Thursday, May 25, 2017

Boston Ponders Future of Globe
Some Hope Local Buyer Emerges, But Deal Would Be Tough
By Keith O'Brien

With The New York Times Co. threatening to close The Boston Globe if the Globe's unions don't accept $20 million in concessions, the fate of the paper has become a conversation starter - and stopper - among those near the nexus of power and money in this town. Who, the question goes, might be lining up to buy the newspaper and possibly stave off a shutdown?

"A lot of people ask me whether I'm going to figure out a way to buy it," said Ben Taylor, former publisher of the Globe. But Taylor, like others thought to be considering the Globe's future these days, just shakes his head. "I tell them exactly what I've told you. I'm not even sure it's for sale, and I'm not actively pursuing anything here."

Speculation runs rampant, and down predictable paths: to members of the extended Taylor family or others connected to their era of Globe ownership; to some who voiced interest in the past, such as former Boston advertising maven Jack Connors, who says he's not currently involved in any discussions about purchasing the Globe. Other names crop up, but denials beget denials, or total silence.

"It's been very, very low-key conversation, nothing of a concrete nature," said John Fish, chief executive of Suffolk Construction Co., who's heard whispers about interested buyers in recent days, but is not considering buying the Globe himself.

The question is seen as, at least, premature, given that the Times's ultimatum to Globe unions has yet to play out. And still, the hope lingers, said Steve Grossman, a Newton resident, former chairman of the Democratic National Committee, and major local philanthropist, that some well-heeled Bostonian - or a group of them - will make sure the Globe doesn't close down.

"I can well imagine those conversations taking place," he said. "And I hope that they are."

But newspaper analysts, media consultants, and labor lawyers say it's not exactly that simple. Though some, like Connors and former General Electric chairman Jack Welch, have explored buying the Globe in recent years, it could be a hard sell now, analysts say, given the newspaper industry's gloomy outlook in general and the Globe's dreadful revenue picture in particular.

The 137-year-old newspaper, which is not officially for sale, lost $50 million last year, just shy of $1 million a week, and is projected to lose $85 million this year. Just as troubling to a potential buyer, analysts say, are the newspaper's underfunded pension liabilities and the union contracts protecting Globe staffers from the mailroom to the newsroom and providing, in some cases, lifetime-employment guarantees.

Mark Young, president of Natick-based Grist Mill Advisors and a financial adviser to media companies, said he would not advise anyone to buy an asset like the Globe until such contracts could be restructured - essentially scrapped or redone. And even then, new ownership would have its hands full. After all, the structural shift in the news business, driven by the Internet and threatening the Globe and media businesses of almost every kind, will be just as real for new owners.

The most recent crop of newspaper buyers has learned that lesson the hard way. In the last three years, private companies or individuals have swept in to snatch up major metropolitan newspaper companies in Chicago, Minneapolis, and Philadelphia. But in recent months, Tribune Co., owner of major newspapers in Chicago, Los Angeles, and many other media properties, has filed for bankruptcy protection, as have the Minneapolis and Philadelphia newspapers.

And even if a local angel were to appear, buying the Globe in the face of such negative news, all might not end positively for Globe staffers. In order to stop the newspaper from bleeding cash, analysts say, new ownership would likely have to make changes and cuts - fast.

"If somebody bought it, they might say, 'You guys are gone. See ya,' " said Ed Atorino, managing director of the New York-based Benchmark Company and a media analyst. "If your revenues are going from 100, to 80, to 60, eventually you hit muscle and bone. You just can't stay in business if your revenues keep going down."

The Times Co. delivered its ultimatum last Thursday, just days after the Globe completed a round of buyouts and layoffs, cutting the equivalent of 50 full-time newsroom positions. News of the ultimatum came out the next day, stunning reporters and editors as they prepared the weekend papers.

Spokesmen for both the Globe and Times Co. management declined to comment yesterday.

The Times Co. bought the Globe in 1993 for $1.1 billion - the most ever paid for a newspaper - and for years after that the paper was robustly profitable. But mirroring a trend playing out at newspapers across the country, the Globe's revenue has been declining - steeply - since 2004, according to a Barclays Capital report.

Revenue is off 25 percent since then, the report determined, and 12 percent last year alone, putting revenue around $443 million. But the report projects that the worst is far from over. By 2010, the Barclays report estimates, Globe revenue will have fallen to $350 million a year - a 41 percent drop in just six years.

Given these figures, analysts say, it was almost inevitable that the Times Co. would demand concessions from the unions, and the way the company has chosen to do it - by threatening to shutter the newspaper - is hardly unique. Other newspaper companies facing imploding financials have adopted a similar approach.

It's the equivalent of "negotiating with a gun at the table," said Doug Louison, a labor lawyer and partner at the Boston law firm Louison, Costello, Condon & Pfaff. "That's not collective bargaining," he added. "That's threatening unilateral termination."

But it can be effective, Louison said, in persuading people to negotiate. And if the union agrees to concessions, he added, potential buyers might find the Globe a more attractive asset. The business may be struggling, but the brand is still strong, said Taylor, the former publisher, and Young, the Natick-based financial adviser, agrees.

Assuming the union makes concessions, the Times Co. doesn't close the Globe, and the paper ultimately goes up for sale, someone probably will take a shot at buying it, Young said. But what might interest them most, he added, are certain pieces, not necessarily the company as a whole.
"The most attractive piece, I think, is," he said. "That's the one I hear mentioned most often."