John Henry’s sweet deal
John Henry, the billionaire owner of the Boston Red Sox and the Boston Globe, appears to have negotiated a very sweet deal when he sold the Worcester Telegram & Gazette in June, according to documents on file with the Securities and Exchange Commission.
The documents were filed by New Media Investment Group, which purchased the Telegram & Gazette in November along with the rest of the newspapers owned by the Halifax Media chain. New Media, which sprung out of theGateHouse Media bankruptcy, bought the Halifax chain for $280 million, and the sale is expected to be completed shortly.
Henry’s sale of the T&G was controversial. He had promised employees at the newspaper he would find a local buyer for the paper and, failing that, keep the newspaper himself. Instead, he sold the paper to Halifax Media of Daytona Beach, Florida, which in turn sold itself to New Media in November. New Media, based in New York, owns 450 publications in 27 states. Locally, it owns the Patriot Ledger, the Standard-Times of New Bedford, the Herald News of Fall River, the Cape Cod Times, the Enterprise of Brockton, the Metrowest Daily News, and the Providence Journal.
Henry purchased the Globe, the Telegram & Gazette, and a 49 percent stake in the subway newspaper Metro from the New York Times Company for $70 million. He is likely to recoup the entire purchase price by selling off just a portion of the assets. The SEC documents indicate he sold the Telegram & Gazette to Halifax for $17.4 million and he is in the process of selling the Globe property on Morrissey Boulevard in Dorchester, which is assessed at $40 million but likely worth far more.
The SEC documents (page F-76) confirm that Halifax paid a lot for what business people call intangible assets. For example, Halifax valued the Telegram & Gazette trade name at $2.6 million, subscriber relationships at $2.8 million, and advertiser relationships at $6 million. “Goodwill,” described as potential business synergies, was valued at $4.8 million.
Of the $17.4 million purchase price, only $5.3 million consisted of tangible assets, mostly accounts receivable and prepaid expenses. The value of property, plant, and equipment was only $1.6 million.
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