Battle for the New York Times

Carlos Slim has an eye for a bargain. The Mexican magnate clawed himself to the No 2 spot on the world's rich list with purchases that stretch from cigarette manufacturers, to restaurant chains, to car parts distributors, to – most lucratively – telecoms companies. When he plunks down $120m on a big new corporate bet, people take notice. When that bet is on a 6.4 per cent holding in the beacon of the United States newspaper business, The New York Times Company, people take a lot of notice.

The Old Grey Lady, as The New York Times is known, is looking a bit wrinkled around the eyes at the moment, and the investors who once loved her have slipped away, despairing of the future of the newspaper industry. So what does Mr Slim see in her?

The company's shares perked up noticeably yesterday on news of his interest. By lunchtime they were 7 per cent higher. His purchase of 9.1 million shares had been disclosed in a late-hours regulatory filing on Wednesday, which declared the investment a passive stake. Inevitably, though, speculators hoped that the stakebuilding might ultimately lead to a takeover of the family-run company, if not by Mr Slim then by another party he eggs on in the hope of netting a quick profit.

Mr Slim has another newspaper industry interest: a stake of more than 1 per cent in Independent News & Media, owner of The Independent.

In Mexico City, the billionaire told reporters that his interest in The New York Times Co was purely "financial". A spokesman said it was a great business at an attractive valuation and added that he may snap up more shares. Previous profitable forays into the US stock market have included stakes in Philip Morris, the tobacco group in which he bought a $90m stake after its shares hit a four-year low in 2000. He has also profitably dabbled in Apple and the telecoms company MCI.

His investment in The New York Times Co is certainly contrarian. Other investors have abandoned the company in the teeth of a sharp slide in advertising revenue and pressures on circulations not just at its flagship broadsheet in New York, but also at sister papers in the regions, including the Boston Globe.

In July, the most recent month for which figures are available, The New York Times posted an ad sales decline of 15.3 per cent; at the regional papers, the figure was almost one-quarter. The New York Times made its first ever redundancies in the newsroom this year, and last week said it was outsourcing its distribution business, with the loss of 550 more jobs. Nonetheless, The New York Times remains one of the most powerful newspaper brands in America, third in circulation to USA Today and the Wall Street Journal. It also has by far the most popular newspaper site in the US, with 19.5 million visitors in July, up 38 per cent on a year ago, and has promised to invest heavily in the internet and new technologies.

The power and influence The New York Times would give an owner is enough to induce covetousness on the part of numerous billionaires. Michael Bloomberg, the Mayor of New York and founder of the financial information company that bears his name, let run a few days of speculation that he was interested in bidding for the company earlier this year, before ultimately denying it. Rupert Murdoch swallowed the Wall Street Journal in a takeover deal last year, and is musing aloud about marrying it with the Old Grey Lady. Unfortunately for the billionaire dreamers (and leaving aside that regulators might strangle either takeover), The New York Times is not for sale. The parent company is controlled by the Ochs Sulzberger family through a special class of shares that gives them a stranglehold on decision making. Despite having a less than 20 per cent economic interest in the company, the family appoint more than half the board, and remain committed to the public service ideal that has guided their ownership for 112 years.

Unlike the Bancroft family, which sold the WSJ to Mr Murdoch after he wooed them with a 60 per cent premium to the prevailing share price, the Ochs Sulzbergers are involved in the day-to-day running of the company, and Arthur Ochs Sulzberger Jnr is its publisher and public face. Also unlike the Bancrofts, the family appears tightly knit.

Year-on-year attempts by some shareholders to pressure the family into giving up their power failed when their ring-leader, Hassan Elmasry, a fund manager at Morgan Stanley, which had a 7 per cent stake, sold out last year. This year, two rebel shareholders, the hedge funds Harbinger Capital and Firebrand Partners, bought 19 per cent of the company and won two board seats after demanding asset sales and a financial shake-up. They didn't, however, challenge the Ochs Sulzbergers' control. It is that financial shake-up on which those remaining bulls on The New York Times Co share price are pinning their hopes, and which may well determine whether Mr Slim turns a profit on his daring investment. One option oft debated on Wall Street is the possibility that the family itself will take the company, or perhaps just the paper, into private ownership.

But bears think all the options are unpalatable. "In light of the fundamental challenges facing the company we do not believe that restructuring action (such as asset sales, a go-private transaction, etc.) would necessarily translate into a valuation meaningfully higher than the current share price," Peter Appert, an analyst at Goldman Sachs told clients yesterday. The Ochs Sulzbergers have long seen their controlling interest as a bulwark against the short-termism of Wall Street investors. Mr Slim, too, may be looking to the longer term. Rick Edmonds, the media business analyst at the Florida-based Poynter Institute, a Florida school for journalists, said the short-run pressures are immense and growing, now that the advertising slowdown has hit online sales, too.

"But there are new possibilities emerging, particularly now we are getting to a period where mobile devices such as the iPhone and Amazon's Kindle can do more things," Mr Edmonds said. "The extent to which people will want news and ads on their devices is not fully clear yet, but newspapers are very logically positioned to serve the local part of that. These technologies are picking up steam, and while they are not there yet, it seems that newspapers no longer have to put all their eggs in the basket of online."

The telecoms billionaire always on the look-out for a bargain

For the past two years, the cigar-puffing Carlos Slim Helú has tussled with Bill Gates and Warren Buffett for the title of the world's richest man, but the Mexican telecoms magnate had some less than flattering things to say about his rivals' famous philanthropy.

"Poverty isn't solved with donations," he said last year at the launch of his own health initiative in northern Mexico. "Our concept is more to accomplish and solve things, not to go around like Santa Claus."

Mr Slim's own philanthropic efforts in Mexico dovetail neatly with his business interests. Plans to build giant hospitals would aid his construction firm, for example. But such is the complexity and contradictory nature of the man.

When Forbes magazine, the official arbiter of these things, last took a snapshot in March, he came in at No 2, behind Mr Buffett and ahead of Mr Gates, with a fortune of $60bn (£34.2bn).

The magnate inherited a small fortune from his father, an immigrant from Lebanon, who ran a general store in Mexico City and began investing in property. But it was the younger Mr Slim's eye for a corporate bargain that sent that legacy into the stratosphere – and his aggressive, critics would say monopolistic, business practices which kept it growing.

He picked up industrial companies at fractions of their book value when investors fled Mexico after its 1982 financial crisis, and then his political associations helped him to win control of the privatised monopoly Telefonos de Mexico in 1990. The company has a market share of 90 per cent, while his mobile arm has a 73 per cent share.

In recent years, his companies have expanded fast in the other emerging markets south of the Mexican border, from Guatemala to Argentina, and his American Movil group is the largest mobile provider in Latin America.

Mr Slim rededicated himself to his business interests following the death of his wife, Soumaya, in 1999 – to whom he has dedicated a museum showing the couple's extensive art collection.

Now 68 years old, the father of six is also an avid collector of baseball memorabilia.

Mr Slim eschews many of the trappings of wealth and the luxuries that his fortune would afford him. He has three sons, all of whom run significant parts of the empire and are expected to succeed him.

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