BOSTON (Reuters) - Advertisements for The Boston Globe boast that a single news story can “take you away.” But after Friday, the newspaper itself may be taken away and shut down after 137 years of publication.
The New York Times Co (NYT.N), which bought the Globe for $1.1 billion in 1993, threatened at the start of April to shut the money-losing, award-winning broadsheet unless the paper’s 13 unions agree by Friday to $20 million in concessions.
As the deadline approaches, the future of one of America’s most acclaimed regional newspapers looks unclear, illustrating deepening problems for an industry that has few answers for an accelerating, long-term shift of advertising to the Internet.
Names of potential buyers have surfaced only to disappear nearly as quickly, some worrying about finding a profitable financial model for a newspaper that won 20 Pulitzer Prizes and dominates news coverage in the six-state New England region but has faced steep drops in circulation.
“It’s like trying to catch a falling knife,” said Jack Connors, the former head of Boston ad agency Hill Holliday who was part of an attempt to buy the paper several years ago.
“I’m not a buyer” because of the Globe’s uncertain financial situation, he added. “I don’t know whether there’s an economic reason to own it.”
The Globe was on track to lose $85 million this year unless changes are made, according to the Times Co. That follows losses of $50 million last year, red ink that is buffeting the Times Co, which ended 2008 with $1.1 billion in debt. When the Times bought it, the Globe was one of the most profitable newspapers in the United States.
But many U.S. newspapers have lost 20 percent or more of their advertising revenue as readership shifts to online news. The Globe’s average weekday circulation, for example, fell 14 percent to 302,638 for the six months to March 31 from a year earlier, according to the Audit Bureau of Circulations.
The Globe has described plans to improve revenue by raising prices and through new digital advertising efforts. But if it were closed, it would be the most prominent of the big city American newspapers to shutter, including EW Scripps Co’s SSP.N Rocky Mountain News and the print edition of Hearst Corp’s Seattle Post-Intelligencer, which were shut this year.
“It would be a terrible loss,” said lifelong Globe reader Kathryn Kirshner, a psychologist in Brookline, Massachusetts. “It covers Boston and New England news in a profoundly important way, uncovering things that are bad and wouldn’t be covered.”
Massachusetts senators Edward Kennedy and John Kerry and nine of the state’s 10 members of the House of Representatives sent a letter this week to Times chairman Arthur Sulzberger Jr., urging that a solution be found to prevent closing the Globe.
A Globe spokesman was not immediately available for comment.
Principal Boston Red Sox owner John Henry, a prominent hedge fund manager often mentioned as a possible suitor, is not in talks for the Globe, the baseball team said on Thursday, adding that neither Red Sox Chairman Tom Werner nor any team affiliates are in discussions to purchase the paper.
A source familiar with the situation told Reuters earlier in the week that Henry is looking at taking control of the Globe as part of a deal to buy the Times Co’s 17.75 percent stake in New England Sports Ventures, which owns the Red Sox.
Henry owns most of New England Sports Ventures.
Thursday’s Red Sox statement did not address if the parties could be interested in a future deal. Some suggest the Times Co’s threat may be a negotiating tactic to win lasting cost-cuts at the paper as the Times strives to shed debt.
Negotiations for a buyer, some suggest, could begin if the Times Co wins union concessions, which could include pay cuts of as much as 20 percent, removal of seniority rules and lifetime job guarantees, and millions of dollars in cuts to company contributions for retirement and health plans.
“I’d be interested in buying the paper,” said Christopher Egan, managing member of Carruth Capital, a Westborough, Massachusetts real estate and investment company, and son of Richard Egan, co-founder of data storage giant EMC Corp EMC.N.
“There’s value in the Boston Globe brand, in the Sox and the website,” he said, referring to the newspaper’s Boston.com. However, he added that “I have no guess what it’s worth” and said he hasn’t reviewed the books or been approached by any representatives. “I don’t think the New York Times knows what it wants to do with it yet. They can’t sell it without restructuring the union contracts,” he said.
Egan, who calls himself a “former Globe employee” for having delivered the paper as a boy, previously explored buying New England radio and television stations.
Inside the Globe newsroom, staffers are anxious about the negotiations. “We’re all worried, and we all want what’s best for The Globe,” said business reporter Jenifer McKim.
Union officials declined to comment for this story.
If the Globe survives, its owner face the same stubborn questions dogging publishers worldwide, such as whether readers will ultimately pay for news online — a business model that has its share of skeptics.
“If that happens someone else will find a way to provide that news for free,” said Jonathan Marcus, a former editor of Boston Magazine who teaches journalism at Boston College.
“Once a newspaper begins to charge for content, people will begin to read another newspaper. And once all the newspapers begin to charge for content, someone else will find a way to furnish content for free.”
Additional reporting by Robert MacMillan and Ben Klayman; Editing by Phil Berlowitz