Saturday, 13 September 2008

Slim and Sulzberger - the new Slim Shady Show

Where to begin?!

First off the New York Post and SLIM CHANCE FOR TIMES which has Sulzberger praising Slim. (You've gotta love a Murdoch Aussie editor headline!)

It also claims that Sulzberger's annual State of the Times address was "was the typical rah-rah stuff. You'd think it was the early '90s."

(Did I hear somewhere that Sulzberger did a slide show at the annual meeting of all the paper's Pulitzers to the soundtrack of a Coldplay song or did I dream that? No, that must have been a dream.)


IN his annual "State of the Times" address to employees yesterday, New York Times Chairman Arthur "Pinch" Sulzberger painted a rosy picture of the company and its newest investor, Mexican billionaire Carlos Slim - but Wall Street still seems skeptical.
Slim, ranked by Forbes as the second-richest person in the world, with a net worth of $60 billion, on Tuesday disclosed that he had purchased 9.1 million Class A shares, which gave him 6.4 percent of the company stock.
That makes him the third-largest stockholder who is not a member of the controlling Ochs-Sulzberger family.
"He [Sulzberger] said that they were aware of it and felt it was a good thing," said one insider who was present at the meeting.
The question on everyone's mind is what Slim will do as a Times shareholder.
Wall Street seemed intrigued but not overly optimistic that Slim, who made his fortune in the Latin American telecommunications industry, will force great change on the struggling newspaper giant.
The stock closed yesterday at $15.23, up $1.27, or 9 percent. Yet the Times' shares are still off 13 percent this year.
"We would not interpret his investment as a precursor to some form of restructuring action by the company, given NYT's dual-class stock structure and the Sulzberger family's control via their ownership of 90 percent of the super-voting B shares," wrote Goldman Sachs analysts Peter Appert and Stephanie Withers in a report yesterday.
"We like NYT's national franchise and long-term strategy to drive increasing Internet revenues; we do not like the valuation of stock, particularly in light of near-term earnings challenges. Key risks to our price target include ad-market trends and a family-controlled board."
Added another Wall Street source, "I don't know what [Slim] adds to the party."
This source noted that two activist stockholders, Harbinger Capital and Firebrand Partners, have already obtained seats on the board.
"I don't see him [Slim] accelerating the pace of change," said the analyst. "We'll see what happens, but frankly, I don't get it."
At Sulzberger's "State of the Times" meeting, one source said, "It was the typical rah-rah stuff. You'd think it was the early '90s."
One source asked Sulzberger if he would cut the company's dividend to shareholders and divert money to the distressed Newspaper Guild-administered health plan.
Sulzberger said he would not negotiate worker issues at the Town Hall style meeting.
At another point, he declined to say whether any future cuts would include managers.
"It depends on the manager," Sulzberger said.

The WSJ has a quote from Slim's spokesman Arturo, and the NYT not commenting to the WSJ journalists, which is odd, given his apparent comments at The State of the Times meeting, where, according to the NYPost Sulzberger "said that they were aware of it and felt it was a good thing."


You see that .WSJ cover in the picture above, with the model wearing a dress made out of WSJ front pages?

Well, they nicked that idea off the IHT which used a picture of a model wearing a dress from pages of the IHT in a brand campaign.

Unlike .WSJ who I think had the dress and shot custom made for their launch, the IHT was able to approach the designer who had already designed and modeled the IHT dress in their collection and ask for their permission, permission which was freely given.

Just in passing.

Slim Brings Eye for Value To New York Times Co.
Billionaire Viewed Price as Attractive In Taking Big Stake
By DAVID LUHNOW and RUSSELL ADAMSSeptember 12, 2008; Page B3
Mexican billionaire Carlos Slim has become one of the world's three wealthiest men through a combination of hard-nosed business practices and a legendary eye for spotting value.

His bet on New York Times Co. prompted a rare flurry of affection for the publisher's stock Thursday. The shares rose 1.27, or 9.1%, to $15.23 at 4 p.m. in heavy volume on the New York Stock Exchange after Mr. Slim emerged as the third-largest institutional holder of Class A shares with the acquisition of a 6.4% stake, overtaking even the company's chairman on the list of top institutional shareholders.
Mr. Slim's spokesman, Arturo Elias, said the investment was merely financial and that the 68-year-old billionaire had no plans to take a role in the company's management or board.
"We felt that the price was attractive, and that this is a great company," Mr. Elias said in an interview.
New York Times Co. declined to comment.
Mr. Slim, the owner of Mexico's former telephone monopoly and Latin America's biggest cellphone firm by subscribers, is the second investor in the past year to amass a large stake in the publisher, which is more vulnerable than ever to outside pressure to change course.
Mexicans called Mr. Slim "Midas" in the 1980s for his ability to buy companies on the cheap and turn them around. But more recently, he has taken a hands-off approach to most of his portfolio investments and doesn't intervene in a company's management. He often cites Warren Buffett as an inspiration, as well as legendary value investor Benjamin Graham.
New York Times Co. was set up to largely insulate its owners from external forces: The Ochs-Sulzberger family maintains control through ownership of a special class of supervoting shares that elect 70% of the board.
But the newspaper publisher's recent performance -- print-ad revenue was down 14% in the first half from a year earlier, and the stock recently fell to its lowest point in a decade -- has caused the Sulzbergers to loosen their grip. In March, New York Times Co. granted two board seats to an activist investor group led by the hedge fund Harbinger Capital Partners and investment company Firebrand Partners LLC, ending a three-month proxy battle. The two seats gave representation to a group that has urged the company to invest in new-media properties and divest itself of underperforming assets, like the Boston Globe, but it didn't substantially ease the family's ultimate control of the board.
The billionaire's approach to investing in the U.S. has been to look for undervalued stocks and buy as an investment. He owns 11.2% of retailer
Saks Inc., for instance, according to regulatory filings.
Mr. Slim bought about 3% of
Apple Inc. in 1997, shortly before the company launched its hit iMac. Within a year, Apple's shares had soared more than fivefold and Mr. Slim gradually reduced his stake. In late 2002, he began buying about $700 million of cut-rate bonds from WorldCom Inc., the telephone company that later emerged from bankruptcy protection with the MCI name. Fewer than three years later, Mr. Slim earned more than $500 million in profit when Verizon Communications Inc. bought the carrier.
In an interview last year, Mr. Slim said he enjoys poring over companies' financial statements and occasionally comes across something that catches his eye. "Obviously, the telephone industry is one I am comfortable with, but it depends on what I see," he said.
Mr. Slim's telephone companies have driven most rivals out of business, charging them high fees to complete their calls through Telmex's existing network and tying up any legal challenges in Mexico's Byzantine courts.
Mr. Slim's holdings, including his New York Times Co. acquisition, are worth an estimated $58.5 billion, according to Sentido Común, a Mexican financial Web site that tracks his wealth.

The Independent of London (a paper famously modeled on its ambition to be the British version of the International Herald Tribune) provides a European perspective.

Battle for the New York Times
Carlos Slim's purchase of 6 per cent of the Old Grey Lady has triggered yet more speculation about the sale of the newspaper, coveted by moguls from Michael Bloomberg to Rupert Murdoch.

Stephen Foley reports

Carlos Slim has an eye for a bargain. The Mexican magnate clawed himself to the No 2 spot on the world's rich list with purchases that stretch from cigarette manufacturers, to restaurant chains, to car parts distributors, to – most lucratively – telecoms companies. When he plunks down $120m on a big new corporate bet, people take notice. When that bet is on a 6.4 per cent holding in the beacon of the United States newspaper business, The New York Times Company, people take a lot of notice.
The Old Grey Lady, as The New York Times is known, is looking a bit wrinkled around the eyes at the moment, and the investors who once loved her have slipped away, despairing of the future of the newspaper industry. So what does Mr Slim see in her?
The company's shares perked up noticeably yesterday on news of his interest. By lunchtime they were 7 per cent higher. His purchase of 9.1 million shares had been disclosed in a late-hours regulatory filing on Wednesday, which declared the investment a passive stake. Inevitably, though, speculators hoped that the stakebuilding might ultimately lead to a takeover of the family-run company, if not by Mr Slim then by another party he eggs on in the hope of netting a quick profit.
Mr Slim has another newspaper industry interest: a stake of more than 1 per cent in Independent News & Media, owner of The Independent.
In Mexico City, the billionaire told reporters that his interest in The New York Times Co was purely "financial". A spokesman said it was a great business at an attractive valuation and added that he may snap up more shares. Previous profitable forays into the US stock market have included stakes in Philip Morris, the tobacco group in which he bought a $90m stake after its shares hit a four-year low in 2000. He has also profitably dabbled in Apple and the telecoms company MCI.
His investment in The New York Times Co is certainly contrarian. Other investors have abandoned the company in the teeth of a sharp slide in advertising revenue and pressures on circulations not just at its flagship broadsheet in New York, but also at sister papers in the regions, including the Boston Globe.
In July, the most recent month for which figures are available, The New York Times posted an ad sales decline of 15.3 per cent; at the regional papers, the figure was almost one-quarter. The New York Times made its first ever redundancies in the newsroom this year, and last week said it was outsourcing its distribution business, with the loss of 550 more jobs. Nonetheless, The New York Times remains one of the most powerful newspaper brands in America, third in circulation to USA Today and the Wall Street Journal. It also has by far the most popular newspaper site in the US, with 19.5 million visitors in July, up 38 per cent on a year ago, and has promised to invest heavily in the internet and new technologies.
The power and influence The New York Times would give an owner is enough to induce covetousness on the part of numerous billionaires. Michael Bloomberg, the Mayor of New York and founder of the financial information company that bears his name, let run a few days of speculation that he was interested in bidding for the company earlier this year, before ultimately denying it. Rupert Murdoch swallowed the Wall Street Journal in a takeover deal last year, and is musing aloud about marrying it with the Old Grey Lady. Unfortunately for the billionaire dreamers (and leaving aside that regulators might strangle either takeover), The New York Times is not for sale. The parent company is controlled by the Ochs Sulzberger family through a special class of shares that gives them a stranglehold on decision making. Despite having a less than 20 per cent economic interest in the company, the family appoint more than half the board, and remain committed to the public service ideal that has guided their ownership for 112 years.
Unlike the Bancroft family, which sold the WSJ to Mr Murdoch after he wooed them with a 60 per cent premium to the prevailing share price, the Ochs Sulzbergers are involved in the day-to-day running of the company, and Arthur Ochs Sulzberger Jnr is its publisher and public face. Also unlike the Bancrofts, the family appears tightly knit.
Year-on-year attempts by some shareholders to pressure the family into giving up their power failed when their ring-leader, Hassan Elmasry, a fund manager at Morgan Stanley, which had a 7 per cent stake, sold out last year. This year, two rebel shareholders, the hedge funds Harbinger Capital and Firebrand Partners, bought 19 per cent of the company and won two board seats after demanding asset sales and a financial shake-up. They didn't, however, challenge the Ochs Sulzbergers' control. It is that financial shake-up on which those remaining bulls on The New York Times Co share price are pinning their hopes, and which may well determine whether Mr Slim turns a profit on his daring investment. One option oft debated on Wall Street is the possibility that the family itself will take the company, or perhaps just the paper, into private ownership.
But bears think all the options are unpalatable. "In light of the fundamental challenges facing the company we do not believe that restructuring action (such as asset sales, a go-private transaction, etc.) would necessarily translate into a valuation meaningfully higher than the current share price," Peter Appert, an analyst at Goldman Sachs told clients yesterday. The Ochs Sulzbergers have long seen their controlling interest as a bulwark against the short-termism of Wall Street investors. Mr Slim, too, may be looking to the longer term. Rick Edmonds, the media business analyst at the Florida-based Poynter Institute, a Florida school for journalists, said the short-run pressures are immense and growing, now that the advertising slowdown has hit online sales, too.
"But there are new possibilities emerging, particularly now we are getting to a period where mobile devices such as the iPhone and Amazon's Kindle can do more things," Mr Edmonds said. "The extent to which people will want news and ads on their devices is not fully clear yet, but newspapers are very logically positioned to serve the local part of that. These technologies are picking up steam, and while they are not there yet, it seems that newspapers no longer have to put all their eggs in the basket of online."
The telecoms billionaire always on the look-out for a bargain
For the past two years, the cigar-puffing Carlos Slim Helú has tussled with Bill Gates and Warren Buffett for the title of the world's richest man, but the Mexican telecoms magnate had some less than flattering things to say about his rivals' famous philanthropy.
"Poverty isn't solved with donations," he said last year at the launch of his own health initiative in northern Mexico. "Our concept is more to accomplish and solve things, not to go around like Santa Claus."
Mr Slim's own philanthropic efforts in Mexico dovetail neatly with his business interests. Plans to build giant hospitals would aid his construction firm, for example. But such is the complexity and contradictory nature of the man.
When Forbes magazine, the official arbiter of these things, last took a snapshot in March, he came in at No 2, behind Mr Buffett and ahead of Mr Gates, with a fortune of $60bn (£34.2bn).
The magnate inherited a small fortune from his father, an immigrant from Lebanon, who ran a general store in Mexico City and began investing in property. But it was the younger Mr Slim's eye for a corporate bargain that sent that legacy into the stratosphere – and his aggressive, critics would say monopolistic, business practices which kept it growing.
He picked up industrial companies at fractions of their book value when investors fled Mexico after its 1982 financial crisis, and then his political associations helped him to win control of the privatised monopoly Telefonos de Mexico in 1990. The company has a market share of 90 per cent, while his mobile arm has a 73 per cent share.
In recent years, his companies have expanded fast in the other emerging markets south of the Mexican border, from Guatemala to Argentina, and his American Movil group is the largest mobile provider in Latin America.
Mr Slim rededicated himself to his business interests following the death of his wife, Soumaya, in 1999 – to whom he has dedicated a museum showing the couple's extensive art collection.
Now 68 years old, the father of six is also an avid collector of baseball memorabilia.
Mr Slim eschews many of the trappings of wealth and the luxuries that his fortune would afford him. He has three sons, all of whom run significant parts of the empire and are expected to succeed him.

Not to be outdone by the New York Post's witty headline Newsweek goes with the equally not very complimentary headline SLIM PICKINGS.

The NYT wouldn't speak to Newsweek either, but Newsweek, unlike the WSJ (is there some sort of a secret non-aggression pact between the WSJ and the NYT?) managed to do the type of journalism also found at the New York Post.

They found an inside also willing to speak about the 'State of the Times' meeting, who said Sulzberger was "confident and comfortable," and disclosed that he and Slim's representatives "had been talking for a while." The Newsweek source "added that Slim or Slim's representative had alerted Sulzberger of the pending investment. The Times boss told the gathering of employees that he and Slim were "on the same wavelength" in their positive outlook about the company's future, and that Slim "wants to be along or with us for the ride."

Slim Pickings

Mexican telecommunications tycoon Carlos Slim Helú has purchased a 6.4 percent stake of the New York Times Co.
Johnnie L. Roberts Newsweek Web Exclusive
Sep 11, 2008 Updated: 7:01 p.m. ET Sep 11, 2008

Ordinarily, anxiety would seize the entrenched management of a financially challenged public company when an outsider suddenly shows up with a sizeable new holding of its battered stock. But not Arthur Sulzberger Jr., chairman and scion of the beleaguered New York Times Co., which has increasingly become the target of investor angst and ire.
In a previously scheduled town-hall meeting Thursday at New York Times headquarters, Sulzberger disclosed that the purchase of a 6.4 percent stake in the Times Co. by Mexican telecommunications billionaire
Carlos Slim Helú and his family came as no surprise. According to staffers who attended the meeting, Sulzberger said he'd been aware of the potential for an investment as a result of previous conversations he'd had with Slim's representatives about the Times's plight and prospects.
Sulzberger, who in addition to his top corporate role is the newspaper's publisher, was "confident and comfortable," said one staffer at the meeting, and disclosed that he and Slim's representatives "had been talking for a while." The source added that Slim or Slim's representative had alerted Sulzberger of the pending investment. The Times boss told the gathering of employees that he and Slim were "on the same wavelength" in their positive outlook about the company's future, and that Slim "wants to be along or with us for the ride."
The investment first came to public light in a regulatory filing Wednesday. Based on the publishing company's share price of almost $14 at the end of trading Wednesday, Slim's holding was valued at $127 million. A spokesman for Slim's telecommunications empirem, Telmex, confirmed the investment Wednesday in a statement to the newswire Agence-France Presse, describing the holding as "a financial investment like many others by the Slim family." The spokesman said the family doesn't intend to try to involve itself in the management of the publishing company. A spokesperson for the New York Times didn't respond to an e-mail or phone message before NEWSWEEK's deadline.
The Times has watched its share price collapse in recent years from a peak of almost $53 in 2002 (the publishing company's shares closed at $15.23 in New York Stock Exchange trading Thursday, up more than 9 percent on news of the Slim investment). Such dramatic deterioration in share prices has swept the entire industry in recent years as newspapers struggle with a profound shift in the business of journalism—and specifically its financial lifeblood, advertising—to the Internet and as the economy has softened. Slim is one of several investors in recent years to acquire a Times stake large enough to require disclosure under U.S. securities regulations. Morgan Stanley sold its 7.2 percent New York Times stake in 2007 after a fruitless two-year campaign to force the company to end its dual-class voting shares; under the structure, Class B shareholders—of which the Sulzbergers are the predominant members—elect 70 percent of the board of directors, while Class A shareholders vote in the rest. On the heels of Morgan Stanley's rebuff, a pair of hedge funds acquired a stake of more than 20 percent in the Times. Initially seeking to install four directors through a proxy fight, Harbinger Capital and Firebrand Partners negotiated a compromise with company management for two board seats, ending a hostile bid to shake up the company.

In summary we have a tabloid doing the most interesting reporting, particularly regarding the Street; the WSJ providing very little in the way of added value; Slim and Sulzberger on "the same wavelength" with Slim having "no plans to take a role in the company's management or board".

So what wavelength is that? Sulzberger having no plans to take a role in the company's management or board?

Only joking of course.

But there could be (and this is pure speculation) a wavelength to split up the business or at least offer more B-shares in certain NYT Company assets, such as the Boston Globe or the International Herald Tribune.

So, where does the International Herald Tribune stand in all this?

As ever, I have absolutely no idea, although I did note the IHT ran a heavily edited version of the NYT's own piece about all this.

International Herald Tribune
New York Times
Vacation /Business Trip Furnished Apartment in Paris

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