Troubled NYT may find Slim lifeline

Speculation was rife over the weekend that the financially troubled New York Times Co is in discussions with Mexican billionaire Carlos Slim about investing hundreds of millions of dollars in the newspaper, after several reports to this effect emerged in the media. However, there was no official confirmation, and there is no guarantee that the talks will be successful.

One of the options said to be under discussion is a preferred-stock issue, where the Times Co would issue Slim – the world's second richest man - preferred stock in return for his investment, making it similar to a loan. Preferred shares are often convertible into common stock after a defined period. Slim already owns a 6.4 per cent stake in the company.

An investment by Slim could also be a vote of confidence in the Ochs-Sulzberger family, whose control of the Times for more than a century has been threatened by the changes taking place in the US newspaper business.

The Times Co, which owns its namesake newspaper and The Boston Globe as well as other papers in the United States, is grappling with a decline in advertising revenue on a level that it and other newspaper publishers have never seen before.

In the development, which was first reported by The Wall Street Journal, The Times Co is planning a special board meeting next week about the investment. The money could help the publishing company pay off $400 million in debt in a credit facility that will retire in May.

Newspaper publishers from McClatchy Co to Tribune Co have carried debt on their books, but that did not become an issue until ad revenue started to fall and profit margins began eroding. This was due in part to a fall in circulation as more people turned to the Internet for free news, and was exacerbated by the current recession. Some small newspapers may be forced to shut down, as it is hard to find buyers.

Slim's stake in the Times was worth about $128 million in September 2008. Since then, its value has shrunk to about $58 million. At the time, Slim described his investment in the Times as financial rather than strategic.

Slim, 68, became one of the world's richest men by placing heavy bets on hard-hit companies. Last year, he increased his stake in US luxury retailer Saks Inc to 18 per cent, becoming its biggest investor. His Inbursa brokerage in Mexico bought at least $150 million worth of Citigroup shares as they sank to lows not seen since 1992. It was not clear if Inbursa bought the sake for Slim or other clients.

Many media observers say the well-respected Times will survive as many other papers fail. Nevertheless, the company has been forced to think about selling off properties to bolster its cash position, such as its 17.5 per cent stake in the holding company of the Boston Red Sox baseball team. It also faces looming debt payments. It has reportedly received at least one offer for the Globe.

The ultimate question is how long the Ochs-Sulzberger family will stay in the business. Multiple media reports and commentators have questioned if the family has the stomach to stay involved despite the plunging value of their stock. So far, however, Times chairman and publisher Arthur Sulzberger Jr has said that the company is not for sale.