The New York Times cast its net wide to find a buyer for its stake in the Boston Red Sox baseball team on Wednesday, ending a love affair with sports franchises that has so entranced the media industry.
In a tersely worded statement that included its banker’s phone number, The Times confirmed it had hired Goldman Sachs to explore a potential sale of its 17.75 per cent stake.
Contact late last year with interested parties, including Jack Connors, a co-founder of a Boston advertising firm, failed to result in a deal.
In December, the disclosure of those discussions in the press elicited impassioned denials from Mr Connors that he was buying anything belonging to the publisher.
With an 18 per cent decline in advertising and net profit falling nearly 50 per cent year on year in the fourth quarter and advertising conditions worsening, the publisher of the International Herald Tribune and the Boston Globe now aims to court a wider group of bidders.
The Times, like many of its peers that sought to diversify their holdings over the past decade, acquired the stake in 2002 for an estimated $75m.
Attracted by the synergies with media assets as well as the prestige that ownership of sports franchises confers, Time Warner did a deal with the Atlanta Braves, Tribune with the Chicago Cubs, and News Corp with the Los Angeles Dodgers.
But in harsher economic times, media companies have turned to these assets as among the first properties to get rid of. Tribune, which filed for bankruptcy protection in December, is nearing a deal to sell the Cubs.
The Times has indicated internally that it had hoped to generate four times its initial investment in the Red Sox and related assets, a source familiar with the matter said late last year. But fetching that amount would be challenging as buyers’ access to credit is limited.
The New York Times, like many of its newspaper industry peers, is now forced to consider all available financing options. Carlos Slim Helu, the world’s second richest man, loaned $250m to the company last week but, in return, extracted a 14 per cent interest rate. The company has also slashed its dividend by nearly 75 per cent, and is in discussions to raise $225m in a sale and leaseback of its stake in its New York headquarters.
The Times’ fourth quarter net income fell to $27.6m, or 19 cents a share, from $53m, or 37 cents a share a year earlier, dragged lower by severance charges and a writedown of assets.
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