will lift all boats, the Globe can be put back on the market next year and some tolerable purchase price will be proffered.

But the more likely outcome is that the grim slide will continue and that an already poisonous culture will grow yet more toxic. What's the end-game there? How long can the NYT afford to carry the net operating losses? When does it make more sense to just shut it down?

Whatever else happens, the paper must do everything it can to keep the Sports Section talent happy. Absent Bob Ryan and Dan Shaughnessy and one or two others, the Globe Sport Section is no different from any other sports section. Lose them to ESPN or Comcast and it's game over.