What’s The Boston Globe worth?

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February 21, 2013, 8:26 pm
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(NECN: Peter Howe, Boston) - Making official what had been widely known for months, The New York Times Co. late Wednesday put The Boston Globe and the rest of its New England Media Group up for sale, driving renewed speculation about a tough to answer question: Just what is New England’s biggest newspaper, and its associated websites, worth in 2013?

"For a prospective buyer, there's a lot to like about the Globe as a business, and definitely as a news organization," says Lou Ureneck, a Boston University journalism professor and director of its business and economic journalism program. "The Globe is a going concern, it’s a profitable business, it has a distinguished brand."

But at the same time, with advertising revenue plunging, circulation ebbing and the news business facing a hard time getting anyone under the age of 35 to pay for the content it produces, the Globe faces a harsh future, giving any prospective buyer ample reason to hold back.

"The newspaper business, the news business, is in turmoil," Ureneck said. "There's a lot of uncertainty."

It’s a number that today is almost impossible to imagine, but 20 years ago, The New York Times Co. paid $1.1 billion for the Globe – the equivalent of $1.75 billion in today’s money – only to see the value begin to steadily fall as the World Wide Web exploded. It’s been widely reported the Times turned down a $550 million offer for the paper in 2006 from a group led by Boston powerbroker Jack Connors and former General Electric CEO Jack Welch, and then, after the bottom fell out of the economy and newspaper business, two $35 million bids in 2009 that also included the cost of absorbing future pension liabilities for many hundreds of unionized Globe retirees.

Now, many media investment bankers and business analysts anticipate the Globe would fetch something like $100 million to $200 million if sold this spring, that number depending on whether a buyer also covers roughly that much again in unfunded pension liabilities, or whether the Times Co. is willing to keep those on its books. (The Globe and its Boston.com and BostonGlobe.com websites are the top properties in its New England Media Group, which also includes the Telegram & Gazette of Worcester and a strong business printing under contract other Eastern Massachusetts newspapers, including the arch-rival Boston Herald tabloid. It’s not clear whether the Times will demand a buyer take the group as a package or would be willing to sell the Globe and the Telegram to different buyers.)

These days the Globe sells half the number of papers it did when the Times bought it – barely 200,000 weekdays – and has won just 28,000 paying subscribers for its BostonGlobe.com website. That’s considered to be a markedly stronger number than many other papers that have tried to put up a “paywall” and stop giving away their content free on the Web, but it’s unclear how many of the 28,000 are getting the access for well below the list price of $4 a week, or how well BostonGlobe.com is offsetting lost newspaper advertising and circulation. The company also owns the wildly successful Boston.com free website, which has close to 7 million monthly visitors.

A big change since the last time the Times took offers: It’s hammered the papers’ unions for pay and benefit concessions, unpaid furloughs, and an end to lifetime job guarantees for many Globe unionized employees.

"That should make it more attractive than it was in 2009 to find a buyer," said attorney Michael Andresino, a mergers and acquisitions expert with Boston law firm Posternak, Blankstein & Lund. "Having sort of gone through the pressure of ’09 and cut costs the way they have, that's probably the biggest advantage that I would see here" to the Times being able to command a better sales price for the Globe.

"It's not clear to me that their move to digital is successful, that you could call it a success yet," Andresino said.

One wild car to consider: The Globe sits on, according to the city of Boston’s assessing department, a piece of land at 135 William T. Morrissey Boulevard worth $21.3 million, inside a $17.1 million building, with good access to the Southeast Expressway, the boulevard and the MBTA Red Line and JFK/Columbia/UMass commuter rail station. One possible motivating factor for a buyer could be, in part, a real-estate redevelopment play in which the paper and its newsroom and business operations are moved elsewhere and the Morrissey Boulevard parcel is redeveloped for offices, retail, lodging and possibly housing.

The Herald did just that two years ago, moving its newsroom and business office to a South Boston innovation district office building and putting its newspaper plant on Albany Street by the Expressway and Mass. Turnpike Extension up for redevelopment as what’s now being marketed as the Ink Block housing/retail complex.

And an especially important consideration for a potential sale of the Globe: The cachet, hard to put a dollar value on, of owning New England’s biggest news organization and potentially going down in history as the person or people who saved The Boston Globe and transformed it to endure for the 21st Century. Members of the Taylor family, descendants of multiple generations of Globe publishers and presidents, the family that sold the paper to the Times in 1993, are widely reported to be looking at regaining control of the paper and its online news operations, along with a steady string of Boston corporate titans who are seen as interested in saving a key local institution many thought the Times Co. let languish for years with insufficient direction, support, and resources.

"There are buyers for an asset like that that you don't get for a sort of standard industrial company," Andresino said.

Ureneck said there may be a bottom-line minded ownership group that comes in looking to wring out costs, slash the Globe’s 360-person newsroom, and flip the real estate, but he also expects "someone to come in and to see a business that's capable of modest profit in the short term, perhaps a little bit better in the long term, but who is willing to balance the profit demands with the need to sustain a civic organization, a community resource, which is what The Boston Globe … The Globe is an important civic institution in the City of Boston, and you know, all of us who care about Boston want to see this sale happen in a smart and successful way."

With videographer Scott Wholley.

Tags: Boston, newspaper, Peter Howe, The Boston Globe, New York Times , New York Times company, New England Media Group, the Taylor family
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