Carlos Slim, Family Buy 6.4% Stake in New York Times (Update2)

By Sarah Rabil and Gillian Wee

Sept. 10 (Bloomberg) -- Mexican billionaire Carlos Slim acquired a 6.4 percent stake in New York Times Co., making him the third-largest investor in the newspaper publisher outside of the controlling Sulzberger family.

Slim and a family trust said they owned 9.1 million shares of New York Times as of Sept. 4, according to a regulatory filing today. They hadn't previously reported a stake in the company, the third-largest U.S. newspaper publisher.

``It is a great company that has an attractive value today,'' said Arturo Elias Ayub, a spokesman for Slim, in a telephone interview. ``The door is always open to assess whether we will buy more.''

The stake may lead to Slim, the world's second-richest man, buying the company or influencing its business decisions, said Richard Dorfman, managing director of investment firm Richard Alan Inc. in New York. New York Times, whose stock has fallen 20 percent this year, has eliminated jobs and accelerated cost cutting to cope with industrywide declines in print advertising.

``He either wants to own it outright or try to steer it in a different direction,'' Dorfman said in an interview. ``The issue is the Sulzberger people not wanting to give up control.''

The Ochs-Sulzberger family trust holds about 89 percent of Class B shares that elect 70 percent of board members. Family members hold a total equity stake of 19 percent.

New York Times fell 4 cents to $13.96 today in New York Stock Exchange composite trading before the filing. Based on the Sept. 4 closing price, the day of the stock purchase, Slim's New York Times stake was valued at $121.2 million.

A Bargain?

Hal Vogel, a New York media analyst, said Slim may be buying the shares in a bet that a third party would acquire New York Times. The company's largest investor, Harbinger Capital Partners, mounted a proxy fight earlier this year for seats on the board, asset sales and more Internet investment.

``Maybe he's just buying what he thinks is part of a bargain,'' Vogel said. ``He might be playing it for someone else to take it out.''

Slim, 68, was ranked by Forbes magazine in March as the world's second-richest man with an estimated wealth of $60 billion, behind Berkshire Hathaway Inc.'s Warren Buffett. Slim owns America Movil SAB, Latin America's largest mobile-phone service provider; Telefonos de Mexico SA, that country's biggest land-line operator, and Grupo Carso SAB.

Apple, CompUSA

In Mexico City today, Slim told reporters the New York Times investment is ``financial,'' according to a Reuters report. In 2000, Slim bought $90 million of stock in Philip Morris Cos. when shares of the biggest cigarette maker traded close to a four-year low. It followed similar purchases of depressed shares in Apple Computer Inc., CompUSA Inc. and OfficeMax Inc.

Slim bought a stake in Independent News & Media Plc, publisher of The Independent in the U.K., earlier this year.

Harbinger boosted its New York Times stake on Aug. 1 to 28.5 million shares, or almost 20 percent of the stock outstanding. The second-largest shareholder, T. Rowe Price Group Inc., owned 15.2 million shares, or an 11 percent stake, as of its latest filing on June 30.

New York Times spokeswoman Catherine Mathis declined to comment. Charles V. Zehren, a spokesman for Harbinger Capital Partners, also wouldn't comment.

New York Times revenue fell 10 percent in July as a slumping U.S. economy dragged down retail and classified ads to their steepest monthly declines this year. New York Times Chief Executive Officer Janet Robinson said in July she expects to exceed a target for $230 million in annual savings by the end of 2009.

Dividend Pressure

The company has faced increased financial pressure to cut its quarterly dividend of 23 cents a share, which has an indicated yield of 6.6 percent. Moody's Investors Service analyst John Puchalla said last month that one way for the company to save its credit rating from being cut to junk would be to reduce the dividend costing $132 million a year.

If the New York Times were to cut or drop its dividend, that would ``severely impact'' the family's cash flow and hurt the shares, which may lead family members to take a potential offer from Slim, Dorfman said.

Slim may ultimately offer the Sulzbergers a price greater than the stock's 52-week high, Dorfman said. That was $21.45, or 54 percent more than today's closing price.

``Maybe there'll be pressure from family members who are not involved in the day-to-day operations,'' said Dorfman. He said the Sulzbergers may be similar to the Bancrofts, the family that sold Dow Jones & Co. to News Corp. last year.

Journal Sale

When News Corp. Chairman Rupert Murdoch bid for Dow Jones in April 2007, he offered $60 a share, or 65 percent more than Dow Jones' stock price of $36.33 on April 30. A divided Bancroft family accepted the offer after more than three months of debate over Murdoch's impact on news coverage at the Wall Street Journal.

Murdoch, 77, pledged to maintain the editorial independence of Dow Jones, winning enough support to complete the purchase when Bancroft family members controlling at least 37 percent of the company approved the deal. Murdoch's $5.2 billion purchase of Dow Jones closed in December.

To contact the reporter on this story: Sarah Rabil in New York at srabil@bloomberg.net

Last Updated: September 10, 2008 20:04 EDT

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