Mexican Billionaire Slim Sees Future For Struggling NYT

Mexican billionaire Carlos Slim's decision to loan the New York Times $250 million gives a vote of confidence to a debt-strapped publisher at a time when the financial viability of print is being widely questioned in the age of the Internet.

The New York Times Co. (NYT) said Tuesday it will use the money to refinance existing debt, but also continues to seek other financing and will press ahead with cost-cutting measures.

Slim's move to expand his involvement with the Times raised some eyebrows given difficulties faced by newspaper publishers seeing double-digit declines in advertising revenue.

When Slim disclosed a 6.4% stake in the New York Times in September, his spokesman Arturo Elias Ayub said the investment was purely financial, and that the price - which has since fallen by half - was attractive for "a company with a great name and a very good strategy."

Under the latest deal, through financial group Inbursa (GFINBUR.MX) and real estate concern Inmobiliaria Carso, Slim would receive a 14% annual return on six-year notes, and could, via warrants, boost his stake in the New York Times to about 18% from the current 6.9%.

In a press release, Elias Ayub reiterated Slim's confidence in the company's future, citing the strength of its brand and "potential for digital expansion." Ayub couldn't be reached for further comment.

Francisco Suarez, head of analysis at Mexico's Actinver brokerage, described the deal as a "great opportunity" given Slim's management track record and ability to take a long-term view into an investment.

"He's not necessarily looking for short-term yield." Suarez said. "He can settle into investments for many years."

Aside from controlling Mexico's two main phone companies - flagship fixed-line operator Telmex (TMNX) and wireless giant America Movil (AMX) - Slim has built up an emporium of manufacturing, mining, retail, and real estate interests that often involved buying cheap in times of crisis.

And right now it's a buyer's market, Suarez said.

The deal is also viewed by some as a way for Slim to gain greater visibility in the U.S., where America Movil operates the Tracfone brand, and investments include a stake in Saks Inc. (SKS). A U.S. venture that went awry was computer distributor CompUSA, which was sold a year ago after being listed at one time on the Mexican stock market through a holding company.

Slim, who made No. 2 on the Forbes list of billionaires in March 2008 and was briefly considered the world's richest man, edging ahead of Warren Buffet at least temporarily, is no stranger to putting money into struggling enterprises.

Among Mexican companies that benefited from loans or temporary investments over the past decade are media concern Grupo Televisa (TV), construction company Empresas ICA (ICA) and conglomerate Desc, since renamed Grupo Kuo (KUO.MX).

"A quick review of Slim's history shows that if there's something he has known how to do over the years, it's take advantage of those risks, thanks to his position as a lender of last resort," wrote Eduardo Garcia, publisher of the online financial news site Sentido Comun, who has closely tracked Slim's wealth in recent years.

-By Anthony Harrup, Dow Jones Newswires; (5255) 5001 5727, [e-mail]

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