NYTCO's stake in NESV brings with it partial ownership of historic real estate at Fenway Park, and a cable company. But it's unclear whether the embattled newspaper publisher will find a buyer for its stake, especially as it is said to be asking $300 million--almost twice the Barclays' valuation. Meanwhile, in the midst of a deepening recession and the global credit crunch, even relatively profitable sports franchises like the Chicago Cubs--for sale by the Tribune Co.-- have languished on the market.
The Cubs comparison, if apt, has ominous implications. Indeed, the planned sale of the Cubs was a key part of Tribune boss Sam Zell's strategy for avoiding bankruptcy. But the company was forced to declare bankruptcy on December 9th after failing to divest the sports franchise. Desperate for cash, Zell had petitioned the state government of Illinois to buy the team, but these negotiations were nixed by the corruption scandal unfolding around Illinois Governor Rod Blagojevich.
The news that NYTCO's Red Sox stake is up for sale comes just a few days after the company announced that its advertising revenues plunged 21% in November, foreshadowing a disastrous fourth quarter and new year. Like other newspaper publishers, it is suffering from two trends that are now coinciding: a long-term shift in media consumption from print to the Internet, followed by advertising dollars, and a sharp cyclical downturn in the broader economy. These problems will become especially pressing when the company has to pay off a $400 million line of credit this May. On December 8th the company said it would borrow $225 million against its new headquarters in Manhattan.