We never bought into the idea that newspaper companies should own baseball teams, but we will say this: The New York Times’s decision to buy 17.5% of the entity that owns the Red Sox in 2002 was the best financial investment it has made in years.
The NYT has now officially put this stake on the block. It might fetch $150-$200 million or so (less after tax). This will not be enough cash to get NYTCo through 2009, but it should buy it some additional breathing room.
Assuming the Red Sox sale goes through, NYTCo will have two additional assets it can sell: The Boston Globe and About.com. At today’s prices, these might bring in $300-$400 million. This additional cash would allow the company to meet its cash needs until mid-2010. By then, however, if current business trends continue and the company hasn’t slashed costs, the news operations will be burning cash fast.
See our estimates of how much cash NYTCo needs over the next three years here.
Russell Adams, WSJ: Seeking to fortify its core assets, New York Times Co. is actively shopping its stake in the holding company of the Boston Red Sox baseball club, according to two people familiar with the discussions.
The Times Co., which faces a cash shortage accelerated by steep industrywide revenue declines, has been rumoured for months to be open to selling non-core assets. Besides its flagship newspaper, the Times Co. owns the Boston Globe, About.com and a 17.5% stake in New England Sports Ventures, which owns the Red Sox, their fabled ballpark Fenway Park and most of the cable network that airs their games.
The Times Co. pushed discussions beyond the exploration phase early last month at a quarterly meeting of NESV’s limited partners at which the Times Co. indicated to the partnership its intention to sell. Since then Times Co. has been pursuing potential buyers, according to people familiar with the discussions. A Times spokeswoman declined to comment.
It is unclear what the Times Co. thinks it can get for its stake. Barclays Capital estimates the Times Co.’s investment is worth about $166 million; analysts and sports bankers recently told Reuters the Times Co. could raise at least $200 million if it sold its stake…
It’s possible that the Globe could be packaged with the sports assets in a sale; Jack Connors, a former ad executive in Boston, and former General Electric CEO Jack Welch took a serious look at the Globe two years ago, when people close to them said they were valuing it at $550-600 million at the time. The Times rebuffed the inquiries. The Globe was recently valued by Barclay’s at $20 million.
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