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Boston Globe

7 things to know about The Boston Globe’s sale to John Henry

The Boston Globe’s sale to billionaire Red Sox owner John Henry wasn’t too surprising (though its announcement in the wee hours of Saturday was). As weekend turns to week, the move still seems to make a lot of sense. Here are seven thoughts on why and what may be next for the Globe.

1.) It’s a sweet deal for Henry. The Globe’s real estate is close in value to the $70 million sales price he paid. And the New York Times Co. will retain the pension liabilities of the paper, CFO James Follo said in an earnings conference call Thursday.

So if the Globe were to fail as an ongoing business venture, the real estate is a great cushion to fall back on. The property is large and strategically located near an expanding college campus. Relocating, as many metro papers including Philadelphia’s have done, could be a sound cost-cutting move in the near-term. Or the value of the building and property would likely keep going up if the Globe stays.

A security guard walks past the entrance of The Boston Globe building in this 2009 file photo. (AP Photo/Charles Krupa, File)

This deal structure — taking the real estate, leaving the pension liability with the seller — has been standard in recent newspaper transactions — including Berkshire Hathaway’s acquisition of Media General’s newspapers and the Times Co.’s sale of its regional titles to Halifax.

2.) The remaining risk for Henry — and it’s a real one — is that advertising revenue deteriorates even more, digital replacement revenue is slow coming and the Globe slides into serious operating losses.

The Times Co. breaks out revenue for the Globe and its sister paper, the Worcester Telegram & Gazette, but not profitability. However, ad revenue this year is down nearly 10 percent through two quarters, substantially worse than the industry standard. Digital subscriptions do not come as close to making up the difference as they do at the New York Times.

The entire company showed a net profit of 4.2 percent in the second quarter. So I would estimate that the Globe is operating at break-even or a small loss (think: The Washington Post) and is likely to continue that pattern the next several years.

Henry is a Forbes 400 stalwart with wealth estimated by the magazine at $1.5 billion, so investments in keeping the paper strong and moving along with digital transformation are not likely to spend down his piggy bank.

3.) A downside for the Globe is competition — the Boston Herald takes circulation and advertising it might otherwise capture. Some other papers with civic-minded ownership groups of wealthy locals (Philadelphia, San Diego) do not have that disadvantage.

Under Times ownership, the Globe extracted big concessions from its unions in an earlier financial crisis, so labor costs and unrest may not be as big an ongoing problem as at the Philadelphia papers (where owners threatened closure seven months ago during tough bargaining).

Ownership of the Telegram & Gazette, which shares some Sunday sections and business operations with the Globe, is probably neither a big plus nor a drain financially.

4.) The Globe locked in to a high-quality, high-cost strategy several years ago. Its yearly subs are the highest priced among metros, and it is several years along trying to develop bostonglobe.com as a premium website with features a reader cannot find on the free boston.com site.

Editor Brian McGrory was a key player in making sure there was editorial-value added to justify the cost to readers during his time as metro editor several years ago. The Globe has also been proactive in developing a mobile news presence and other new ventures like a direct-marketing arm.

Henry may have other initiatives and new directions in mind, but I don’t see the Globe as a candidate for a quick pivot. So I would not be surprised to see the current team of McGrory and publisher Christopher Mayer stay in place.

5.) Wealthy locals have been part of the mix of newspaper buyers and potential buyers for some time now. In Los Angeles, real estate billionaire Eli Broad, entertainment mogul David Geffen and supermarket and private investment magnate Ron Burkle have all expressed interest over the years in restoring the Los Angeles Times to local ownership. Warren Buffett kicked off his newspaper buying spree with his hometown Omaha World Herald.

I have compared these moves to the pleasure for the very wealthy of buying a sport franchise — more fun than owning a bond and a high-visibility good deed for your community as well. In Henry, we now have one rich man doing both at once.

6.) I had thought the New York Times would be picking a winning bidder among several groups strictly on the basis price with no particular attention to what new owners might do with the paper. The Globe’s own account implied but did not say definitively that the disappointing $70 million bid was the highest. Beth Healy reported Monday that three groups claimed their bids had been higher.

I am left wondering whether the Times was influenced by the company’s experience working with Henry when it owned a minority stake in the Red Sox, confidence in his business acumen and perhaps queasiness with returning the Globe to the Taylor family from whom it bought the paper 20 years ago. All that could have tilted the balance in Henry’s favor.

7.) On the surface, this deal could not be more straightforward — $70 million cash. But tax benefits to either the buyer or seller are worth watching for when the transaction is completed in another 30 to 60 days,

Provisionally. let’s call the result a happy ending — or at least a happy juncture — in the Globe’s ownership/survival drama. The New York Times Co. has been a passive owner of late, preoccupied with the huge task or remaking its flagship franchise in the digital era.

The paper now gets a fresh start and an owner who can be presumed to be a builder rather than a cost-cutting, profit-harvesting liquidator. But the challenges tomorrow remain what they were yesterday — finding revenue alternatives and successful digital products as print advertising erodes, even more quickly in spread-out metropolitan areas like Boston than for the industry as a whole. Read more

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Boston Globe Future

Red Sox owner will buy Boston Globe for $70m

The Boston Globe | The New York Times Co. | The New York Times | Bloomberg

Red Sox owner John Henry will buy the Boston Globe from the New York Times Co. for $70 million cash, the Globe’s Beth Healey reports.

Henry’s purchase also includes the Worcester Telegram & Gazette, the Globe’s printing business, its websites and an interest in the commuter paper Metro Boston.

His offer beat reportedly beat bids by U-T San Diego owner Doug Manchester; Robert Loring of Revolution Capital, which owns the Tampa Tribune; and a group led by Ben and Steve Taylor, whose family once owned the Globe. Henry had previously been involved in a bid involving the New England Sports Network but launched a solo bid after that ended. Read more

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Boston Globe did a good job using Twitter after Marathon bombings, Twitter says

Twitter Blog

Twitter “became a crucial part of the journalist’s toolkit” after the Boston Marathon bombings, Twitter Data Editor Simon Rogers writes. The Boston Globe used the microblogging service particularly well:

In the midst of a deluge of information over that week, the Globe remained a credible channel of news, sifting through reports to highlight verified and important information. The Globe used Twitter as a news distribution channel tweeting a lot — and retained and enhanced its credibility.

Mentions of the Globe’s content jumped in the days following the blasts:

Read more

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Chicago Blackhawks ad in Boston Globe salutes city’s ‘gracious spirit’

We’ve reported on the Chicago Tribune sending the Boston Globe pizzas after the Boston Marathon bombings and taking back part of its tribute to the city’s sports teams during the Stanley Cup finals. So it seems appropriate to note the ad that the Chicago Blackhawks, who won the Cup, placed on page A9 of Friday’s Globe.

Called “An open letter to the Boston Bruins organization & the city of Boston,” the ad says “we were deeply touched by what happened off the ice.”

“Like the rest of the world, Chicagoans have been reminded in recent days of Boston’s strength. Please know we tip our hat to your city’s big heart and gracious spirit. You lead by example and have set the bar very high for others to follow.”

Photo of the ad after the jump (click to view bigger). Read more

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Boston Globe bids are due today

Bloomberg | Financial Times | Boston Globe

Bids for the Boston Globe are due Thursday, and Bloomberg’s Edmund Lee reports they’re likely to come in at around $100 million — a significant haircut given the $1.1 billion the New York Times Company paid for the Globe in 1993.

That’s about $200 million less than Aaron Kushner offered in 2011, Lee reports, and $400 million less than Jack Welch offered in 2006. Read more

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Senators urge State Department to ramp up efforts to find Tice, Foley

Associated Press

Senators in New Hampshire and Texas are urging the State Department to increase its efforts to find missing journalists James Foley and Austin Tice.

‘‘As the months continue with no further information regarding Mr. Tice’s or Mr. Foley’s whereabouts or welfare, we ask for your continued personal attention to these cases,” New Hampshire senators Jeanne Shaheen and Kelly Ayotte and Texas senators John Cornyn and Ted Cruz wrote in a letter Thursday.

They also asked Secretary of State John Kerry to raise awareness about U.S. citizens being held in Syria and to address it during peace talks in Geneva, the Associated Press reports.

Foley, a freelance journalist for Agence France-Presse and GlobalPost who’s from New Hampshire, has been missing in Syria since November. Tice, a McClatchy and Washington Post freelancer from Texas, has been missing in Syria since last August. Tice’s family recently returned to Beirut to, as they put it, “reach more deeply into the region on behalf of our son.” Read more

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Boston Globe to print entire press run of Boston Herald

Beginning July 1, The Boston Globe will begin printing the entire press run of the Boston Herald. The two papers announced the 10-year agreement Wednesday afternoon.

The Globe had already been printing and delivering about one-third of the Herald’s print circulation — an agreement the two papers had reached last year.

“This agreement represents an important component for the future of our business,”  Richard E. Masotta, Globe vice president of operations said in a press release that the agreement “represents an important component for the future of our business” and addresses “the structural challenges of our industry.”

Boston Herald Publisher Patrick Purcell is quoted in the same release as saying:

“The newspaper industry, as well as other traditional media companies, has undergone a radical transformation in recent years. In the face of that change, it has never been more important for newspapers to implement ways in which they can be more efficient.  The Herald and The Globe both recognize this.  While we will continue to compete for readers and advertisers, we also recognize that we can serve those audiences better and longer by cooperating in areas that are cost effective.”

Related: Report: Boston Globe bidders include Doug Manchester, Patriots’ owners Read more

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Report: Boston Globe bidders include Doug Manchester, Patriots’ owners

The Boston Globe

Bids for The Boston Globe are due June 27, and Beth Healy reports there are eight groups that might submit offers.

U-T San Diego owner Doug Manchester “toured the Globe recently, according to people who saw him,” Healy writes. Revolution Capital Group, which acquired the Tampa Tribune from Media General last October, is also a potential bidder.

Local interest includes the Kraft Group, which owns the New England Patriots; Boston lawyer Shannon Liss-Riordan; and a group including two members of the family that sold the Globe to the New York Times Co. Read more

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Chicago Tribune sends pizzas to Boston Globe newsroom

“We can’t buy you lost sleep, so at least let us pick up lunch,” a note from the Tribune’s newsroom says. Boston Globe Magazine writer Scott Helman confirms to Poynter the lunch in question is pizza from Regina Pizzeria.

Photo courtesy Michael Levenson

Tribune staffers previously bought drinks for Times-Picayune staffers after they learned their paper was reducing print frequency and staff. Read more

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Boston Globe sale precipitated by $100 million bid in January

Former Boston Globe President Rick Daniels leads an investor group that offered “more than $100 million” for The Boston Globe in January, Keach Hagey reported Friday night.

“The Times has been in quiet talks for the past year with the buyer group,” Hagey reported. Read more

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