The New York Times Will Survive, But Will Have a Tough 2009

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The New York Times will be faced with two obstacles as it seeks this year to solve its Boston Globe problem, since the Globe is losing an estimated $52 million per year:

Internal problem: The entire company is now worth less than the $1.1 billion it paid for the Boston Globe. (As of Jan. 6, its market cap is $1.09 billion; it had been less than $900 million in Nov. 2008). It’s difficult to write off that much money, but the company has taken other drastic steps such as cutting dividends to conserve cash and taking out a mortgage on its new headquarters. How much is it worth to them to unload the Globe?

External problem: Even at a distressed, Times-financed purchase price, who will want to takeover the Boston Globe? After all, if the Times can’t make the Globe profitable, who can?

In terms of the Times itself, the challenge is that its attempt to sell online-subscriptions failed several years ago. It’s going to need to find ways to increase the value it provides its advertisers, such as its new ad across the bottom of the front page. That said, we don’t think the Sulzbergers will sell the Times, as the Bancroft family sold the Wall St. Journal to News Corp.

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