KEY POINTS:
The New York Times, a beacon of American print journalism for 157 years, has received a US$250 million ($472.8 million) bailout from the richest tycoon in Mexico.
Carlos Slim, the telecoms billionaire who currently ranks as the second-wealthiest man in the world, has agreed to a big increase in his stake in the Times' parent company, as part of its plans to stave off a spring cash crunch.
In return, Slim will harvest a hefty annual dividend of 14.1 per cent on his new investment. He already owns 6.9 per cent of The New York Times Company and will receive warrants to buy more under the rescue deal.
If the warrants are exercised, he would end up with 18 per cent of the company, making him its biggest shareholder behind the Ochs-Sulzberger family which has historically controlled the board.
Slim has always insisted his interest is purely financial, and the Ochs-Sulzbergers continue to control the board through special voting shares. He has one other newspaper investment: a one per cent stake in Independent News & Media, owner of The Independent and the largest shareholder in New Zealand Herald publisher APN.
Yesterday, the Mexican billionaire said he believed the Times' strong internationally recognised brand and the popularity of its website - the most-visited newspaper site on the internet - meant that it would remain a strong media player.
But the Times has been brought to the edge of financial crisis by the credit crunch, which has reduced its options for replacing a US$400 million debt facility which expires in May.
It has cut the dividend it pays to the controlling family and other shareholders, and promised to raise US$225 million by mortgaging its Renzo Piano-designed skyscraper headquarters in Manhattan, but its debt has still been downgraded to junk status.
Slim has a fortune estimated at US$60 billion, putting him behind the investor Warren Buffett in the list of global billionaires. He owns AmErica MUvil, Latin America's largest mobile phone service provider, and TelEfonos de Mexico, that country's biggest land-line operator.
He is doubling up his investment in the Times when the recession is compounding the long-term challenges for newspapers, which have been shedding readers and facing competition for advertising from online media.
In a memo to staff last month, Arthur Sulzberger Jnr, the company's chairman and the publisher of its flagship newspaper, called the 2009 financial outlook "daunting".
The parent company, which also owns regional newspapers and the website About.com, posted a 13 per cent drop in ad sales for the first 11 months of 2008, including a 21 per cent plunge in November.
Yesterday, Janet Robinson, the chief executive of The New York Times Company, said: "We continue to explore other financing initiatives and are focused on reducing our total debt through the cash we generate from our businesses and the decisive steps we have taken to reduce costs, lower capital spending, decrease our dividend and rebalance our portfolio of assets."
- INDEPENDENT
