The Wall Street Journal offers a fascinating scenario ($link) for Pinch Sulzberger to pull the New York Times Company out of its tailspin: sell The Boston Globe (and presumably other New England media properties it bought when it acquired the Globe's parent company Affiliated Publications).

The piecemeal sale of Knight—Ridder's papers showed there are plenty of rich local worthies willing to own their hometown paper.

So much so that it is even conceivable the Times could recoup the $1.1 billion it paid for the Globe in 1993. Of course, this creates a problem of its own. Fold in the planned sale of its broadcast unit, anticipated leaseback of its fancy new headquarters and Mr. Sulzberger would have to find good uses for up to $2 billion of cash.

That is more than enough to fund the company's hunt for Internet properties and still leave room to finance a chunky dividend or buyback. The Sulzberger family, which owns 20% of the stock, might find this appealing after seeing the market value of their holdings decline by half in four years. So, too, might the chairman, who this past week agreed to forgo any stock—based compensation this year.

I think the writer overestimates the profitability of the national edition of the New York Times, and underestimates the profitability of metropolitan editions. And I have to wonder if vanity—inspired local purchasers would really pay more today for the Globe (or any other newspaper) than they would have a few years ago.

Nevertheless, if Pinch were to honestly admit that he made a blunder when he bought Affiliated, and reap some significant cash from its sale, he would be on the way to restoring ample cash resources.

The jury is still out on his internet properties, though. Only time will tell if the purchase prices are justified by growth in profits and cash flow. Rupert Murdoch has done extraordinarily well with his purchase of MySpace.com, but so About.com, bought by Pinch, does not appear to have enjoyed success in the same league with News Corp's purchase.

Hat tip: Ed Lasky

Thomas Lifson   9 17 06