Is Carlos Slim a would-be newspaper baron, a visionary investor, or just a predatory lender?
The Mexican cell phone billionaire will throw The New York Times Co. (NYT) a fat lifeline in the form of a cash infusion of several hundred million dollars. News of the talks was first reported over the weekend in The Wall Street Journal. The Times provides some finer detail yesterday: In exchange for $250 million upfront, Slim will get 10-year notes with warrants that convert into common stock, and he'll also receive a special annual dividend of as much as 10 percent.
The Journal likens the arrangement to the one between Goldman Sachs (GS) and Warren Buffett, who put $5 billion into the banking giant with the inducement of a 10 percent dividend.
No one would call Buffett a reckless investor. But then the banking sector isn't looking at a long-term downward secular trend like the one afflicting the newspaper industry. Slim's earlier experience with the Times Co. should have given him a sense of just how fast its fortunes are falling: The $128 million stake he bought last September is now worth a mere $58 million.
Maybe he just really wants the tax write-off? The Times says it's "unclear what motivated Mr. Slim's investment," but notes that he "never sought a governance role and did not express interest in influencing the company's operations," unlike Harbinger Capital and Firebrand Partners, the hedge funds that bought up large chunks of Times Co. stock and agitated for change until the company talked them into a compromise last year.
Nevertheless, Felix Salmon thinks Slim must be entertaining a fantasy of controlling the Times, "otherwise there's no reason why he'd do this."
