> What's even more shocking is that the Globe has been doing great journalism—winning Pulitzers, etc.—and even turning a modest profit. But that's the difference between a growing industry (where Tumblr can sell for $1 billion with no profits or even meaningful revenue in sight) and a shrinking one.<p>Well, do any startups offer pensions? Maybe that has more to do with it...
Uh.... that's not how math works.<p>What you mean to say is "The Globe sold for $70 million, but if you think about the pension obligations, the buyer is really paying about $180 million for it." which is very different from the "sold for -$40 million", which isn't even a thing that makes sense.
Or perhaps the old parent company views pensions as an already sunk cost, and thus irrelevant, and thinks the actual operations of the paper are worth, you guessed it, $70M.
You'll see more of this. Judging from his wiki entry, John Henry (who names a kid that?) is apolitical, but when the NYTimes, LATimes, etc, finally get completely sold to Carlos Slim or a Saudi Prince or whoever, the editorial direction of the country will get more and more one-sided.<p>It's amazing any newspaper is still in business, but eventually it will be strictly a subsidized game.
The article raises a decent point, but yes the -40 is obviously misleading. Why would anyone sell it for negative instead of just liquidate it? When NYT bought the paper it essentially paid 1bil + 100mil-ish assumption of pensions. Now when it sold it, it only got 70 mil.<p>It's better to correctly restate the purchase price, rather than make the selling price negative. But that wouldn't generate click throughs.<p>Edit: This is related to the Enterprise Value concept of a company. You include liabilities in this calculation when calculating a buyout valuation (not sure if that includes pensions or not; I don't do stocks anymore now because it's all just a giant federal reserve hedge fund)<p>Edit 2: wikipedia says EV should include unfunded pensions, which makes rational sense.
This math is wrong.
The pension obligations are liabilities and not an immediate expense. Many companies have huge pension liabilities along with monstrous amounts of debt.
What you need to look at is the equity, in other words assets - liabilities, and if that equity figure is more then 70 million, then the purchaser got a discounted deal.
"What's even more shocking is that the Globe has been doing great journalism—winning Pulitzers, etc."<p>Wow! That buggy whip company is DOING GREAT! Some of their buggy whip makers just got awards from the Buggy Whip Makers Guild for their high quality buggy whips!