Hanky panky in sale of Boston Globe?
The New York Times Company may be facing some serious scrutiny over its planned sale of the Boston Globe to Boston Red Sox owner John Henry for a mere $70 million, after having paid $1.1 billion in 1993. The owner of the San Diego Union-Tribune, Douglas Manchester, is alleging that his higher bid was rejected by the company. John Lynch of the Boston Herald writes:
A losing Boston Globe contender is claiming his San Diego media company outbid Red Sox owner John Henry - and would have gone even higher - a bombshell allegation that he says could delay the deal and leave the New York Times Co. open to shareholder backlash.
"We bid significantly more than Henry," said John Lynch, the CEO of U-T San Diego, one of the Globe finalists. "At the end of the day, I'm certain our bid was higher and could have been a lot more higher if they had just asked. I'm just stunned. I thought this was a public company that had a fiduciary duty to get the most by its stockholders. ... From the beginning, I don't think they wanted to sell to us."
Lynch said the Times laid out three qualifiers for the deal: price, capability to close quickly and ability to finance.
"We had the money in the bank, we had the highest price and we rolled over (Friday) and accepted all their terms," said Lynch.
As recently as 3 p.m. EDT Friday, Lynch said, U-T San Diego had an army of lawyers working to iron out a deal with the Times, and didn't officially learn it had lost until they received an email at 3:30 a.m. EDT - some two hours after the Globe announced the $70 million deal on Twitter.
The potential trouble here for the New York Times Company would be its fiduciary responsibility to shareholders. Even though the company has two classes of shareholders, with the shares owned by Sulzberger family members controlling the board of directors, the other shareholders are entitled to realize the highest price available for the assets the company is selling.
Doug Manchester is reviled in the journalism world for having bought the U-T and turned it in a conservative direction. If it could be shown that the NYTCO turned down a higher bid in order to prevent the Globe for falling into the hands of a conservative bidder, that could open the door to a shareholder lawsuit.
But there could be other terms of the deal offered by Henry to were superior to the U-T bid. Beth Healy of the Globe writes:
Red Sox principal owner John W. Henry, who early Saturday signed a deal to buy The Boston Globe from the New York Times Co., prevailed over a half-dozen rival bidders for two main reasons: He was rooted in Boston and had plenty of cash.
Henry agreed to pay $70 million for the 141-year-old Globe, its websites, and affiliated properties, the Times Co. said. The deal followed weeks of negotiations that culminated in a marathon session Friday night, with Henry and his lawyers ensconced in his suite at Fenway Park, trading calls and messages with Times Co. officials as the Arizona Diamondbacks edged out the Red Sox.
If the U-T bid required financing, rather than offering cash, that would be a business justification for preferring the Henry offer. But if the NYT company left shareholders' money on the table in order to place the Globe in non-conservative hands, then expensive litigation cold lie ahead for the company.
Stay tuned to this one.
The Boston Herald, the Globe's much livelier competition, is launching its own talk radio serviuce today, on the internet. They tell me the schedule, starting today is:
Conservative talkers Jeff Katz 6-9 a.m. and Michael Graham noon-3 p.m. Plus political hardball with Hillary Chabot and Jaclyn Cashman 9 a.m.-noon. Sports talk 3-6 p.m.
I hope and expect the Herald to cover the unfolding story of the Globe acquisition with its customary panache.