Slim takes 6.4% stake in New York Times

The purchase makes the Mexican billionaire third-biggest shareholder in the media house.

Mexican billionaire Carlos Slim acquired a 6.4 per cent stake in New York Times Co, citing the newspaper publisher's “attractive value” following a 20 per cent drop in the stock this year. The shares rose the most since 1993.

The purchase makes Slim the third-biggest shareholder in New York Times outside of the company's controlling Sulzberger family. Slim and a family trust owned 9.1 million shares of New York Times as of Sept. 4, according to a regulatory filing yesterday. They hadn't previously reported a stake in the company, the third-largest US newspaper publisher.

The stake is passive, according to the filing. Slim may be buying the shares in a bet that a third party may acquire New York Times, said Hal Vogel, a New York media analyst. The company's largest investor, Harbinger Capital Partners, mounted a proxy fight 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 in an interview. “He might be playing it for someone else to take it out.”

New York Times rose 90 cents, or 6.5 percent, to $14.86 at 11:56 am in New York Stock Exchange composite trading after earlier gaining as much as 10 percent. Based on the closing price Sept. 4, the day of Slim's most recent stock purchase in New York Times, his stake was valued at $121.2 million.

A Bargain?: “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.''

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

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 SAB, that country's biggest land-line operator; and Grupo Carso SAB.

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 2 percent stake in Independent News & Media Plc, publisher of the Independent in the U.K., earlier this year.

Sales Drop: New York Times revenue fell 10 percent in July as a slumping U.S. economy dragged retail and classified ads to their steepest monthly declines this year. The company has cut jobs, raised the price of its flagship newspaper and plans to close a New York distribution unit. 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.

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.

Starting in January, Harbinger and Firebrand Partners pushed for New York Times to sell the Boston Globe and a 17 percent stake in the company that owns the Boston Red Sox. The investors ended their proxy campaign after New York Times agreed to give them two seats on the board.

Asset Sales: New York Times could raise more than $1 billion if it mortgages its new headquarters and sells non-core assets, Gabelli & Co. analyst Barry Lucas said today. The proceeds could be used to buy back as much 35.3 million shares at $17 each through a so- called Dutch auction, said Rye, New York-based Lucas, who recommends holding the stock. Affiliate Gamco Investors Inc. owned 230,972 shares of New York Times as of June 30.

Slim may try to influence business decisions as an investor, said Richard Dorfman, managing director of investment firm Richard Alan Inc. in New York. The control of the Sulzbergers may make it difficult for Slim to buy the company outright, he said.

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.

The company also 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.