New York Times Could Use Mogul Aid

The New York Times Co.(NYT Quote) continues to struggle. Even after raising $250 million from Carlos Slim at a 14% interest rate and selling its own building and leasing it back for another $225 million, the company is facing a bleak future in a bleak industry.

Advertising revenue keeps grinding down. It dropped 27% in the first quarter alone compared to the year before. The company has stopped paying its dividend and is looking at unloading its stake in the Boston Red Sox. Yet, even if it does this, the Times will continue to be forced into major cost cuts next year to avoid bankruptcy, if current advertising trends persist.

For some people, those difficult economic realities don't change their love of the country's biggest newspaper. Entertainment mogul David Geffen tried recently to buy the 19% stake in the NYT owned by Harbinger Capital. No deal was struck because Geffen was reportedly unwilling to pay above market price for the shares.

It's likely that moguls will continue to look at buying some of the NYT. Equally likely is that the Ochs-Sulzberger family will agree to sell part of the company to these interested parties because it will be much more palatable to them than the prospect of losing control of the company entirely through a bankruptcy filing.

There are several reasons why Harbinger Capital would want to sell its stake in the newspaper. Harbinger bought its stake with great fanfare in late 2007. At the time, NYT was one of several large established media companies that Harbinger owned, with an eye to pushing them to adopt certain changes that would positively impact their stock prices. They took large stakes in Media General(MEG Quote) and Cablevision(CVC Quote), making their views known immediately on what needed to be done.