Carlos Slim Becomes Largest Individual New York Times Shareholder

By Lukas I. Alpert and Josh Beckerman
 
Mexican billionaire Carlos Slim became the largest individual shareholder in New York Times Co. on Wednesday after exercising warrants that more than doubled his stake in the media company to 16.8%.
 
Mr. Slim, 74 years old, received the warrants in 2009 when he lent the Times $250 million to help it deal with sharp declines in advertising revenue and mounting debt at the height of the economic crisis.
 
That deal has been paying…
Mexican billionaire Carlos Slim became the largest individual shareholder in New York Times Co. on Wednesday after exercising warrants that more than doubled his stake in the media company to 16.8%.
 
Mr. Slim, 74 years old, received the warrants in 2009 when he lent the Times $250 million to help it deal with sharp declines in advertising revenue and mounting debt at the height of the economic crisis.
 
That deal has been paying off handsomely for Mr. Slim. The Times paid him back in 2011, three and half years before his loan was due, as its financial health improved. Mr. Slim received $122 million in interest payments plus a premium for early repayment of the loan.
 
In exercising the options, Mr. Slim spent $101.1 million to acquire 15.9 million Class A shares at $6.36 per share, a significant discount to the market price. New York Times shares closed Wednesday at $12.28. He now holds a total of 27.8 million shares valued at $341.4 million at Wednesday’s closing price. Before Wednesday’s move, Mr. Slim controlled just under 8% of the Times.
 
Mr. Slim has also received approximately $2.86 million in dividend payments since the Times reinstated them in October 2013 after suspending them at the end of 2008.
 
The Times says it will use the proceeds for share buybacks. “We believe it is in the best interests of the company to continue to maintain a conservative balance sheet and a prudent view on the allocation of free cash flow, and this one-off repurchase program should not be viewed as a change of position about our capital allocation plans,” Mark Thompson, chief executive of New York Times Co. said.
 
Arturo Elias Ayub, a spokesman for Mr. Slim, said that with the price of the warrants, and the current New York Times share price, “it would have been ridiculous not to exercise them.” He said the investment continues to be merely financial, and that Mr. Slim has no intention of selling the shares or of playing any role in New York Times management.
 
“We continue to have confidence in the [NYT] management, we think they’re doing things well,” he said. The Times is “a valuable brand, and not just a newspaper, but a creator of content,” he added.
 
Mr. Slim, who controls Latin America’s biggest telecommunications company América Móvil, built much of his business empire buying companies that had fallen on hard times and turning them around. His other business interests include mining, construction, auto parts, real estate, retail and banking.
 
While Mr. Slim now becomes the company’s largest individual shareholder, control remains with the Sulzberger family, whose trust holds 83.7% of the Class B voting shares. The Class B shareholders select 9 of the 13 board members, while Class A pick the other 4.
 
The Times, like much of the newspaper industry, is struggling with falling ad revenue as readership increasingly migrates online, where advertising brings in less. The paper fired its editor in chief last summer and cut more than 100 staff members at the end of 2014 to control costs.
 
The Times reported a loss for the third quarter as print advertising revenue continued to decline. A 16.5% gain in digital advertising revenue brought overall revenue up by 0.8% on the year. The company has continued to add digital subscribers with its two-tiered subscription program that offers low-price and premium models. It had 875,000 paid digital subscriptions at the end of the quarter, up roughly 40,000 subscribers from the prior quarter.
 
Mr. Thompson has said The Times remains committed to its print roots. In December the company said it would expand the number of sections it offers to maximize cash flow from its print business, which makes up 72% of advertising revenue. Earlier this week, the Times announced it will launch a monthly print section devoted to men’s fashion and lifestyle coverage.
 
—Anthony Harrup contributed to this article.

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