Carlos Slim, who holds 6.4% stake now, is in talks to make big investment in New York Times Co.
January 18, 2009: 8:53 AM ET
· Times, Mexican billionaire in talks
NEW YORK (Reuters) -- The New York Times Co. is in talks to raise hundreds of millions of dollars from Mexican billionaire Carlos Slim, a source told Reuters Saturday, a move that would give the ailing newspaper publisher a critical cash infusion to pay its debt.
An investment by Slim, the world's second-richest man according to Forbes magazine, 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 changes shaking the foundations of the
The Times, which owns its namesake newspaper and The Boston Globe as well as other papers in the
According to the source, the Times might give Slim, who already owns a 6.4% stake in the company, preferred stock with no voting rights but with an annual dividend.
The Times is planning a special board meeting next week about the investment, the source said. The news was first reported by the Wall Street Journal. A New York Times spokeswoman declined to comment.
The money could help the Times 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 as 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.
The ad decline has been exacerbated by the financial crisis. Now, papers in cities like
The Times's shares have plummeted 70% from their 12-month high of $21.14 in April 2008 to $6.41 on Friday. Seven years ago, the shares were trading above $50.
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
His Inbursa brokerage in
Selling assets
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% stake in the holding company of the Boston Red Sox baseball team. It has received at least one offer for the Globe, sources have said.
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.
The Times also is facing a renewed threat from The Wall Street Journal, owned by News Corp, whose chief executive, Rupert Murdoch, has made no secret of his intent to knock the Times off its perch as the top national
Times executives saw Slim's initial investment as a good development, a source familiar with the matter at the Times told Reuters at the time.
It came several months after hedge fund Harbinger Capital Partners bought about 20% of the Times's shares, demanded that the company sell non-core assets to boost its stock price and got two of its representatives elected to the board -- initially over the Times's objections.
Slim's business empire includes Latin American cell phone giant American Movil, former state-owned Mexican telephone company Telefonos de Mexico, financial conglomerate Grupo Financiero Inbursa, department stores, restaurants and manufacturers of cigarettes, floor tiles and car parts. 
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