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Selling off newspaper assets may not be enough to slash heavy debt loads as worsening advertising declines are forcing more publishers to breach covenants.

Some 30 US newspapers are up for sale including the 149-year-old Rocky Mountain News, owned by EW Scripps, and the San Diego Union Tribune, but few buyers have emerged in spite of rock bottom prices.

Sale valuations for papers, once in the lofty eight to 10-times operating cash flow, now yield no more than a four-to-six-multiple, according to Ed Atorino, an analyst at Benchmark.

Meanwhile, advertising revenues at newspapers are expected to continue their double-digit declines, now expected to fall 17 per cent and 7.5 per cent in 2009 and 2010, according to Barclays Capital.

Topping the list of most high-profile candidates under review is The New York Times’ Boston Globe, which just two years ago was valued at $650m by a consortium of buyers led by Jack Welch, former General Electric chief executive, and included former advertising executive Jack Connors.

Mr Welch’s original offer was rebuffed by Arthur Sulzberger, Jr, chairman and publisher of the Times, who vowed to keep the company intact at the time and the flagship title under the family’s control.

Mr Welch declined comment. But people familiar with the matter say he is unlikely to be interested in another bid.

“There are no buyers in the market for those properties,” says one media investment banker who has been contacted by potential bidders of the Globe.

The NY Times declined comment.

Since 2007, the NY Times has written down the value of its New England group, which also include the Worcester Telegram & Gazette, by $980m. It paid $1.1bn for the Globe in 1993.

The NY Times confirmed last week it has remained in contact with potential buyers and is continuing to review its portfolio of assets even as it discusses alternatives to relieve an upcoming cash crunch. Barclays estimated the company’s free cash flow will not support its capital structure.

Perhaps the more attractive asset is the NY Times’ 17 per cent stake in the Boston Red Sox baseball team, which was ranked the third most valuable team at $816m by Forbes last April before the financial crisis hurt ticket sales and dried up corporate sponsors in the sector.

The NY Times’ interest in the stake, which was purchased as part of a group of buyers in 2002, centred on a major stake in the New England Sports Network, a local sports cable network whose ratings have topped primetime television during the season.

If the fifth most valuable baseball team, the Chicago Cubs, which owner Tribune put up for sale, has attracted bids of about $1bn, then the stake in the Red Sox could be worth more than the $139m that the team’s independent market valuation implies.

Copyright The Financial Times Limited 2017. All rights reserved.
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