Seeking to fortify its core assets, New York Times Co. is actively shopping its stake in the holding company of the Boston Red Sox baseball club, according to two people familiar with the discussions.
The Times Co., which faces a cash shortage accelerated by steep industrywide revenue declines, has been rumored for months to be open to selling non-core assets. Besides its flagship newspaper, the Times Co. owns the Boston Globe, About.com and a 17.5% stake in New England Sports Ventures, which owns the Red Sox, their fabled ballpark Fenway Park and most of the cable network that airs their games.
The Times Co. pushed discussions beyond the exploration phase early last month at a quarterly meeting of NESV's limited partners at which the Times Co. indicated to the partnership its intention to sell. Since then Times Co. has been pursuing potential buyers, according to people familiar with the discussions. A Times spokeswoman declined to comment.
It is unclear what the Times Co. thinks it can get for its stake. Barclays Capital estimates the Times Co.'s investment is worth about $166 million; analysts and sports bankers recently told Reuters the Times Co. could raise at least $200 million if it sold its stake.
The Times Co. acquired its stake in NESV when it joined John Henry in the hedge fund billionaire's $700 million purchase of the Red Sox in 2002. It is the second largest shareholder behind Mr. Henry. The stake was supposed to shore up the Globe's advertising position in New England by packaging the Globe with New England Sports Network, one of the most powerful television outlets in the region. But it wasn't enough to stop the decline in advertisers and readers.
It's possible that the Globe could be packaged with the sports assets in a sale; Jack Connors, a former ad executive in Boston, and former General Electric CEO Jack Welch took a serious look at the Globe two years ago, when people close to them said they were valuing it at $550-600 million at the time. The Times rebuffed the inquiries. The Globe was recently valued by Barclay's at $20 million.
The ad recession and migration of readers and advertisers to the Web has sent newspaper publishers under intense pressure, forcing many to try to unload once-untouchable assets. The Times Co. on Wednesday said company revenues fell 14% in November while advertising revenues for the News Media Group, which includes both the Times and the Globe, declined 22%.
The Times Co. has taken several cost-cutting steps recently to satisfy its funding requirements, which includes a $400 million revolving credit facility that expires in May. The company recently slashed its quarterly dividend by three-quarters and said it plans to borrow as much as $225 million against its Manhattan headquarters. But analysts have said the company might need to make more cuts and/or sell assets to avoid drawing more debt toward the end of next year. Executives from Times Co. at an industry conference this month said they are exploring asset sales ahead of what they expect to be "among the most challenging years we have faced."