Boston Globe and Telegram Sold - Lose 94% of Value

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Saturday, August 03, 2013

GoLocalWorcester Business Team

The New York Times Company has dumped the Boston Globe, Worcester Telegram and some other holdings for less than 6% of what they had paid for the combined assets over the past three decades. John Henry's sports and media group will pay approximately $70 million.

The sale by the New York Times Company is the latest asset being sold. “This is a thriving, dynamic region that needs a strong, sustainable Boston Globe playing an integral role in the community’s long-term future,” John Henry said in a statement about the sale.

The combination of the Globe and the Telegram purchase prices were in excess of $1.3 billion dollars.

Recently, The New York Company sold off at a heavy discount About.com and a range of other print papers.

More Cuts?

Both the Boston Globe and the Telegram have faced siginifcant staffing cuts. The Globe's newsroom once was more than 550, today the newsroom is reported to be under 370. The cuts to the Telegram may be more pronounced. It unclear what consolidation will take place between the Globe and the Telegram as well as reductions that may take place between the print functions and John Henry's interest in cable networks.

Is the Globe's Real Estate Worth More than the 2 Papers?

According to sources close to the bidding and reaffirmed in Dan Kennedy's column in Huffington Post today, the value of the real estate that the Globe holds may be the true value of the deal. As the Globe reportedly lost 9.5% in revenue in the second quarter this year in a time when the New York Times Company was trying to make the Globe look attractive during the sale and advertising spend improved, raises further questions about the viability of the two papers. "...the Globe's land and physical assets might be worth the $70 million purchase price all by themselves," wrote Kennedy.

Possible Next Moves

Could the Henry group close the Telegram and push the Globe's marketing and distribution beyond the 495 belt into Worcester County? The Henry group may love newpapers, but no investor who made his wealth as a hedge fund manager is going to sustain multi-million loses.

The Alliance for Audited Media reports that the circulation at the Globe from Monday through Friday has now declined 38% since2003 from 402,423 to 245,572.