John Henry Faces T&G Labor Dispute And Globe Toxic Waste
Wednesday, October 23, 2013
This summer, the billionaire Henry - one of three primary owners of the Red Sox - agreed to buy the T&G and Globe for a total of $70 million in cash. That’s only about 5 percent of the price that the New York Times paid when it bought the two papers and their properties almost 20 years ago.
At first, it seemed like a great deal for Henry. But Judge Shannon Frison, of Worcester District Court, had other ideas, as she demonstrated, last Friday, by freezing the sale “until further order of this court.”
Her decision came on the very same day that the Times was reportedly scheduled to complete its sale of the T&G and Globe properties to Henry.
'Creative accounting' alleged
Judge Frison’s action came in an ongoing, four-year-old class-action suit filed against the T&G by independent newspaper carriers, who maintain they should be treated as employees instead of as independent contractors. Previously, a Gardner District Court judge and, subsequently, the state Appeals Court ruled in favor of the carriers.
Judge Frison has set $60 million as the "maximum end" of any settlement agreement. That means almost all – if not all - of the $70 million that Henry has agreed to pay the Times could be put into escrow until the civil suit is resolved.
The independent carriers are furious over the fact that the $70-million price tag represents less than one-fifth of the $380 million in revenue that Times’ New England Media Group, of which the T&G and Globe are part, posted for 2012. The T&G generated for $42 million of that revenue total.
Fitchburg attorney James Galliher, who represents the independent carriers, reportedly told Judge Frison this Monday that the "creative accounting" used by the Times to determine the sale price could cause the T&G to be "basically worthless." He also reportedly called the Globe a "distressed property" that is being sold well below its real value.
Saturated with toxic chemicals
Judge Frison’s temporary injunction, which stopped the sale of the T&G and Globe to Henry, was followed, yesterday, by a Boston Business Journal article, Boston Globe's site contamination hampers development options.
The contamination, according to the BBJ article, was first documented 17 years ago by Green Environmental. “A spokesman for the DEP,” the article states, “confirmed that some or all of the contaminants outlined in the Green Environmental report stem from spillage and leakage of diesel fuel stored and distributed from tanks on the Globe’s property.”
The Globe property has been valued “between $29 million and $71 million,” the BBJ article reports, citing confidential financial documents prepared by New York investment bank Evercore Partners plus interviews with local real estate sources. “The Evercore report noted that the higher end of those appraisals was based on an ‘in-use’ valuation, meaning the Globe’s headquarters would continue to operate as a printing and newspaper distribution facility under a new owner.”
However, the BBJ article cites “sources familiar with this summer’s bidding for New England Media Group. “Every proposal,” those sources reportedly say, “included plans to sell the Globe’s 670,000-square-foot headquarters and move its operations to a smaller space.”
Henry was not available for comment, according to the BBJ article, and both the Globe and Times declined to comment.
Wait ‘til next year?
The latest batch of bad news for the Times and Henry may be the straw that breaks the proverbial camel’s back on their famous deal.
Adding to the challenges facing their pact, is the state of New England Media Group’s finances. The primary properties of the Group are: the T&G; Telegram.com; the Globe; BostonGlobe.com, Boston.com; GlobeDirect, the Globe’s direct-mail marketing company; and a 49-percent interest in Metro Boston.
As BBJ reported in August, in an article titled John Henry’s shrinking Globe, the Group’s total revenue “is expected to fall to $363.8 million next year, off 18 percent from the $440.6 million booked in 2009. Despite around $35 million in cost cuts teed up through 2014, the company has forecasted nearly $20 million in net operating losses over the next two fiscal years.
When the Times and Henry announced their deal in August, they expected it “to close in 30 to 60 days.” Now, though, Judge Frison’s independent-carriers ruling coupled with the toxic mess on Morrissey Boulevard, the closing may - as Red Sox fans declared for 86 seasons – have to wait ‘til next year.
Steven Jones-D'Agostino is chief pilot of Best Rate of Climb: Marketing, Public Relations, Social Media and Radio Production. He also produces and hosts The Business Beat on 90.5 WICN, Jazz Plus for New England. Follow him on Twitter @SteveRDAgostino.
Historic Arcade Reopens With Ribbon-Cutting Ceremony
On October 21, the historic Providence Arcade opened its doors, revealing nearly a dozen retail shops (with more to come), several restaurants, and Providence's first 'Bicycle Garage." The ribbon-cutting cermony included appearances by Governor Lincoln Chaffee and Mayor Angel Taveras.
J. Michael Abbott
The restoration project's lead architect, J. Michael Abbott of Northeast Collabrative Architects, and his design team were on hand for the ceremony. Their design creates an historic atmosphere blended with modern amenities.
(Not pictured: Partner John Grosvenor and associate Andrea Torizzo)
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