Monday, August 05, 2013

The Free Paper

What John Henry wants with the Boston Globe now that he owns it is a complete mystery to this former industry veteran. WHY he bought it in the first place is a simpler issue. It's the same reason a lot of people look at newspapers every day. It was being given away.

Oh, the alleged purchase price of New England Media (the entity through which the New York Times Co. owned the Globe and the Worcester Gazette & Telegraph) was $70 million in cash. To begin with, that's purchasing a very high profile business, a profile useful to a financier like Henry in many ways, for peanuts. $70 million is approximately one year's budget for another Henry enterprise, Roush Fenway Racing.

But wait, that's not all! Consider that as part of the deal, Times Co. agreed to assume the pension liabilities of the two newspapers, reported to be somewhere in the neighborhood of $110 million. If you pay x for a business, and the seller agrees to keep x + whatever of the liabilities on its books as part of the deal, in actuality, you got x + whatever off the sticker price. The Globe minus those obligations is $110 million more valuable to the buyer than before.

If the idea is buy low, sell high, Henry can't do much better on the first half of the plan than that. As for Times Co., well, it bought the Globe back in the '90s for over $1 billion. This is the sort of transaction that gets CEOs lynched by stockholders, unless, like at Times Co., the annual stockholders meeting is also Thanksgiving family dinner.

I assume Times Co. sold the paper to Henry instead of other bidders because it believes he will keep the Globe's journalism more or less intact, horrible front page weather puns, obsessive coverage of the Cape Flyer railroad train and centrist mush op-ed pieces included. This almost surely includes coverage of Henry's primary local business, the Red Sox.

Based on our very slight prior acquaintance, I can confidently report that Henry is no one's fool. He may have been angered, as all  sports people are, by stuff he read about the Red Sox in the Globe in the past. But he's far too astute a businessperson to meddle in Sox coverage. It'd hurt both businesses.

Look, newspaper sports journalism has two predictable tones of coverage. When a team's winning, all news is good news. When a team's losing, all news is bad news and cranky interpretations of reality become the norm. Globe coverage of the Sox this season has been very positive, because so are the American League East standings. Oh, if they found a missing page of Biogenesis records with David Ortiz's name on it, the coverage would be negative and how. But that's how all bad news gets covered.

People, even sports fans, are not stupid. They may be misinformed, overemotional, even downright nuts, yes, but seldom stupid. If fans (who else reads baseball news) suspect the Globe is turning in a daily bag job for the home team, they will stop reading it. This will be bad for what is not exactly a robust bottom line.

This same suspicion will lead to an even uglier suspicion as far as Henry is concerned. Those same fans will naturally conclude that the puff pieces in the Globe mean that the Sox have something to hide, whether they do or not. The maximal paranoid interpretations of baseball reality in Boston will gain credibility in leaps and bounds. There are  two sports talk radio stations whose own bottom lines thrive on mass paranoia. They won't be shy about promoting their own interests at Henry's expense, even his broadcasting partner.

This dire scenario isn't going to happen. Citizen Henry will almost surely do as what I and Times Co. expect. As a good publisher should, when he thinks of the Globe, he won't think about journalism. He'll think about how it could make some money.


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