NEW YORK — Rupert Murdoch’s counterintuitive quest to invest in print media helped drive away longtime lieutenant Peter Chernin.
And now that Chernin can’t intercede, does Murdoch want to follow News Corp.’s $5 billion buyout of Dow Jones by gobbling up the struggling New York Times Co.?
The answer appears to be yes, as impossible as present economic conditions make it for most deals of any kind to get done.
What’s more, incredulous News Corp. insiders say Murdoch’s love of print media is so fervent that he’s also been talking about a play for the Los Angeles Times, which could make easier prey for several reasons.
With News Corp. shares trading at $6.79 (up 6% Tuesday), the central question of whether Murdoch could actually pull off such a maneuver is thorny. In the case of the New York Times, a combination with News Corp.’s existing properties would send up all kinds of regulatory red flags, especially in a Democratic administration. The acquisition would be Murdoch’s second paper in New York after the Post, alongside two TV stations. Murdoch already had to battle for a waiver from the FCC to own the two TV stations.
There’s also the fact that the Times and the Wall Street Journal compete nationally, and the prospect of meshing the Times’ left-leaning outlook with the conservative approach of the Journal and the Post.
Reports of Murdoch’s interest in the Times have circulated for the past year but he has consistently waved them off. In March, he called such buzz “complete nonsense” and said the move would be “illegal.”
More recently, however, he has appeared to move in the opposite direction, defending the Dow Jones deal against a storm of criticism. But the hurdles blocking a News Corp. acquisition of the New York Times are arguably larger than the sizable ones that stood in the way of the Dow Jones deal.
The biggest may be the trust updated in 1997 by the Sulzberger family, which controls the Times Co. The family is a much tighter-knit group than the sprawling Bancroft clan that owned the Journal. The Sulzbergers have a fierce opposition to Murdoch, and even a theoretical offer well above the Times’ current multi-decade-low stock level of less than $4 a share is not likely to make them relent. And with just eight family trustees, including Arthur Sulzberger Jr., there is less chance of fragmenting their vote in Murdoch’s favor.
“Make no mistake, they are already at war against Rupert Murdoch,” said Michael Wolff, author of the recent Murdoch bio “The Man Who Owns the News.” “And he has been very clear in signaling his interest.”
As Wall Streeters digested the news of Chernin’s exit, they identified two things that make a deal for the Gray Lady a remote but still intriguing possibility: the dire state of the Times and the swashbuckling style of Murdoch, who has defied doubters since his empire-building days.
“It’d be awfully tempting if he puts 60 bucks a share on the table like he did the last time” with Dow Jones, said Edward Atorino, a research analyst who covers the Times Co. for Benchmark Capital, a broker-dealer that owns no shares in the company. “But the Times Co. thinks it can tough it out. They don’t have the bank pressure that has hit other media companies. That won’t kick in for another year or two and they hope, by then, that the economy will have recovered.”
That’s not to say the Times hasn’t been keen to shed assets, especially as eager private equity investors and hedge funds have upped their stakes. Its 17% stake in the Boston Red Sox, for example, in light of the $1 billion-plus that Tribune Co. got for the Chicago Cubs, suddenly seems like a good revenue generator.
And technically, a News Corp. transaction for another paper is possible, given that the company has more than $2 billion in free cash flow in the current fiscal year, even amid the advertising downturn and the continuing erosion of the newspaper biz.
The big problem, as with so many would-be acquirers these days, is with News Corp.’s severely depressed stock price.
But tough times haven’t kept the notion of Murdoch collecting newspapers from being a frequent topic of conversation.