Turmoil at paper may scare buyers

Wed. June 10, 2009; Posted: 11:13 AM

Jun 10, 2009 (Boston Herald - McClatchy-Tribune Information Services via COMTEX) -- NYT | Quote | Chart | News | PowerRating -- The Boston Globe's losses, lifers and potential lawsuits are adding up to a hard sell for the New York Times Co. if it ever tries to unload its money-losing broadsheet.

Though the Times Co. plans to implement an across-the-board 23 percent wage cut for Boston Newspaper Guild members, the union's rejection Monday night of a proposed give-back contract now makes it very tough to sell the Globe in the future, analysts said.

The problems: the Globe still faces continued financial losses due to a decline in the entire newspaper industry; nearly 200 Guild members maintain their life-long job guarantees as a result of Monday's vote; and management and the union appear headed for a potentially protracted legal fight over cuts at the paper.

"Having these different things going on makes it considerably harder, if not impossible, to sell this newspaper," said Rick Edmonds, a media business analyst at the Poynter Institute, a nonprofit center for journalists.

The industry's financial woes are bad enough.

But a potential buyer might also balk at buying a business with older, higher-paid workers with life-time job guarantees, Edmonds said. "It really reduces your flexibility as a manager," he said.

The possibility of a bitter legal battle just adds to the negatives. "It makes for an unsettled situation," said Edmonds.

John Morton, a newspaper analyst, said he doesn't think the Times Co. can -- or even wants -- to sell the Globe at this point, largely because few want to buy a newspaper due the industry's current turmoil.

But the Globe's three Ls -- the losses, lifetime job guarantees and legal wranglings -- "don't add to its luster," said Morton.

In a note released yesterday, Wachovia analyst John Janedis said there's only a "remote" chance negotiations between management and the Guild could lead to a better deal for employees.

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For full details on New York Times Co The (NYT) click here. New York Times Co The (NYT) has Short Term PowerRatings of 7. Details on New York Times Co The (NYT) Short Term PowerRatings is available at This Link.

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