Billionaire sports team owner and financier John Henry, who helped the Boston Red Sox capture the World Series in 2004 and 2007 after an 86-year drought, will attempt another comeback with Boston’s hometown newspaper.
Henry agreed to buy the Boston Globe from New York Times Co. for $70 million in cash, according to a statement last week. The price is a fraction of the $1.1 billion the Times Co. paid for the Globe in 1993 before the newspaper lost half of its circulation amid an industrywide advertising slump.
In acquiring the Globe, Henry becomes the latest billionaire to take on the struggling newspaper market -- a group that includes Warren Buffett and real estate investor Sam Zell. The 63-year-old Henry will bring a knack for statistical analysis that helped earn him a fortune as a commodities hedge- fund manager and enabled him to build a sports empire on two continents.
“This is a thriving, dynamic region that needs a strong, sustainable Boston Globe playing an integral role in the community’s long-term future,” Henry said in a statement over the past weekend. “In coming days there will be announcements concerning those joining me in this community commitment and effort.”
Despite his deep experience in managing businesses, Henry is a novice when it comes to newspapers. He faces a challenging advertising environment affecting the entire newspaper industry as well as difficulties unique to the Globe.
The Boston entrepreneur has agreed to buy a business that had a 7 percent sales decline in the first half of this year to $179.7 million. The Globe group, which also includes the Worcester Telegram & Gazette, had a 10 percent drop in ad revenue to $82 million and a 2 percent decrease in circulation sales to $74 million in that same period.
“Henry has to figure out what’s going on with the circulation business if he’s going to turn it around,” said Ken Doctor, a media analyst with research firm Outsell Inc., calling the Globe’s recent 9 percent decline in print circulation “catastrophic.”
The Pulitzer Prize-winning newspaper also has much higher operating costs than other publications due to its union agreements, Doctor said.
“Given the high cost structure and the pressure of declining revenues, that’s a bad combination,” Doctor said.
If the way Henry managed the Boston Red Sox is any indication, he could bring in his own management team, Doctor said.