Globe Says Times May Cut It Loose (Update)

The Times is shopping the Boston Globe, reports the Globe, and two potential buyers may already be out there.
Author:
Publish date:

Updated from 10:41 a.m. EDT

Instead of shutting it down, The

New York Times

(NYT) - Get Report

may try to eek out what it can from the

Boston Globe

by selling it.

The

Boston Globe's

own reporters -- many of whom elected to reject a pay cut in a union vote Monday despite threats from the

Times

that the paper's very survival was at stake -- broke the story Tuesday night. The news appeared in the morning edition of the 137-year old daily paper.

The

Times

has hired

Goldman Sachs

(GS) - Get Report

to shop the

Globe

, the

Globe

reported, citing two "interested" buyers.

The sources, both anonymous, told the

Globe

that while the

Times

is interested in a sale, it's not a foregone conclusion that it will unload the Boston daily, one of two in that city.

A

Times

spokesperson declined to comment on the report, citing company policy on "rumors concerning potential acquisitions and divestitures."

Despite its many problems, the

Globe

still throws off cash. In 2008, the New England Media unit of the

Times

, of which the

Globe

is a part, generated more than half a billion dollars in revenue, though it posted a loss of $50 million over the same 12 months.

The

Times

has said that the

Globe

is on track to lose $85 million in 2009. Some, however, have questioned that number's accuracy, thinking it too high, most notably members of the Globe reporting staff, who have alleged that the

Times

purposefully inflated the estimated loss as a bargaining tool to win further concessions from workers.

All of which raises an important point, brought up in many other places: labor strife plus projections of big losses do not normally make for an attractive acquisition target.

For comparison's sake, the

Times

bought the Boston daily in 1993 for $1.1 billion.

Meanwhile, the Globe's biggest union, the Boston Newspaper Guild, followed through on its promise to file a complaint with the National Labor Relations Board over the 23% wage cut introduced by management Wednesday. Union members had earlier rejected a contract that would have cut wages and benefits by $10 million total.

In Wednesday trading,

Times'

shares ended the session slightly lower, at $6.18, down 16 cents.

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