The New York Times Co is in talks to raise hundreds of millions of dollars from Mexican billionaire Carlos Slim, a source told Reuters on Saturday, a move that would give the ailing newspaper publisher a critical cash infusion to pay its debt.
An investment by Slim, the world's second-richest man according to Forbes magazine, could also be a vote of confidence in the Ochs-Sulzberger family, whose control of the Times for more than a century has been threatened by changes shaking the foundations of the US newspaper business.
The Times, which owns its namesake newspaper and The Boston Globe as well as other papers in the United States, is grappling with a decline in advertising revenue on a level that it and other newspaper publishers have never seen before. According to the source, the Times might give Slim, who already owns a 6.4 percent stake in the company, preferred stock with no voting rights, but with an annual dividend. The money could help the Times pay off $400 million in debt in a credit facility that will retire in May.
The ad decline has been exacerbated by the financial crisis. Now, papers in cities like Denver and Seattle may shut down this year because their publishers can no longer afford to keep them and can find no one to buy them.
The Times's shares have plummeted 70 percent from their 12-month high of $21.14 in April 2008 to $6.41 on Friday. Seven years ago, the shares were trading above $50. Slim's stake in the Times was worth about $128 million in September 2008. Since then, its value has shrunk to about $58 million. At the time, Slim described his investment in the Times as financial rather than strategic.
Slim, 68, became one of the world's richest men by placing heavy bets on hard-hit companies. Last year, he increased his stake in US luxury retailer Saks Inc to 18 percent, becoming its biggest investor.