Murdoch was on a panel with Indian mogul Ratan Tata and Mexican billionaire and future New York Times owner Carlos Slim. The question that elicited Murdoch's bizarre reference to New York Gov. David Paterson was clearly directed at Fox News: "How do we bring more civil discourse to the discussion, and stop appealing to the populists on the right and the left?"

One way would be to not pay people millions of dollars to pursue bizarre conspiracy theories and call the first black president a racist—but that's not the Murdoch way! No, Murdoch's slurred, barely coherent answer blamed politicians, including Paterson, who, it's important to note, is "blind, and can't read braille, and doesn't know what's going on." And therefore is responsible for the lack of civil discourse in our political conversation. Class act. Good thing Murdoch has leftie liaison Gary Ginsberg at hand to smooth this over for him.

We're just going to throw this out there: Rupert Murdoch is not well. This senseless gaffe, on top of his strange and uncomprehending assertion last week that Barack Obama is indeed a racist just like Glenn Beck said and that no one at Fox News has ever compared Obama to Stalin when they obviously do on a nearly nightly basis, make him seem strange and muddled. He's getting old, and it's showing.

The conference had another highlight—Slim's defensive and belittling discussion of his minority stake in the New York Times. Asked why he loaned a quarter of a billion dollars to the struggling paper, Slim responded with a casual, "Why not?" before nearly interrupting the panel's moderator to point out that on top of a 14% interest rate, he'd received warrants in the deal. Asked to elaborate on the value of media investments, Slim started with, "I think the New York Times will pay. It was credit, with a high yield, and warrants." How reassuring. Slim did offer a perfunctory defense of the Times as a business, calling it one of the best newspapers in the world. Then he offered to lend money to the Wall Street Journal at 12%, two points better than he gave to the Times.

The paper already took out a $250 million subprime loan from Carlos Slim. The best they can hope for there is not to allow him to leverage it to sneak in and take over the whole company. It was reported earlier that Hollywood megamogul David Geffen was trying to buy a 20% chunk of NYT stock from a hedge fund, but today one or both sides are pooh-poohing it as one mere phone call—a flight of Geffen fancy, if you will, not a real bid.

So the outside saviors are both...predatory at best, nonexistent at worst. What about saving itself, with a plan to not be cannibalized unto death by the internet? They're going about it, albeit quaintly! Today John Koblin has more details on the Times' theoretical plan to rake in more money, somehow. There are two possibilities!

1. A "'meter system,' in which the reader can roam freely on the Web site until hitting a predetermined limit of word-count or pageviews, after which a meter will start running and the reader is charged for movement on the site thereafter." Tick tick tick!

2. A "membership" system in which you donate money to the NYT and get a t-shirt or a key chain or extra content or a private relaxing "massage" from Jon Landman and Janet Robinson, whatever, they haven't worked it all out yet.

The sunny backdrop to all this is that if the company doesn't come up with some miraculous way to pay down its debt, fast, the Sulzbergers will likely have to give up their family control of the paper. So uh, they're still open to better ideas!

[NYP, NYO, WSJ]

Fortune reports that Geffen considered buying a 19 percent stake held by Harbinger Capital, a hedge fund. (Google also took a look but passed) Geffen — or anyone, really — would be a better owner than the Sulzbergers, the kleptocratic parasites who inherited their controlling stake. (The Sulzbergers like to style themselves as guardians of the Times's vaunted journalistic values, but the current generation seems far more interested in their dwindling dividends.)

If not Geffen, then who? Probably Carlos Slim Helù, the sketchy Mexican telecom mogul who's been accumulating a stake in Times Co. shares and debt. The debt, in particular, positions him to take over the Times if its finances take a tumble. We must stop this outrage! The Times is too great a national treasure for it to land in heterosexual hands.

The NY Post runs a big speculative piece on what we will call "THE SLIM SCENARIO" today, which is slightly misleading, of course, so we'll lay out the basic factual arguments for you:

• The NYT took out a $250 million loan from Slim at awful interest rates. They have no cash, pretty much. So they may have to pay him pack in stock. (Partially or fully).
• Since NYT's stock price is so low, they would have to give him 48 million shares, at current prices, over the next six years to pay him back. That's way more stock than the Sulzbergers have!
• But: the Sulzberger family holds the supervoting stock that lets them control the company. They can only sell that stock if they (almost) unanimously agree to. They would presumably have to be in extremely desperate straits to even consider turning over any significant portion of the super-stock to Slim.
• But! The Sulzberger kids have lost most of their family fortune so maybe they want to take the money and run! Currently, the NYP reports, eight family members on the company payroll are only pulling in a combined $4.5 million per year, while the family is used to spending $20 mil per year on charities and living expenses. By rich people standards that is like being broke! Also problematic: the proceeds from any company assets the NYT sells will go to pay back Slim, not to fund the Sulzbergers.

Arthur Sulzberger Jr., family steward to the financially-troubled paper, has written an embarrassing paean to its benefactor Slim. At least he had the good grace to publish it elsewhere, in Time magazine. Can you smell the butter?

I recently had the great pleasure of meeting Carlos Slim... It was obvious from the moment we met that he was a true Times loyalist... Carlos, a very shrewd businessman... has funded extensive public-health education programs and... helped thousands of students throughout Latin America...

Carlos knows very well how much one person with courage, determination and vision can achieve.

Sulzberger just finished examining 30 different online-news business models in hopes of making more money from nytimes.com. The publisher is well aware of how challenging it is to turn a profit online. So perhaps he should not be blamed for seizing the opportunity to exploit his real talent: Pleasing the rich and powerful people who own his company, through flattery and every other means.

Sulzberger is hardly alone: many in the traditional media find it easier to court new sugar daddies than to implement deeper forms of change. The Times scion is, however, the most conspicuous — and so, in many ways, the saddest.

Anywhere from 11 to 16 percent.

How we came up with that figure: The Times gets $225 million upfront from W.P. Carey, the real-estate company serving as its transaction "partner." (If by "partner" one means "loan shark.") Lease payments start out at $24 million a year and are set to rise over the deal's 15-year length. After 10 years, the Times can repurchase its 21 floors of the building (developer Forest City Ratner owns the rest) for $250 million. To turn those figures into an effective interest rate, we used Excel's internal rate of return function, and ran scenarios where lease payments stayed flat over 10 years and where they rose 10 percent annually. A reasonable scenario — 3 percent annual increases, roughly in line with inflation — yields a rate of 12.5 percent.

Compare that to the 11 percent cash interest the Times is paying Carlos Slim Helù, who already owns 6.9 percent of the newspaper publisher.

The sale-leaseback transaction may result in some tax savings which will lessen the overall cost of the deal. But still, it's a hefty rate. If it were a regular mortgage loan, we'd call it subprime. According to Bankrate, 15-year home loans are going for 4.94 percent. Even credit cards are charging an average variable rate of 10.84 percent. Translation: The New York Times is in worse financial shape than the average American consumer. That's sad indeed.

The story, by Marc Lacey, is ostensibly about Slim's relationship with the media—he's the "Reluctant Media Baron." Really, the story is about the NYT proving that it won't have its coverage influenced by rich investors.

But the story's "on the one hand, on the other hand" premise doesn't really make sense. Here's Slim, a big media baron who invests in media companies worldwide, it says. But, "when the news media focus their spotlight on him, he sometimes gives the impression that he wants to be left alone to make more money in peace."

Of course he wants to be left alone to make his money in peace. Like every other billionaire! The story does give a rundown of various allegations against Slim: he threatened to pull advertising from a paper that wrote a negative story about him; he invests in media companies primarily so he can muffle criticism of himself; he is, overall, an evil monopolist who is milking a poor country unconscionably.

Then again, he's not flamboyant. So it all balances out. The real fun won't start until the NYT's editorial side really nails Slim's ass to the wall, hard. Can't be too difficult, can it? And damn, the newsroom needs to show it's not in thrall to the business side. The publisher's already refusing to talk his own paper's reporters. Nothing better than a nice juicy investigation of the big new investor to make the NYT Co. execs pay for that insult.

Leverage! [NYT]

Doubledown Media, publisher of Trader Monthly and other financial titles which global economic events have now rendered grotesquely anachronistic, has put itself up for sale. Let's hope this doesn't cut down on the company's output of Wall Street loudmouth feuds. [NYP]


The NYT wrote two huge investigative pieces on the ties between Barry McCaffrey and other retired generals who served as media experts, the Pentagon PR machine, and businesses trying to get Pentagon contracts. They were great pieces. So the Pentagon "investigated" and put out a report that says, hey, nothing to see here! Well you know who doesn't like that answer? NYT Public Editor Clark Hoyt, that's who. He also gets two unbelievably disingenuous quotes. Barry McCaffrey "said he couldn’t imagine how The Times could publish the first article about 'generals shilling for the Pentagon without mentioning me as a hero, the antithesis of that hypothesis.'” Yes, how could they fail to mention your heroism, over and over? And equally ludicrous, from the reporter who wrote the massive story about what a shady bastard McCaffrey is: "Barstow said he never intended to say that McCaffrey did anything illegal or unethical. He said he was describing how the world works and raising the issue of disclosure of potential conflicts." Here's how the world works: it's full of shady bastards. [NYT]

Hey, the NYT Co. just took $250 million from Mexican billionaire Carlos Slim, but a couple years back the paper wrote a story calling him a "'robber baron' and a 'crony' of Mexico's notoriously corrupt politicians." This from the New York Post, owned by crony of America's notoriously corrupt politicians Rupert Murdoch. [NYP]

Russian expat oligarch Aleksandr Lebedev just bought London's Evening Standard, and people aren't sure what to think. Should they be worried about his motives? One one hand, he's an ex-KGB operative. On the other hand, he also owns muckraking papers in Russia that are considered enemies of the government. So clearly he's just doing it for the chicks. [NYT]

The French government is giving all French 18-year-olds a free subscription to a French newspaper of their choice! In print. The move is basically a gigantic handout to the newspaper industry, which can't be a bad thing for Sarkozy. The small portion of teenagers who do read newspapers will continue to read them online, and maybe trade all those papers to a homeless guy, for some weed. [AP]


Insanely rich Mexican businessman Carlos Slim assures the world that his $250 million investment in the New York Times was made for strictly business reasons, on the same day another ratings service cuts the NYT Co.'s debt further into junk territory.


"On Wednesday at 8 p.m., CBS will pre-empt 'The New Adventures of Old Christine,' which stars Julia Louis-Dreyfus, to put on a program featuring a star arguably even bigger: a special edition of 'The CBS Evening News With Katie Couric.'” You can never quite tell if the Times is mocking people on purpose. [NYT]


Haha, the Pope (!) warns that Myspace and Facebook could turn us all into isolated perverts who only socialize virtually, and watch porn. Too late, your holiness. [AP]

The money isn't enough.

The Times will give quite a bit for the honor of an investment from Slim, whose success has been chalked up to, variously, the sackfuls of money he delivered to Mexico's then-ruling party in the early 1990s, the pushing away of competitors by that party, the high prices his company charged in an impoverished telecom market (thanks again to said party), allowing his country's communications infrastructure to languish, and leveraging his Mexican monopoly into other businesses abroad.

In addition to a 14 percent interest rate —higher than one gossip-grubbing blogger's non-teaser credit card rates of 9 and 10 percent — the paper is giving Slim warrants that could be converted into stock controlling 17 percent of the Times Company, making him the third-largest shareholder behind the Sulzberger family and Harbinger Capital, with roughly 20 percent each.

The Times treats the conversion of these warrants, priced slightly below the recent stock price, as fait accompli in its coverage:

Mr. Slim will receive no representation on the company's board or any shares with special voting rights like those of the Sulzberger family, which controls the company. Nonetheless, when Mr. Slim exercises the warrants, he will be among the largest single shareholders in the Times Company, owning up to 17 percent of the common shares outstanding.

(Emphasis added.)

Though Slim's cash can be used in place of a $400 million credit line expiring in May (and never fully tapped), the Times will still owe another $249 million in 2010. And the company's revenue fell more than three times as steeply as its costs in the first nine months of 2008. Since then, the advertising market has only gotten worse, and 2009 promises to be especially brutal. Even if the Times Company can mortgage its office and sell off assets like About.com, it will eventually need to bring expenses in line with sales. Barring a miraculous market recovery, it's hard to see how the Times Company does that without the newsroom layoffs it said were no longer in the cards.

News of Slim's possible investment broke over the weekend, and now the Times itself says an announcement could come as soon as tomorrow. Slim, one of the world's richest people, would essentially be loaning the struggling newspaper a quarter of a billion dollars in exchange for convertible shares paying him high annual dividends. But he would have the right to convert that stock into common shares—and if he did, he would own about a third of the NYT Co.

The Sulzberger family controls the company through a special class of voting stock, which ensures no one can take over the company simply by buying up regular stock. But historically, the Sulzbergers have always been the largest shareholders as well. With this deal, Slim would be in a position to become a larger shareholder than the family that's run the paper for generations. That would make the dual-class structure—which has already pissed off large investors and caused them to dump their NYT stock—even more tenuous. If Slim were to convert his holdings into regular stock, he would only have to join with one or two other large shareholders to form a bloc representing more than half of NYT stock. The Sulzbergers may be putting themselves in a very shaky position if someone decides it's worth their while to make one more public assault on the stock structure that keeps them in power. [NYT]

Slim, whose personal fortune was pegged at $60 billion last year, is Mexico's version of a robber baron, leveraging his purchase of the country's telephone monopoly into control of businesses throughout Latin America and the U.S. Last September, he scooped up $127 million worth of the Times' publicly traded stock, giving him a 6% stake in the company. Now, the Wall Street Journal reports that he is in talks for a preferred-stock deal. Though the Journal notes "The talks are ongoing and may yet fall apart," the fact that the Times is even pursuing a deal underscores just how badly it needs a cash infusion.

As the Journal notes, the Times is carrying more than $1 billion in debt and has just $46 million in cash on hand. A $400 million credit line is expiring in May and it has another $650 million in credit payments due over the next two years. To raise money, it's already been contemplating a sale of its stake in the Boston Red Sox and a sale-leaseback of its brand new corporate headquarters. If it gets more desperate, its web property About.com would probably be the next to go on the block.

A preferred stock deal would work a bit like a loan. Slim's shares wouldn't have voting power, but he would be owed hefty dividend payments. Voting power at the Times Co. is held in a class of super-voting stock that the Sulzberger family controls. But the magnitude of the deal that the Journal describes could put Slim in position to be the paper's largest shareholder — even larger than the Sulzberger family — if he ever exercised his right to convert preferred shares into common stock. Right now the Sulzbergers and the hedge fund Harbinger Capital Partners each own about 20% of the Times Co. At Friday's closing price of $6.41 those stakes are worth about $180 million, far less than $300 million or more that the Journal describes Slim contemplating.

Slim's giving is seen by many as simply a way to deflect criticism his monopoly phone business holds back the struggling Mexican economy — and to cozy up to powerful buddies like Bill Clinton.

The Times is surely less than thrilled by the presence of a vulture investor like Slim. The origins of his money should make the newspaper even more queasy.