Former New York mayor Mike Bloomberg is reportedly once again sniffing around and asking whether the New York Times might be for sale.
It almost certainly isn’t for sale.
But he should buy it anyway.
This would be an excellent way for Bloomberg to turbocharge his global influence ambitions. And it would ensure an excellent future for one of the world’s best news organisations, as well as the great journalists who work there.
How could Bloomberg buy the New York Times if it isn’t for sale?
By taking a page out of Rupert Murdoch’s book.
For decades, Rupert Murdoch had coveted the Wall Street Journal. But the Wall Street Journal, like the New York Times, was controlled by a family, and it was emphatically not for sale. So Murdoch bided his time until he got rich enough to make an offer the family couldn’t refuse.
One day, Murdoch bid $US5 billion for the Wall Street Journal (Dow Jones, actually).
That was at least $US3 billion more than the Wall Street Journal was worth.
But still, the Bancroft family, who controlled Dow Jones, immediately and indignantly rejected the offer: The Wall Street Journal was not for sale!
But then the infighting began.
You see, when families own things for several generations, lots of people in the family end up owning little pieces of those things via inheritance. And some of the family members don’t really care about owning little pieces of the things — especially when a billionaire comes along and offers to buy those little pieces for two or three times what they are worth. When Murdoch’s offer hit the tape, the eyes of a lot of Bancroft family members got wide. They quickly calculated what lifestyle changes might be possible if they exchanged their inherited little pieces of the Wall Street Journal for Murdoch’s billions. And then they began sharing their views with the family members who were more attached to those little pieces of things.
Within a month or two, the Bancroft family caved. And Murdoch had his prize.
Mike Bloomberg could do exactly the same thing with the New York Times.
As cheery a picture as New York Times leaders paint of their digital future, the truth is that the next 5-10 years are going to be tough. More loss of print ads, more cost cuts, more painful restructurings required to fit the New York Times print cost structure into the new digital world. No one really wants to go through that if they don’t have to.
So, Bloomberg should just make a pre-emptive, public all-cash offer for the New York Times Company.
Bloomberg could offer, say, $US5 billion, or $US35 a share.
That is vastly more than the New York Times Company is worth.
And almost all shareholders of the company would instantly recognise that.
The New York Times Company stock price would instantly double, to $US25 or so.
Immediately, everyone who owned New York Times stock, including members of the Sulzberger family, would double their wealth overnight. They would recognise that if the company rejected the offer that they might soon be immediately impoverished again. They might also recognise that this might be the best offer they might ever get. And, if Bloomberg took another page out of Murdoch’s book and soothed the family with visions of a glorious future for their cherished paper, they might see a graceful, magnanimous way out. And the infighting would begin.
Eventually, the Sulzbergers would cave. In part because they would be persuaded that a Bloomberg-owned New York Times would be a better New York Times. And that legacy is, for excellent reasons, important to the family.
Why would Bloomberg ownership be better for the New York Times?
Because unlike the New York Times’ current owners — public investors and family members who depend on the income — Bloomberg doesn’t care how much profit the company produces or even whether it produces any profit at all. Bloomberg’s other business, Bloomberg, L.P., spews out about $US5 billion of profit every year. Bloomberg owns more than 70% of that business and is worth an estimated $US35 billion. Bloomberg doesn’t need any more profit. Or, for that matter, net worth.
What Bloomberg wants is influence.
And Bloomberg is so eager to develop that influence that he is reportedly burning “hundreds of millions” of dollars a year building media properties attached to the Bloomberg mother ship.
If Bloomberg bought the New York Times, he could steer this investment into the New York Times instead. He would avoid the hassle and concern and internal friction of having Bloomberg media properties compete with the Bloomberg terminal business. He could invest aggressively in the New York Times and make it much bigger and better than it is today. He could also ensure that the paper will not have to go through another decade of cost-cuts and restructurings.
It’s a smart move for both sides.