Mexican mogul Slim sees opportunity in NY Times (Academics pop the corks)

AP via Yahoo ^ | Tuesday January 20, 2009, 9:10 am EST | Julie Watson, Associated Press Writer

[frithguild]

MEXICO CITY (AP) -- A Latin American billionaire looks to expand his empire in the United States in a deal that could make him the largest shareholder of The New York Times Co.

[snip]

"By having a stake in the New York Times, he's basically projecting himself as a powerbroker in this country, regardless of how his investment does," said Armand Peschard-Sverdrup, a senior associate of the Center For Strategic and International Studies, a Washington think tank.

[snip]

The Times said Slim would buy six-year notes in the company with warrants that are convertible to common shares. The notes carry a 14 percent interest rate, with 11 percent paid in cash and 3 percent in additional bonds, the newspaper reported.

[snip]

Opponents say Slim, 68, runs ruthless monopolies that illegally block competitors, and is known for hostile takeovers. After Slim boosted his stake in Saks from 17.2 million shares to 25.3 million shares late last year, the company's board introduced a "poison pill" into its share structure, apparently to prevent a Slim takeover.

Slim has said he knows how to seize an opportunity. These days, there is no better place to buy businesses on the cheap than the United States.

"I don't see him meddling," said George Grayson, a Mexico expert at the College of William & Mary in Virginia. "Those of us who read the New York Times everyday, I think will be uncorking champagne bottles because unless these papers are infused with capital they are going to cut back services."

[snip]

[frithguild]

For those following this story, more of the terms of the deal are out today. Slim's deal looks better today than it did yesterday.

As I have commented before, as an acolyte of Toffler, Slim knows the value of information in a Third Wave society.

An acquaintance of mine posted a conversation on his blog. I will butcher my recollection of it, but this is it.

It was between a veteran hedge fund manager and someone who was in the business for only 20 years. The less experienced fellow was commenting dismally about power revolving to liberal elements, and how this was negatively impacting the markets. The more experienced said look - I remember what it was like in the 1970’s. It is much easier to predict what a government is going to do that a free market. I made my biggest fortune back then.

The same is true for Slim, Soros, Buffet or any other of the super rich. They want an economy with a greater influence by governments, because it is easier for them to profit that way. The New Yourk Times brand is one of the most vailuable tools a cognitarian may wield. He needs it preserved, because that is what helps government ascend to greater power, and this helps him.

He will not meddle, as our cork popping academics have commented. It is worth preserving the status quo for the sake of his other holdings, even if he loses tens or hundreds of millions on NYT.

[frithguild]

ping

[MissCalico]

Ok, that sounds machiavellian enough to be true so now what’s the spin on his investments in tobacco. Seems like, on the surface, government control over that industry would harm his MO and PM holdings.

[Army Air Corps]

Even though he is a Mexican citizen, I am sure that he made campaign contributions in some way. It would be interesting to see to whom he made such contributions.

[MississippiMan]

Why oh why can’t a conservative American step forward and take control of the Old Gray Hag? Now THAT would be a cork popper, provided he actually got enough power to make radical changes happen.

MM

[Cicero]

Yes, you took the words out of my mouth. This isn’t a financial investment as such. It’s buying the good will of the Ruling Class in the U.S. He has bought the right to be widely spoken of as a Liberal Savior, not a greedy capitalist oppressor of the Mexican poor.

[Hacklehead]

Perhaps requiring afternoon siestas will cure the company’s problems.

[Oldexpat]

He won’t be getting any negative press from them no matter what he does in Mexico.
Big business loves big government..with it’s foot on the neck of small business and the middle class.

[monday]

I think everyone is reading too much into this. He's getting a good deal. 14 percent interest plus the security of bonds, plus the convertibility option is pretty good. Add to that the fact that the NYT is probably worth a billion just for it's name and while it may seem to be a risky investment to most people, for him it's just business as usual. He has made his fortune on risky investments.

[abb]

This (moo) is predicated on the old information distribution model. Yes, the NYT is still powerful, but the web (many to many) is gnawing away at any ‘broadcast’ (one to many) model’s efficiency.

I just got in a new book (supposed to be a definitive history) about the impact of the printing press in the middle ages.

We live in an exciting age of information distribution.

[frithguild]

Agree that the premise of my suppositon on Slim’s motivations is that he views the NYT in terms of the existing distribution model. In the short term, it is in his interest to prop it up.

I also agree that alternative means of distribution is “gnawing away” at informatins distributors like the NYT.

Slim could well be executing a long term strategy. Personally, I look at the “brand” of the information and use it as a filter. If the present NYT business model completely fails, the NYT information “brand” will remain. To my mind, the Packard Motor Cars brand has many favorable attributes, even though it failed as a going concern 60 years ago. This may be the “Third Wave” value that Slim sees.

[abb]

I agree the “brand” of the NY Times has value, as does the Wall St. Journal and to a lesser degree other old-time newspapers. Without a viable plan to sell a product or service and collect revenue, that “brand” is devalued, though.

Check out this paper.

http://www.acm.org/ubiquity/views/j_dewar_1.html
The Information Age and the Printing Press: Looking Backward to See Ahead
By James A. Dewar

Some new stuff from today.

http://www.alleyinsider.com/2009/1/our-plan-to-fix-the-new-york-times-nyt
Our Plan To Fix The New York Times (NYT)

http://www.slate.com/id/2209327/pagenum/all/
Slim’s PickingsWill Carlos Slim use the New York Times to bolster his reputation?

http://blog.newser.com/post/2009/1/21/Times-Has-Slim-Chance.aspx
Times: Hope’s Slim

http://newsosaur.blogspot.com/
How Slim could end up owning NYT

http://www.smartmoney.com/news/ON/?story=ON-20090120-000639-1603
New York Times Financing Plan Brings Expensive, Temporary Relief

[ken5050]

It’s a good deal ONLY if the NYT can make the interest payment..and to take controil, he has to deal with the messy problem of the Time’s dual classes of stock..look at the Saudi Prince who just lost $ 8 Billion on his investments in Citibank..

[ken5050]

It’s a good deal ONLY if the NYT can make the interest payment..and to take controll, he has to deal with the messy problem of the Time’s dual classes of stock..look at the Saudi Prince who just lost $ 8 Billion on his investments in Citibank..

[frithguild]

Thanks for the links. I will read Looking Backward in toto when I get a chance. Having not quite finnished Taleb, I will be looking for “Black Swans”