David Geffen Wants a Chunk of the New York Times. But What Does Google Want?
David Geffen, who had previously tried to buy the Los Angeles Times, has been trying to buy a chunk of the New York Times (NYT). So says Fortune magazine, which says that Geffen offered to buy the stake owned by Harbinger Capital, and so says TheWrap.com and Reuters.
None of the stories cite an on-the-record source. But my assumption is that, in all cases, the authors talked to Geffen, who has been known to chat up a reporter or two, and always with a very specific agenda.
In this case, Geffen–or whoever is talking to Fortune, TheWrap.com and Reuters–wants to make it clear that the billionaire media mogul is willing to buy a 19 percent chunk of the paper for a lot less than Harbinger did in 2007. The investment group paid some $500 million for its stake back then, and it is worth less than $200 million now.
Exactly why Geffen is so interested is unclear since it’s not like buying 19 percent of a run-of-the-mill public company where shareholders have real clout. The Times’s dual-class stock structure means it is, for all intents and purposes, a private company owned by the Ochs-Sulzberger family. The only real way to exercise influence over the company would be to lend it a good deal of money–which is exactly what billionaire Carlos Slim did earlier this year.
Also unclear: Why Google (GOOG) would have “looked seriously” at the opportunity to buy the Times in the last few weeks, as Fortune’s Richard Siklos reports in the same story.
The part that sounds right to me is that Harbinger approached co-founder Larry Page about a deal. That’s because Page is the Googler most concerned about the declining state of the newspaper business and has pushed the company to think about ways it could assist the industry.
Presumably that could be through commercial innovations like the new search feature the company is reportedly working on or perhaps even via Google.org, the company’s nonprofit foundation.
But I’m told that while Google execs have brought up the notion of snapping up distressed newspapers using its huge cash hoard within the past year, those talks have never gotten serious. It’s hard to see how they could: Google has emphatically stayed out of the content business so far, and it’s unclear why it would change direction now–and invest in a shrinking industry at the same time.
Google CEO Eric Schmidt himself declared that Google wasn’t in the newspaper-buying business a few months ago, in an interview with… Fortune:
“Fortune: How about just buying [newspapers]?
Schmidt: The good news is we could purchase them. We have the cash. But I don’t think our purchasing a newspaper would solve the business problems. It would help solidify the ownership structure, but it doesn’t solve the underlying problem in the business. Until we can answer that question, we’re in this uncomfortable conversation.
I think the solution is tighter integration. In other words, we can do this without making an acquisition. The term I’ve been using is ‘merge without merging.’ The Web allows you to do that, where you can get the Web systems of both organizations fairly well integrated, and you don’t have to do it on exclusive basis.”
That sounds an awful lot like someone who wants to advertise on newspaper sites, not buy them.