2013-08-04

More on the NYTimes Deal: A Deflation Story?

The NYTimes turned down an offer worth almost 600% more in 2011 because the deal didn't offer enough cash.

New York Times Sells Boston Globe to John Henry for $70M
New York Times has rebuffed proposals that exceeded $100 million in the past. In 2011, Freedom Communications Inc. CEO Aaron Kushner, publisher of the Orange County Register and other California papers, offered more than $300 million, according to another person familiar with the deal who asked not to be identified because the matter was private.

Kushner’s offer included the assumption of both qualified and unqualified pensions. Times Co. turned down the offer because it didn’t include enough cash up front, according to another person, who also requested not to be named because the talks weren’t public.

The New England Media Group, the division that manages the Globe, has about $110 million in pension liabilities, people familiar with the matter said in June.

Times Co. preferred cash to help offset the liabilities, rather than bids that assume even part of them, one of the people said. Such bids would be less attractive because the Globe’s pension liabilities would revert back to Times Co. if a new owner of the Boston newspaper were to become insolvent, the people said.
The NYTimes was willing to have a tag sale for the Boston Globe, if only to avoid the pension liabilities. People expected bids to be around $100 million, but they settled for 30% less.

Governments all across the blue states of America have similarly large pension liabilities (high taxes = high salaries = large pension liabilities), which is why many may end up defaulting in the future.

H/T: Ideology or cash-credit decoupling?

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