Could Google Buy The New York Times?

There's lots of illogical things printed by the New York Times, which bloggers love to hate, but the most irritating and unsensible thing about the Grey Lady is that every quarter, the same thing happens - The stock (NYSE: NYT) gets pegged down a little more, more cost cuts are announced, maybe some layoffs, reduction in coverage areas, disposal of an asset or two, etc.. - And then everybody just gets on with it, assuming that nothing's going to happen to an iconic Institution like the New York Times.

Also, considering the brand and partisan value, it would be a bit foolish to put a price on the New York Times. Which makes it a bit difficult to judge how well (or how badly) the NYT is doing.

So let's look at the figures from its parent company, the New York Times Co.

Jay Yarow and Jon Fine from BusinessWeek (July 25, 2008) show off their excellent math skills by toting up the Times Co.'s enterprise value ($2.85 billion) and subtracting it from the total value of all of their other assets ($2.1 billion), which leaves about $750 million for the New York Times, the International Herald Tribune, and the company's New York City radio station. This figure is way off-base. Why? Because it doesn't take into account reality.

Reality is that a lot of deep pocketed liberals would go to any length, and any price, to make sure that the coverage at the NYT remains.. well.. Fair and Balanced (with all due respect to Fox, and no infringement intended). Add to that the fact that the New York Times readership is more of a fanatically loyal cult than simply a brand. So its basically a question of liberal pride that the NYT remain as it is.

But for Wall Street's private equity groups and takeover barons, the NYT represents ripe and low-hanging fruit, and everytime the NYT dips down some more, it arouses intense schadenfreude on Wall Street, since the company remains immune to any blowback. As 2 hedge funds - Harbinger Capital Partners and Firebrand Partners - have found to their dismay, buying up 19% of NYT and threatening to wage a proxy fight has got them nowhere. Best they have managed to get is 2 seats on the Board, with no real influence to reshape the company's operations. The Sulzberger family trust owns almost 90 percent of the company’s Class B stock and retains control over the Board. In 2006, 30 percent of Class A shareholders withheld their votes for directors, and last year, 42 percent did so. A major investor, Morgan Stanley Investment Management, gave up on efforts to shake up the company, and sold its stake.

Put simply, the company is immune to Wall Street pressure. Since May 2007, NYT has lost over 50% of its value, dropping from $24.79 on May 29th 2007, to its current value of just over $12. Inspite of this, everybody simply assumes that this sustained slump is because of industry wide problems for the print media, as opposed to management issues specific to the NYT. What all this means is that the stock can continue dropping right till the edge, and no one will bat an eyelid.

But this also gives the paper time to clean up its act and make its web presence as profitable as the print edition. Not an easy task, but out of all the struggling print media companies, its the NYT which has the best chance to do this. Which also brings us to Google. Because Google is flush with cash, and is the leader in grabbing the market share for online news advertisers. And the NYT badly needs a revamp, but is still the print media's unquestioned leader. Most importantly, both have a reputation for having a 'liberal' partisan bent.

They're made for each other, with Google having access to all the online advertisers and so much cash, and the NYT with such a massive audience, but with dropping revenues and a lack of advertisers. If Google buys off the NYT, it will happily pay a heavy premium over and above the 'share' value, and will maintain the 'liberal' coverage. So theoretically speaking, no one should have an objection to the deal. All that remains is for Google and the Sulzberger family to agree to the deal, and what is a moribund concern on life-support could be turned around using Google's web savvy managers and advertising network. And it could serve as an example for other newspapers.

Comments

[fredb:]

this article lost all credibility when i read the title. it woudl be 'BUY' not "BY'...

2008 Jul 29 01:04 PM

[shanefalco:]

I think that was on purpose...a little play on words.

2008 Jul 29 01:37 PM

[andrew j:]

Wow, i love the assumption that the NYT is liberal, and the ensuing dripping contempt. Damn, got some on my shoe...

The only thing more intellectually bankrupt would be the idea that it is somehow offset by Fox news, that two prejudiced news sources somehow balance each other and provide Truth.

2008 Jul 29 01:54 PM

[atauber:]

why should they spend on garbage whice is fit to print?

2008 Jul 29 02:36 PM

[Brad Christ...:]

When Arthur Sulzburger Sr. handed the reigns to Jr., that was the start of the down fall. He brought in all of his college buddies who thought they could take the wheel of a great American icon. The rest is history, now the family is too proud to realize they need outside help and need it fast. I own over 5000 shares of stock. The dividends are still being paid, but I will be averaging out on my brokers advice as are many of my friends who retired with stock holdings in their 401K's also.. Bye bye Sultz Jr., will you go down with the ship? I doubt it, I think you'll be the first on the life boat before the women and children!!!

2008 Jul 29 07:15 PM

[GoogleDoubter:]

The NYTimes is the number ONE source of news links that appear at the top of Da Drudge Report. They may be maliaigned, but everyone who is anyone smart reads the NYTimes as part of their day. I choose online M-Sat and purchase a Sunday paper at the coffeeshop. Nothing better on Sunday's than reading the Magazine and Week in Review sections.

2008 Jul 29 08:13 PM