MediaFile

Keep on rockin’ in the fee world, newspapers

It’s refreshing to read some reasoned thinking about the future of newspapers that does not come from

    Newspaper executives whose cheerleading about how they will survive — somehow — gets undercut by reporting a 30 percent drop in profits one quarter later, or Internet Cassandras who want newspapers to burn and die because they hate editors who get precious about how the calling of journalism trumps the rules of free markets and (more typically) because they hold dear the tradition of thinking that newspapers only print lies.

The Financial Times is the bearer of these encouraging if cautionary words in an editorial that it ran on Tuesday:

There are legitimate concerns about the disappearance of general papers. The best dig up stories and provide coverage of local, national and foreign news that enlightens readers and citizens. It is easy to undervalue such news when it has been plentiful for decades, but society would feel its absence.

Perhaps some of the reporting done up to now by for-profit papers will in future be funded by foundations or trusts. But the industry should not lose faith in the free market. When people really want or need something, they will pay for it, one way or another. If today’s publishers cannot convince their readers to do so, they will be overtaken by others that can.

The FT is not saying that all newspapers have a future; it’s saying that the ones that don’t waste your time will survive because you will pay for them. To be sure, there is news that we want to know and news that we need to know (whether he want to or not). The question is: how many of our papers provide that? We would enjoy getting your response.

Allan Sloan spots New York Times tax genius

The New York Times might not have figured out its long-term strategy to survive just yet, but Fortune columnist Allan Sloan discovered that someone working for the company is a genius when it comes to taxes.

The Times this week said it will borrow $250 million from companies controlled by Mexican billionaire Carlos Slim, also the world’s second-richest man. Slim also is getting warrants that he can convert into stock, something that will make him one of the company’s largest shareholders. Aside from questions about whether he will take over the TImes, the aspect of the Slim deal that turned business reporters’ heads was the crazy interest that the Times will pay — 14 percent.

Sloan has a way of explaining how there is a way around this. Here are some excerpts, but for the full effect, go read his column. While Sloan is a master of converting complicated financial practice into plain English, this one is pretty tough for the layman.

Could Slim be a bad harbinger for New York Times dissidents?

Mexican billionaire and telecommunications tycoon Carlos Slim is poised to throw hundreds of millions of dollars at The New York Times Co so the newspaper publisher can buy some more time to get its act together as advertising revenue falls and debt looms. If he is truly an ally of the Times, as our sources say, it could prove bad news for dissident investors like Harbinger Capital Partners who are pressing for drastic changes at the Times.

The Wall Street Journal broke the story on Saturday night, closely followed by Reuters. It was The New York Times itself (surprise!) that reported the specifics of Slim’s “bailout package” for the Times:

    A $250 million investment in exchange for 10-year notes with warrants that are convertible into common shares. A special annual dividend would go to Slim — maybe 10 percent or more of his investment. No voting rights, no board seat. With his 6.4 percent stake in the Times’s common shares, this could make him the largest Times shareholder, bigger even than the Ochs-Sulzberger family that has controlled the times since 1896.

The value of Slim’s previous investment already has fallen, but if he is treating the Times more as a philanthropic exercise than a business decision, this could work out well for both parties.

Slim chance for New York Times Co.

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Few investors are interested in newspapers these days — except for the super rich.

Carlos Slim, who Forbes lists as the world’s second-richest man, has picked up a 6.4 percent stake in The New York Times Co.

Asked by Reuters why he bought a stake in the publishing company that owns The New York Times, Boston Globe and other assets, Slim said “It’s financial.” The suggestion there is that he is not making a strategic move into U.S. media.