Mexican billionaire Carlos Slim is poised to become the largest shareholder in the New York Times Co. after already almost doubling his money from an investment that helped the newspaper get through the financial crisis.
Slim, who has amassed a US$73 billion fortune by spotting depressed valuations, loaned US$250 million to Times Co. in January 2009. After already getting repaid, the world’s second-richest person is now on track to boost his holdings if he exercises options by their January 15 deadline. Slim would then own almost 17 percent of the Times Co.’s Class A shares, a stake valued at about US$349 million.
While Slim’s financial return shows just how much Times Co. sacrificed for his help at the time, it also illustrates how confident he was in the storied newspaper’s future — even as readers and marketers flocked to the Internet where content was largely free and ad rates were cheaper. And he hasn’t been alone in his faith in media: billionaire Jeff Bezos purchased the Washington Post in 2013 and Warren Buffett has invested in a number of local newspapers.
Slim deciding to hold on to a bigger stake would be “a vote of confidence in the Times,” said Ken Doctor, an independent media analyst for Newsonomics. “It is largely the wealthiest people who have the capacity to take on what is still a flier on the business future of the news industry.”
When 74-year-old Slim agreed to loan Times Co. money in 2009, the company had just cancelled its dividend to preserve cash and a credit line was set to expire. Slim’s investment bought the company enough time to find buyers for assets like the Boston Globe.
Since then, Times Co. has cleaned up its balance sheet, put up a pay-wall for its website and introduced new digital products.
The warrants Slim gained through the loan deal let him buy shares for about US$6.36 apiece, according to regulatory filings, about half of Times Co.’s US$12.57 closing price on Monday. That gives Slim US$6.21 in potential profit for each of the 15.9 million shares he’s allowed to buy, amounting to almost US$100 million, according to data compiled by Bloomberg.
That would boost his total stake to about 27.8 million Class A shares, or about 16.8%.
The last year has been a tumultuous one for Times Co., both in the newsroom and on the business side. In May, Chairman and Publisher Arthur Sulzberger Jr. ousted Jill Abramson as executive editor after less than three years on the job. And at the end of last year, the paper cut more than 100 newsroom employees through buyouts and firings to save costs.
Meanwhile, the company is trying to maintain growth in online subscriptions, which totaled about 875,000 at the end of the third quarter, and print readership has continued to decline. Digital ad revenue has increased, but not enough to make up for the drop in print advertising.