“Is it doable? Definitely. The New York Times Co. is an excellent target for a management-led buyout,” wrote Gross.

Gross cites the examples of newspaper companies that have ‘successfully’ been bought by private investors recently – although not always for the better arguably – such as Brian Tierney with the Philadelphia Inquirer or Avista Partners with the Minneapolis Star Tribune.

According to him, the secret for Times would be to take the company private without the assistance of other buyers.

Gross argues that to buy the company back from private shareholders (for about $3.5 billion), and including the price of debt ($1.3 billion), the total cost would be around $4.8 billion.

So that in a “reasonably aggressive management-led buyout,” buyers would need a rough $1.2 billion in cash and borrow $2.3 billion more.

According to Gross, the Times could make half of that cash-flow available, if you count its recent TV station sales, shares in the Boston Red Sox, and multimedia assets. Factor in cash offers by former General Electric CEO Jack Welch for The Boston Globe at $600 million, and the Times is left with $1.35 billion in cash…

The main problem would then be handling the increased debt and its costs. Yet again, Gross seems to believe that decreased costs (such as no dividends for shareholders) combined with high operating profits could lead the Times out of its debt and back to centralized management.

“In some ways, life as a more-leveraged private company would be more risky for Arthur Sulzberger and his management team. But given the continual harassment they endure in exchange for remaining public, the risk might be worth the reward,” wrote Gross.

We’ll see if the Sulzberger family ever seriously considers the possibility, at a time when money seems to be fleeing rather than pouring in.

Source: Slate.com