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BOSTON CAPITAL

Taking care of business

By Steven Syre
Globe Columnist / April 10, 2009
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Can you name a potential new owner for The Boston Globe?

It seems nearly everyone has an opinion.

Speculation about the paper's ownership has been in the news since the current owner, The New York Times Co., threatened to turn out the lights without steep union concessions amounting to $20 million.

It's easy to see why the Times would be a very motivated seller of the Globe. The paper is losing big money, the trends are bad to worse, and the Times itself is in a serious cash squeeze. Besides, any owner threatening to close down a newspaper is surely prepared to sell it.

A Times spokeswoman declined to comment.

The other night I attended a Newspaper Guild meeting for Globe members like me, where the full list of concessions sought by the Times was discussed.

Many were about money, others were about union contract provisions that protect jobs and seniority. As a collection of demands, they were exactly what buyers would want to see before they got involved.

But that doesn't mean real potential owners would emerge even if employees agreed to all the concessions. The Globe needs to make more progress on serious business problems plaguing many other newspapers.

The Globe is losing too much money, and revenue declines continue to accelerate compared with business recorded a year ago. The newspaper's profit and loss need to become much more stable and any buyer needs to know the business has really leveled off.

The Times Co. doesn't officially break out financial information about the Globe, but the paper has reported that it lost about $50 million last year and is on track to lose $85 million this year. Leaf through any day's paper, and it will show you how the business is suffering.

Advertising revenues at the Times Co.'s New England Media Group, which also includes the Worcester Telegram & Gazette, were down 18 percent last year, compared with 2007. Overall revenues for the group, which include circulation and other contributors, sank from $700 million in 2004 to $524 million last year. That's a $175 million hole dug in four years. It makes $20 million in concessions look like chump change.

Some of those declines can be blamed on the recession. Much of it is connected to the newspaper industry's well-known problems dealing with the Internet and other technology.

Fixing the Globe involves at least two things. As much as it pains me to write it, the business needs to get even smaller to meet shrinking revenues. That means spending less and probably producing less, too.

Also, newspapers like the Globe must find some way to get paid for their Internet content. I don't know if that means micropayments, subscriptions, or something else. But they won't advertise their way out of trouble on the Web.

Even if the Globe gets costs in line and improves revenues, which it can, the business won't resemble the hugely profitable enterprise of years past. Moderate profits with much lower financial risk are realistic goals now. Buyers would emerge if they saw progress toward them.

Who would they be? The civic buyers, much discussed but hard to name, are one real option.

Prominent rich people and institutions don't want to face a choice of writing endless checks or closing a newspaper's doors. Remove that risk and I believe they would step up.

Another possibility: Companies that could derive value elsewhere by owning a newspaper like the Globe. Cablevision Systems Corp. paid $650 million for 97 percent of Newsday Media Group last year to cross-market each other's products on Long Island and elsewhere in Greater New York.

A Comcast Corp. spokesman declined to comment when I asked him about the Globe.

One more: A combination of the city's two dailies, which would consolidate advertising and cut costs.

Boston Herald publisher Pat Purcell, who also leads Ottaway Newspapers Inc., owned by Rupert Murdoch's giant News Corp., has declined to talk about the Globe. Many people don't like the idea, but it makes some sense.

A final idea about a possible owner in the Globe's future: The New York Times Co.

Its threat to shut down the Globe is serious, but I believe it's an option our owners desperately want to avoid. We could slog together a while longer if the newspaper starts to make real financial progress.

But without that progress, there's no point in guessing who could be the Globe's next owner.

Steven Syre is a Globe columnist. He can be reached at syre@globe.com.