• by Erik Sass , November 24, 2006

The New York Times Company will not sell the Boston Globe to interested bidders, including former General Electric CEO Jack Welch, the Boston Globe reported Wednesday, citing a letter from Janet Robinson, the CEO of the Times Co. The contents of the letter were revealed to the Globe reporter by two unnamed Globe executives who had seen it.

In the letter, Robinson said she took Welch's proposal to buy the Globe to the Times Co.'s board of directors, but they rejected it. Welch was rumored to be offering about $600 million--half the price the Times Co. paid in 1993. If the report is accurate, the Times Co.'s refusal bucks the recent trend of local investors and private-equity groups acquiring newspapers and other media outlets.

Welch first voiced interest in acquiring the Boston Globe with a group of prominent Boston businessmen in late October. In addition to Welch's own stature, his bid excited interest because the Times Co. has plausible motives to sell the property. The Times Co.'s New England Group, with the Boston Globe in the lead, sustained substantial ad revenue losses on a year-to-year basis in the first three quarters of 2006--losing 7% in the first quarter, 10% in the second quarter, and 12% in the third quarter.

In earnings conference calls, Robinson has blamed consolidation in the airline industry and among big retail customers, like Macy's and Filene's, in addition to low economic growth in the Boston metro area. However, she has also held out hope that plans by Nordstrom's and Neiman Marcus to expand in the Boston area could help spur ad revenue.

At the same time, Welch's offer came close on the heels of the high-profile acquisition of The Philadelphia Inquirer and Philadelphia Daily News from McClatchy by a group of Pennsylvania businessmen and investors, led by Brian Tierney, CEO of Philadelphia Media Holdings. Welch's scheme for the Boston Globe seemed to echo Tierney's: Local ownership by community figures would ostensibly free newspapers from market pressures and allow them to focus on quality journalism. At the news conference announcing the Philly purchase, Tierney vowed an end to the strategy of "cut, cut, cut for short-term profits" that typified corporate ownership.

However, less than five months later, Tierney was quoted as saying that substantial layoffs at both papers are "unavoidable," in light of long-term structural trends affecting the newspaper industry. Rumors are circulating that he plans to ax as much as 30% of the newsroom--about 150 people.

Meanwhile, in contentious contract negotiations, managers representing the local investor consortium have told the Newspaper Guild--which represents the papers' employees--that they intend to stop making contributions to employee pensions. And in the most recent round of bad news, Inquirer Chief Editor Amanda Bennett stepped down. Welch appears undeterred by troubles at the Inquirer, or indeed by the Times Co. rebuff, described by Globe execs as decisive. According to Wednesday's report, Welch is still interested in negotiating to purchase the paper.