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.
While he has not yet unveiled his plans for the company, in response to questions from the Globe, Henry said Saturday night that he looked forward to helping the newspaper play its vital role in the city and region.
“Being a part of the leadership of the Globe provides an opportunity to play a significant role with others in this community’s present and future. . . .
“I became concerned a number of years ago about the continued viability of our newspapers in Boston. I sat with various publishers and, in studying the challenges newspapers face across the country, I became extremely interested in potential solutions. I’m not sure that anyone has successfully put forward a sustainable financial model for metros given the magnitude and consistency of revenue declines, but if I were going to bet on one it would be The Boston Globe.’’
Henry said he would provide more details in the coming days, including information about the team he is assembling for what he called “a community commitment and effort.”
In a statement, he addressed the issue of whether his ownership of the paper represents a conflict of interest.
“Now that I have a prospective role in Globe leadership, if I were foolish enough to try to influence Sox coverage by the Globe, I would only succeed in diminishing the value of both great institutions,” he said.
Henry is expected to visit the Globe on Monday, according to people briefed on his plans.
“We’re delighted to have found a buyer in John Henry, who has strong local roots and a deep appreciation of the importance of these publications to the Greater Boston community,” Times Co. chief executive Mark Thompson said in a statement.
In addition to the Globe, Henry will be acquiring the Worcester Telegram & Gazette and its website, the Globe’s direct mail business, and a 49 percent interest in the free Metro Boston newspaper. The deal is expected to close in 30 to 60 days.
For Henry, 63, who enjoyed fast success with the Red Sox, winning two World Series within five years of buying the team in 2002, it’s an entirely new challenge to be entering the news business. A mild-mannered billionaire who made his fortune in managing funds and trading commodities, he has built a sprawling sports empire that includes the Red Sox and New England Sports Network, as well as the Liverpool soccer club and Roush Fenway Racing, a NASCAR team.
In buying the Globe and its websites, BostonGlobe.com and Boston.com, Henry bested several other bidders, including members of the Taylor family, which sold the Globe to the Times Co. in 1993, and whose forebears actually owned the Red Sox for a period in the early 1900s. His bid amounted to a small fraction of the $1.1 billion the Times Co. paid for the Globe — reflecting the devastating impact of the digital revolution on the traditional newspaper business model.
Other bidders included the owners of the U-T San Diego newspaper and Revolution Capital, a Los Angeles private equity firm that owns a Tampa newspaper. A trio of well-known Boston businessmen — former advertising executive Jack Connors, construction magnate John Fish, and developer Steve Weiner — bid in the final round, and lawyer Shannon Liss-Riordan had submitted an offer that included taking over the Globe’s pension liability.
His offer was appealing to the Times Co. because it was cash, unencumbered by financing issues or partners.
Some of the people involved in these bids, as well as their advisers, could resurface as John Henry mulls taking on investors or creating a board to oversee the Globe. While he is paying cash for the company, it’s likely that he would consider taking on minority partners in order to reduce his own stake and include other locals in his plans, according to people briefed on the matter.
Connors, Fish, and Weiner, may be in talks to join Henry, according to the people familiar with the plans who were not authorized to speak on the record. Other possible investors include Henry’s Red Sox partner Tom Werner and Boston Celtics co-owner Steve Pagliuca.
A Brookline resident, Henry is a relative newcomer to Boston, here for just a decade. But friends say he is now rooted here, and has established a stable of close associates, including wealthy investors who might be persuaded to join him in the Globe venture.
Known for his numbers savvy in investments and sports, Henry and his colleagues spent the past several weeks digging into the details of the Globe’s facilities, finances, and businesses. He toured the Globe’s printing operation, dressed in blue jeans, looking on with interest as the newspapers were compiled and moved across the room on machines. He has taken a particular interest in the Globe’s Boston.com website and has quizzed executives about the terms and duration of union contracts.
People involved in the process say Henry is formulating ideas on how to boost the Globe’s advertising revenues — the area of greatest challenge for newspapers across the country. He may seek a buyer for the Worcester T&G, and he, like other bidders, is considering the possibility of selling the Globe’s plant on Morrissey Boulevard, according to people familiar with his plans.
The Times Co. bought the Worcester T&G for $295 million in 1999. The newspaper’s publisher, Bruce Gaultney, declined to comment Saturday night.
Public officials and business people across Boston expressed optimism about the deal Saturday, even as the marriage of a newspaper to a sports team it covers spurred debate in journalism circles and among Globe readers about the importance of unfettered coverage.
Henry has yet to fully address issues of news coverage beyond his statement, but Globe editor Brian McGrory had said after the agreement was reached that, “We have no plans whatsoever to change our Red Sox coverage specifically, or our sports coverage in general, nor will we be asked.’’
The shoe was on the other foot in recent years when the Times Co. owned 17.5 percent of the Red Sox, something the Globe disclosed in virtually every story or column mentioning the team.
It was the Times Co.’s success in its Red Sox investment that led, in part, to its deal to sell the newspaper and its affiliates to the Sox owner. The Globe’s parent tripled its $75 million investment in the Red Sox and, along the way, developed a strong relationship with Henry.
His was not the highest bid for the Globe, according to people involved in the process. But his offer was appealing to the Times Co. because it was cash, unencumbered by financing issues or a bevy of investment partners. One executive working for the Times Co. said the key was who was best able to get the financing together and close the deal relatively quickly.
Henry also was not the highest bidder for the Red Sox, according to press reports at the time.
Though the Times Co. is selling the Globe for far less than what it paid for the paper when the business was highly profitable and the Globe fetched a record price, it likely at least broke even on the investment, according to several former Globe executives familiar with the finances. That’s because the Times Co. was able to withdraw a large stream of cash from the Globe during its high-earning years in the 1990s and early 2000s.
Globe publisher Christopher Mayer thanked the Times Co. for its stewardship in a note to the staff Saturday and said he looked forward to working with Henry.
“I have no doubt that we will turn our full attention to moving our business forward and fulfilling our enduring mission: to be a voice for New England through our award-winning journalism across all mediums and platforms,’’ Mayer said.
In a statement, the Globe’s largest union, the Boston Newspaper Guild, representing more than 500 reporters, photographers, and other employees, congratulated Henry for his purchase of the Globe: “We welcome the opportunity to collaborate and innovate with him and his team. We look forward to a bright future as we strengthen and grow the reach and impact of the Globe in the communities it serves.”Beth Healy can be reached at firstname.lastname@example.org.
This story has been updated with a statement from John Henry on whether his ownership of the newspaper would be a conflict of interest.