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(Slate)   1993: The New York Times buys the Boston Globe for $1.1 billion. 2013: The New York Times sells the Boston Globe for $70 million. Hey, someone should give these guys a mortgage-backed hedge fund   (slate.com) divider line 58
    More: Repeat, Boston Globe, New York Times Company, Worcester Telegram & Gazette, integral, direct mails  
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1616 clicks; posted to Main » on 05 Aug 2013 at 10:55 AM (1 year ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2013-08-05 09:49:39 AM
Well, no one here in Boston ever claimed that New Yorkers were smarter than Bostonians.

/we hardly have to do anything... they fleece themselves...
 
2013-08-05 10:11:01 AM
OK, but how much money did they make in that time? The cost of the business isn't the end/all be/all of profits. They owned this town for 20 years and made a lot of money doing it.
 
2013-08-05 10:13:48 AM

jaylectricity: OK, but how much money did they make in that time? The cost of the business isn't the end/all be/all of profits. They owned this town for 20 years and made a lot of money doing it.


If the business lost 93% of its value in that time, probably a lot less than you think.

Also, how'd that far liberal slant to the news reporting work out for them?  Apparently, not that well.
 
2013-08-05 10:15:47 AM

Saborlas: /we hardly have to do anything... they fleece themselves...


I hope that Yankee fan who asked me for directions is still waiting at Park Street for an "Uptown" train to come by
 
2013-08-05 10:28:30 AM

SlothB77: If the business lost 93% of its value in that time, probably a lot less than you think.


It probably lost most of its value in the last 5 years. It was pretty healthy before then.
 
2013-08-05 10:42:17 AM

SlothB77: Also, how'd that far liberal slant to the news reporting work out for them? Apparently, not that well.


The Liberal Media™: the most powerful, unstoppable destructive force ever unleashed upon our great nation, while at the same time a completely toothless failure that is crashing down in flames.
 
2013-08-05 11:00:59 AM

SlothB77: jaylectricity: OK, but how much money did they make in that time? The cost of the business isn't the end/all be/all of profits. They owned this town for 20 years and made a lot of money doing it.

If the business lost 93% of its value in that time, probably a lot less than you think.

Also, how'd that far liberal slant to the news reporting work out for them?  Apparently, not that well.


True. Liberals don't buy endless crap and products as hocked by shills and douchebags. That's the milieu of conservative dopes who believe everything their told by close minded talking heads.
 
2013-08-05 11:01:18 AM

SlothB77: jaylectricity: OK, but how much money did they make in that time? The cost of the business isn't the end/all be/all of profits. They owned this town for 20 years and made a lot of money doing it.

If the business lost 93% of its value in that time, probably a lot less than you think.

Also, how'd that far liberal slant to the news reporting work out for them?  Apparently, not that well.


Liberals don't like reading.  They wait to listen to Jon Stewart and Maddow on tv.
 
2013-08-05 11:01:37 AM
As long as the everyone involved ends up with a billion-dollar retirement package, I think we should reserve comment.
 
2013-08-05 11:02:19 AM
The death throws of a failing business are not fun things to watch, Subby.
 
2013-08-05 11:02:25 AM

sigdiamond2000: SlothB77: Also, how'd that far liberal slant to the news reporting work out for them? Apparently, not that well.

The Liberal Media™: the most powerful, unstoppable destructive force ever unleashed upon our great nation, while at the same time a completely toothless failure that is crashing down in flames.


The Liberal Media continues on despite their losses. More and more are starting to see them for what they are, but they continue.  Obama will bail out the NYT if needed.  The National Inquirer has more credibility than the NYT anymore.
 
2013-08-05 11:03:35 AM
Don't worry: The New York Times Company is still well-positioned to succeed in the new media economy, and reports that they've been short-shrifting digital for 15 years while dicking around with an unsalvageable print-centered business model are inaccurate.

They hired the guy who invented Coffeescript! They're saved!
 
2013-08-05 11:04:36 AM

jaylectricity: OK, but how much money did they make in that time? The cost of the business isn't the end/all be/all of profits. They owned this town for 20 years and made a lot of money doing it.


FTA: "The Times Co., like other business owners, withdrew a large stream of cash from the Globe during its ownership - a sum at least equal to the purchase price, according to several former high-ranking Globe executives. "
 
2013-08-05 11:04:50 AM

Nemo's Brother: The Liberal Media continues on despite their losses. More and more are starting to see them for what they are


Awesome.

So how close are we to the point where you stop b*tching about it then?
 
2013-08-05 11:06:54 AM

sigdiamond2000: So how close are we to the point where you stop b*tching about it then?


Hey! Don't you go trying to take away his boogeyman! How will he ever face real problems without having a ridiculous scapegoat to fall back on?
 
2013-08-05 11:10:51 AM
Definitely the solution is to fire more experienced reports, hire more interns and publish more celebrity news and interviews. Also tap into the information superhighway with a paywall and hire a bunch of bloggers that post inflammatory topics to drive hit counts up for better metrics so that advertising will pay for everything.
 
2013-08-05 11:12:13 AM

SockMonkeyHolocaust: Definitely the solution is to fire more experienced reports, hire more interns and publish more celebrity news and interviews. Also tap into the information superhighway with a paywall and hire a bunch of bloggers that post inflammatory topics to drive hit counts up for better metrics so that advertising will pay for everything.


Yeah, that would certainly change Boston.com. Hey, have they updated the "25 Best Burgers in Boston" slideshow since they ran it last week?
 
2013-08-05 11:14:37 AM

BunkoSquad: SockMonkeyHolocaust: Definitely the solution is to fire more experienced reports, hire more interns and publish more celebrity news and interviews. Also tap into the information superhighway with a paywall and hire a bunch of bloggers that post inflammatory topics to drive hit counts up for better metrics so that advertising will pay for everything.

Yeah, that would certainly change Boston.com. Hey, have they updated the "25 Best Burgers in Boston" slideshow since they ran it last week?


Philly.com has the Naked Bike ride and Eagles Cheerleader tryout galleries.

That's some news... you can use.
 
2013-08-05 11:22:21 AM
Also, if what I read the other day is true the NYT gets to keep $110 million in pension liabilities, so they're actually down even worse.

And supposedly they turned down a $300 million offer that would have taken the pension liabilities off their hands a few years ago.

I'm too lazy and ignorant to try to calculate how much they earned over the years of owning it.
 
2013-08-05 11:29:11 AM
really? This gets a [repeat] tag but not the ballad of John Henry headline?
 
2013-08-05 11:45:39 AM

HiFiGuy: jaylectricity: OK, but how much money did they make in that time? The cost of the business isn't the end/all be/all of profits. They owned this town for 20 years and made a lot of money doing it.

FTA: "The Times Co., like other business owners, withdrew a large stream of cash from the Globe during its ownership - a sum at least equal to the purchase price, according to several former high-ranking Globe executives. "


So, they broke even?  That's a real winner of a 20-year investment, then.
 
2013-08-05 11:58:05 AM

HiFiGuy: FTA: "The Times Co., like other business owners, withdrew a large stream of cash from the Globe during its ownership - a sum at least equal to the purchase price, according to several former high-ranking Globe executives. "


I'd hope that it was substantially more than the purchase price, actually.  Otherwise, 6% rate of return(counting the sale as the only real net profit) over 20 years is a really lousy return.  I'd hope they got at least double out of it.
 
2013-08-05 12:14:50 PM
They did not break even.  Had they invested that $1.1 billion in the stock market, with average return of 6% each year for 20 years, they could've made $2.4 billion.  Instead, it seems like they made only $70 million?  That's what, 0.3% annual return?

The flip side is they kept a potential competitor at bay, by bringing the Globe in-house, which could've hurt the Times' circulation otherwise.
 
2013-08-05 12:19:09 PM

The Banana Thug: They did not break even.  Had they invested that $1.1 billion in the stock market, with average return of 6% each year for 20 years, they could've made $2.4 billion.  Instead, it seems like they made only $70 million?  That's what, 0.3% annual return?


There's so much wrong with what you wrote here I'm not quite sure where to start.
 
2013-08-05 12:28:54 PM
NYT turned down higher cash offers.

The SEC is looking into violations of stock holder rights.

Stay Tuned

(hoping this gets stupid-ugly)
 
2013-08-05 12:36:41 PM
I feel like my subscription to the Sunday Times is like owning a share of a horse-and-buggy company ffs, but I also feel without actual employment for actual journalists there would be next to nothing in terms of thoughtful news analysis anywhere on the interwebs,
 
2013-08-05 12:57:26 PM
Someone is getting a whole lot of assets, cheaply.

What a racket.
 
2013-08-05 01:00:29 PM
Krugman forgot to carry the zero again?
 
2013-08-05 01:04:43 PM
1993? A little thing called "The Internet" happened since then.
I'm surprised they got anything for a newspaper. Could they just have poached the employees instead ? Is the brand worth that much ?
 
2013-08-05 01:12:13 PM

Supes: There's so much wrong with what you wrote here I'm not quite sure where to start.


Please start, because I'm not seeing what's wrong.  To me it seems to be a fairly straight forward example of 'cost of capital'.  IE you have X Money.  You have multiple options with it - invest in various places, spend it, whatever.

I do it for 'green power' options all the time.  Consider Solar panels.  If I have $10k to put a solar electric system in, cost of capital means that if I figure that alternate investments would return ~5%, that said system needs to save me at least $500/year to break even.  Actually, it needs to be closer to $1k since photovoltaic panels have only a 40 year lifespan...

Then again, checking the numbers:  6% a year only gives me 1.32B, assuming they suck any value increase out.  Assuming they drained the company completely, that gives us 2.4B between the money the company made and the liquidation of any assets to the point the company was only worth $70M at the end.  The $70M, assuming they did suck exactly the purchase price of 1.1B out of it over the years, works out to roughly .3% return, at that low of a rate even 20 years isn't much compounding wise.

The 'bought out a potential competitor' is an interesting tidbit, the benefits/costs of which is hard to say unless you're in the industry.
 
2013-08-05 01:16:47 PM

reincarnation_mutation: 1993? A little thing called "The Internet" happened since then.
I'm surprised they got anything for a newspaper. Could they just have poached the employees instead ? Is the brand worth that much ?


I've heard said that the building and property that the Globe occupies is worth about $70 million, so it's not impossible that this is more a real estate investment than a newspaper investment.
 
2013-08-05 01:18:19 PM

Firethorn: HiFiGuy: FTA: "The Times Co., like other business owners, withdrew a large stream of cash from the Globe during its ownership - a sum at least equal to the purchase price, according to several former high-ranking Globe executives. "

I'd hope that it was substantially more than the purchase price, actually.  Otherwise, 6% rate of return(counting the sale as the only real net profit) over 20 years is a really lousy return.  I'd hope they got at least double out of it.


Wouldn't think so. They tried using NYT-RNG as a cash cow in exactly this fashion in the 80s and 90s but even then the rot was setting in for newspapers. Their idea of buying papers in markets that were growing (Wilmington, NC, Lakeland FL, etc) but only had one paper (no competition) turned into  a liability once those papers started losing money. I owned NYT-RNG stock for most of the 80s so I got used to spotting the euphemisms for "we're losing our ass on this" in the quarterly reports. I dumped that stock in '90 when they were "down" to 38 papers and made a decent profit (around 15%). By 2011 they were down to 16 papers and sold the whole lot to Halifax Media for $143 million, which hardly covered the combined physical plants. Since printing presses still make money, as long as they aren't printing newspapers, this was considered quite a beating in the market. The NYT also lost a string of papers which had been used to hire the idiot sons and daughters of various corporate officials and there was some value in that, too.
 
2013-08-05 01:26:24 PM

Firethorn: Then again, checking the numbers:  6% a year only gives me 1.32B


Where is this 6% number from, though?
 
2013-08-05 01:59:18 PM

SockMonkeyHolocaust: BunkoSquad: SockMonkeyHolocaust: Definitely the solution is to fire more experienced reports, hire more interns and publish more celebrity news and interviews. Also tap into the information superhighway with a paywall and hire a bunch of bloggers that post inflammatory topics to drive hit counts up for better metrics so that advertising will pay for everything.

Yeah, that would certainly change Boston.com. Hey, have they updated the "25 Best Burgers in Boston" slideshow since they ran it last week?

Philly.com has the Naked Bike ride and Eagles Cheerleader tryout galleries.

That's some news... you can use.


Combine them.  Naked cheerleader rides.
 
2013-08-05 02:39:35 PM

The Banana Thug: They did not break even.  Had they invested that $1.1 billion in the stock market, with average return of 6% each year for 20 years, they could've made $2.4 billion.  Instead, it seems like they made only $70 million?  That's what, 0.3% annual return?



So much wrong.  Nobody invests "in the stock market" itself and given the size and scope of their interests they would not be dumping $1.1 billion on an index fund.  In all actuality, there's no way to forecast potential investment earnings (since you also assume they reinvested dividends) or the ultimate value of their equity holdings.  If they'd taken a conservative "value oriented" approach to investing at the time of purchase they'd be at or below break-even since those strategies rely heavily on financials who lost much of their equity four years ago.  Furthermore, in order to actually attain the "average rate of return" one needs to invest regularly and continuously over a given period of time...buying in bulk and going long for 20 years isn't the recipe for success.
 
2013-08-05 03:22:33 PM

poot_rootbeer: Firethorn: Then again, checking the numbers:  6% a year only gives me 1.32B

Where is this 6% number from, though?


Not sure.  I tend to use 5%, but I could see you going for between 7-11% for S&P 500 investments.  Over decades 10 year T-Bonds have averaged 5-7%.

It depends on what figure you end up settling on, and what risk premium you use.  Use the 'last 20 years' figure and you'll be at 9.6%, but with stocks you generally want to assign some 'discount' to take into account risks...  It all depends on the individual.
 
2013-08-05 03:33:49 PM

JK47: So much wrong. Nobody invests "in the stock market" itself and given the size and scope of their interests they would not be dumping $1.1 billion on an index fund.


Okay, so it wouldn't be an index fund.  However I think you don't realize the size of the market today - properly diversified to the point that they are indeed basically buying into 'the stock market', because at $1.1B you could own a minor chunk of lots and lots of companies without ever coming close to majority ownership of any of them.  It only works out to $2.2M per S&P 500 company, for example.  All the S&P companies have a market cap of $10.7T, so it's only .01% of the companies(yes, that's POINT zero one percent).

In all actuality, there's no way to forecast potential investment earnings (since you also assume they reinvested dividends) or the ultimate value of their equity holdings.

Don't tell the insurance companies about that!  Where do you think they hold their reserves?  When a company own stock(and lots do), you simply adjust the earnings forecast as stuff shakes out.  When properly diversified the failure of a single company doesn't affect you much, only broad trends in the financials do.

If they'd taken a conservative "value oriented" approach to investing at the time of purchase they'd be at or below break-even since those strategies rely heavily on financials who lost much of their equity four years ago.

Over 20 years that becomes more of a blip.  You should have gotten at least 1 doubling before that.

Furthermore, in order to actually attain the "average rate of return" one needs to invest regularly and continuously over a given period of time...buying in bulk and going long for 20 years isn't the recipe for success.

As strategies go, it's not bad actually.  You'd want to rebalance on occasion, but over time a single large investment in the beginning is going to be almost as 'average' as one that's had continuous deposits.  Especially if we assume they didn't happen to buy at a peak or valley of a large market fluctuation.
 
2013-08-05 03:34:26 PM
Such liberal media, the New York Times. Remember when they went all Libby-lib and made the UNPRECEDENTED move of allowing Judith Miller to print anything she liked on their front-page, with no fact checking? Remember how her pieces were used to justify the war in Iraq?

So liberal.
 
2013-08-05 03:46:58 PM

Firethorn: Supes: There's so much wrong with what you wrote here I'm not quite sure where to start.

Please start, because I'm not seeing what's wrong. To me it seems to be a fairly straight forward example of 'cost of capital'. IE you have X Money. You have multiple options with it - invest in various places, spend it, whatever.


It's not like they bought the Globe, sat on it and watched its value change, and then sold it.  The Globe generated money for them in that time.  Or they sucked money out of it in a vulture capitalist kinda sense.

The Globe had more use for them than just as a commodity..
 
2013-08-05 03:47:59 PM

poot_rootbeer: Firethorn: Then again, checking the numbers:  6% a year only gives me 1.32B

Where is this 6% number from, though?


Don't know where that was but if you could have invested it in a S&P 500 stock fund (without having that amount of money cause a price hike) on June 28th, 1993 when they bought the paper, the S&P was at about $450.  It's now at about $1,700.  So, it would be worth $4.1 billion right now.
 
2013-08-05 03:56:17 PM

Apik0r0s: Such liberal media, the New York Times. Remember when they went all Libby-lib and made the UNPRECEDENTED move of allowing Judith Miller to print anything she liked on their front-page, with no fact checking? Remember how her pieces were used to justify the war in Iraq?

So liberal.


When was the last time the Times endorsed a Republican for President in a general election?

What I find most amusing about the Times is the way their editorial board feels about the Senate Filibuster and how it's always based entirely on which party is in the minority.  In the mid 90s, they advocated for the elimination of the filibuster while Democrats were in the majority, in 2005 with the Democrats in the minority they advocated for its continued existence as a "center of the peculiar but effective form of government America cherishes".  Then, a month ago, they decried it once again (now that the Democrats are back in the majority).
 
2013-08-05 04:01:40 PM

meanmutton: Apik0r0s: Such liberal media, the New York Times. Remember when they went all Libby-lib and made the UNPRECEDENTED move of allowing Judith Miller to print anything she liked on their front-page, with no fact checking? Remember how her pieces were used to justify the war in Iraq?

So liberal.

When was the last time the Times endorsed a Republican for President in a general election?

What I find most amusing about the Times is the way their editorial board feels about the Senate Filibuster and how it's always based entirely on which party is in the minority.  In the mid 90s, they advocated for the elimination of the filibuster while Democrats were in the majority, in 2005 with the Democrats in the minority they advocated for its continued existence as a "center of the peculiar but effective form of government America cherishes".  Then, a month ago, they decried it once again (now that the Democrats are back in the majority).


WTF does that have to do with anything the Sulzbergers care about - which is Israel and the Banking Industry? Clinton and Obama are virtually indistinguishable from any Republican on these issues.
 
2013-08-05 04:02:29 PM
We used to call it The Glob when I lived there.
 
2013-08-05 04:19:35 PM

gfid: Also, if what I read the other day is true the NYT gets to keep $110 million in pension liabilities, so they're actually down even worse.

And supposedly they turned down a $300 million offer that would have taken the pension liabilities off their hands a few years ago.

I'm too lazy and ignorant to try to calculate how much they earned over the years of owning it.


Ha ha.  That'll teach 'em to not turn up their noses at those nasty conservatives' money.

Ok, no it won't.  But it's amusing nonetheless (and worse for them than you say).
 
2013-08-05 04:24:02 PM

Supes: The Banana Thug: They did not break even.  Had they invested that $1.1 billion in the stock market, with average return of 6% each year for 20 years, they could've made $2.4 billion.  Instead, it seems like they made only $70 million?  That's what, 0.3% annual return?

There's so much wrong with what you wrote here I'm not quite sure where to start.


Then try.  This is a very common opportunity cost analysis that they teach in business schools.
 
2013-08-05 04:40:13 PM
CSB:
The Globe was originally a pamphlet that told the tale of the pirated ship, The Globe, and that tale is a long and strange one, let me tell you, Having been hijacked, and marooned, and started new lives on a desert island, years later, survivors where hauled in what took years to get them back to Boston, and they, the victims, had to stand trial for mutiny.
Not any ending to this cool story, because it's a ghost story.
And you don't believe in ghost threads.


But you're in one.
 
2013-08-05 04:58:05 PM

The Banana Thug: Supes: The Banana Thug: They did not break even.  Had they invested that $1.1 billion in the stock market, with average return of 6% each year for 20 years, they could've made $2.4 billion.  Instead, it seems like they made only $70 million?  That's what, 0.3% annual return?

There's so much wrong with what you wrote here I'm not quite sure where to start.

Then try.  This is a very common opportunity cost analysis that they teach in business schools.


So...a 0.3% annual return, compounded let's say monthly (as I think you did to get your $70 million number, though you apparently only used once-yearly compounding for your $2.4 billion figure), on a $1.1bn investment over 20 years yields, just ballparking here, $1,168,011,442.54.  So I'd say you're not off by much more than, oh, just about $1,098,011,442.54.  Which is, give or take, 100%.
 
2013-08-05 05:18:25 PM

Garet Garrett: So...a 0.3% annual return, compounded let's say monthly (as I think you did to get your $70 million number, though you apparently only used once-yearly compounding for your $2.4 billion figure), on a $1.1bn investment over 20 years yields, just ballparking here, $1,168,011,442.54.  So I'd say you're not off by much more than, oh, just about $1,098,011,442.54.  Which is, give or take, 100%.


It's correct to 3 significant digits.  4 digits would be .31%.  I'd say it's also incorrect to assume compounding interest(as opposed to them taking each year's interest as profit out) given that it's pretty much assumed that they drained the company of assets ala 'vulture capitalism' during their years of ownership.  For that matter, in which case they probably obtained the lion's share of the profit in the beginning.

I'll still say that the investment was horrible unless they got their $1.1B and an unspecified additional amount back very quickly in the early days of the takeover.  Like the first 3 years.

While 20 years is enough for significant compounding, I'd say that the available numbers are vague enough that the the vagueness is more than enough to swamp any differences between annual, monthly, or continuous compounding.  Besides, like I said, odds are that they weren't treating the globe as a compounding interest type 'investment', but rather something to be drained for wealth in the most optimum fashion.
 
2013-08-05 05:25:58 PM
Burning down My Master's House!
 
2013-08-05 05:45:21 PM
For those wondering if NYT Co. got a return on the deal, the simple answer is yes. John Henry will get an even better return on the the deal he just made (if it holds up against shareholder lawsuits).

As someone in the business, though in a much smaller role than these two behemoths, there are literally hundreds of ways to rape an pillage a newspaper from its customers (advertisers) and its audience to vendors and unions.
 
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