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$600m stigma

25 October 2006 By Rob Cox

Newspapers are like sports teams. They confer great status to the local worthies that own them. That’s why rich businessmen are often happy to pay more to acquire them than their earnings would normally justify. Will that be the case with the Boston Globe? The newspaper owned by the New York Times Co. is said to be coveted by former General Electric boss – and native Bostonian – Jack Welch.

Welch is reported to have teamed up with Beantown advertising mogul Jack Connors and the backing support of JPMorgan. They would be following a well-trodden path that has led to the acquisition of the Philadelphia Inquirer by local grandees, a fate that may also befall the Los Angeles Times and other Tribune-owned newspapers.

Where such deals have been struck, the locals have paid more for the publications than the public markets were willing to give them credit for. The piecemeal sale of Knight Ridder papers, including the Inquirer, proved that. This has led to great soul-searching by Tribune and other newspaper conglomerates.

The New York Times has shown no such introspection. It says the Globe remains within the Gray Lady’s firmament. It’s easy to see why. The paper’s circulation has plunged and its revenue has been stagnant for years. The Welch-led group values the paper at about $600m. While the Times picked up other assets when it bought the Globe’s parent for $1.1bn back in 1993, the Globe was its jewel.

Selling the Globe would crystallise the value destroyed by Times boss Arthur Sulzberger Jr’s decision to buy it in the first place. Yet it would make strategic sense. The group should be focusing its investment and management on its national flagship, not the metro-regional newspaper business that is bearing the brunt of the migration of display advertising, and readership, to the internet. Sulzberger should bite the bullet, extract the best price he can for the Globe and move on.


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