A Billion for Boston p.

By: Debra Gersh

A Billion for Boston p.
New York Times Co. subsidiary to merge with Boston Globe
parent; deal puts newspapers under common ownership
THE NEW YORK Times Co. has announced it will pay approximately $1.1 billion in cash and stock under the terms of a merger agreement between a Times Co. subsidiary and Affiliated Publications Inc., parent company of the Boston Globe.
The purchase price is said to be the highest ever for an American newspaper.
The deal places the fourth- and 12th-largest circulation newspapers in the United States under common ownership?with provisos for maintaining the management and editorial independence of the Globe ? and sets up a potential advertising package covering most of the Northeast market.
The deal also includes Affiliated's 33% share in BPI Communications, which publishes 19 magazines, including AdWeek, Billboard and the Hollywood Reporter. The rest of BPI is held by its managers.
In addition to its flagship daily newspaper, the Times Co. owns the New York Times Regional Newspaper Group, a chain of 31 smaller newspapers; two magazine divisions, which produce titles such as McCall's, Golf Digest, Tennis and Family Circle; a wholesale newspaper distribution company; a 50% stake in the International Herald Tribune; five television stations and two radio stations; a worldwide news and feature syndicate; and database retrieval and other information services. The company also holds minority interests in two newsprint companies and one magazine-grade paper mill.
Calling the merger a unique opportunity, Times Co. chairman and chief executive officer Arthur Ochs Sulzberger stated that the deal "provides the opportunity for a new and exciting way of selling national and retail advertising to clients targeting the entire Northeast market ? an opportunity that could not be duplicated by any combination of newspapers or other media."
Rumors of a pending deal had been circulating for weeks and, according to published reports, once the Times Co. agreed to allow local control of the Globe, the agreement was completed.
The deal offers all Affiliated stockholders consideration valued at $15 per share ? 21% over its market price the day before the first published reports of the pending agreement.
According to the announcement, holders of Affiliated Common Stock will receive consideration in the form of shares of Times Co. Class A Common Stock. Those with Affiliated Series A Common Stock can choose to receive cash, on a pro rata basis, in exchange for up to 15% of the total shares of Affiliated Common Stock.
In addition, the Times Co. has the option to purchase at $15 per share some 14.1 million in new shares of Affiliated Series A Common Stock, or about 19% of the outstanding shares.
Trust funds for the heirs of Eben D. Jordan, one of the Globe's founders, and of Charles H. Taylor, its first publisher, own 32% of Affiliated, controlling 83% of the Series B votes and 13% of the A votes, according to the paper.
There are about 100 Taylor heirs, a number of whom indicated that they might have sold their shares when the trusts expired in 1996.
Reportedly, William O. Taylor, Affiliated chairman and CEO, shaken by the vitriolic dissolution of the Bingham family newspaper holdings in Louisville, Ky., structured the deal with the Times Co. to head off a hostile takeover down the road.
Four generations of descendants of Charles Taylor have run the Globe over the past 121 years, and the latest deal includes a provision for that arrangement to continue for at least five years.
William Taylor said there would be "no editorial policy changes at the Globe" and noted that the Boston daily "maintains full editorial autonomy and management responsibility for day-to-day operations."
In addition, Taylor said there would be "no layoffs or changes in employee benefits."
When the deal is completed, Taylor will be joined by Robert A. Lawrence, a partner at Saltonstall & Co., and John P. Giuggio, former president of Affiliated, on the board of the Times Co.
Either company can terminate the deal, which is subject to stockholder approval and other regulatory hurdles.
Affiliated can break loose if Times Co. stock falls below $22 per share during a certain period, and the Times Co. can pull out if the average price of its stock goes above $35 per share during that time.
The merger is expected to be completed this fall.
Although the deal has all the hallmarks of the corporate takeovers that have become common in the newspaper industry, the two media companies are among the last held by the families that have controlled them for generations.
In fact, according to an account in the New York Times, discussions began the old-fashioned way?with a phone call from Sulzberger to Taylor, asking whether "there's some sweet music we can play together."
The Newspaper Guild of New York indicated that the Times may have to pay the piper for some of that sweet music.
"We are pleased to see that the New York Times feels strong enough financially to spend $1.1 billion to acquire the Boston Globe," said Barry Lipton, Guild president, in a prepared statement.
"We would be even more pleased and more assured about the wisdom of this purchase if representatives of Times management had not already come to the Guild, essentially pleading poverty as the reason that the Times wants to lower the wages offered to new employees and to "compress" 177 job titles held by members of the Newspaper Guild into just 65 mostly lower-paid jobs, among other proposed givebacks."
Lipton went on to comment, "Possibly since our last contract negotiating session, the Times has found a billion dollars it didn't know it had.
"This makes us very happy because then we can look forward to receiving living wages, meaningful benefits and job security for our labor and not have to accept reductions in these areas so that the New York Times can attempt to build a media empire on workers' backs."
The Times had "no comment" on the Newspaper Guild statement "because we don't negotiate in the press," said Nancy Nielsen, vice president for corporate communications.