Mexican mogul Carlos Slim buys into New York Times, boosts stock price

By Carol Eisenberg

September 12, 2008 at 11:16am

Why is one of the world’s richest men investing in old media?

The news that Mexican billionaire Carlos Slim Helu and members of his family had acquired a 6.4-percent stake in the New York Times Co. baffled analysts, even as it boosted the price of depressed Times shares more than 9 percent Thursday.

Slim’s investment in a company that owns 19 newspapers, including the New York Times, comes as many investors are abandoning the newspaper industry amid steep advertising declines and a stampede to the Internet.

But the 68-year-old mogul, called “Mr. Monopoly” by the Wall Street Journal, has built his fortune in large part by making smart investments in distressed companies.

In 2004, for instance, he became the largest shareholder in MCI, the troubled long-distance carrier, and made a substantial profit the next year when Verizon took over MCI.

The Times investment, he told reporters in Mexico City, “is financial,” suggesting he had no plans to play an activist role.

Slim and his family now own 9.1 million shares of New York Times stock, according to a Security and Exchange Commission filing made public late Wednesday. That makes them the third-largest shareholder outside the controlling Ochs-Sulzberger family. The second largest investor is Harbinger Capital and Firebrand Partners hedge funds. At Thursday’s closing price, the Slims’ investment was valued at $138.6 million.

Despite his track record, several analysts questioned his acquisition.

Lauren Rich Fine, a former Merrill Lynch analyst, told the Los Angeles Times that it was unlikely Slim saw an opportunity that everyone else on Wall Street had missed.

“This is an industry that’s in disarray,” she said. “So it’s really unclear what he’s thinking.”

Unlike some other newspaper companies, the Times has invested in a strong Web presence, but even so, its revenues have been dropping and its stock price has tumbled 20 percent since the beginning of the ear.

But Slim, the Mexican son of Lebanese immigrants, has made his fortune feasting on undervalued properties. In March, he was ranked by Forbes magazine as the world’s second-richest man with an estimated wealth of $60 billion, behind Berkshire Hathaway Inc.’s Warren Buffett.

He has a stranglehold on telecommunications in Latin America, for instance, owning controlling shares in America Movil, the largest mobile-phone service provider and Telefonos de Mexico, that country’s biggest land-line operator.

A Wall Street Journal profile last year said that it would be difficult to spend a day in Mexico without putting money in his pocket:

The 67-year-old tycoon controls more than 200 companies — he says he’s “lost count” — in telecommunications, cigarettes, construction, mining, bicycles, soft-drinks, airlines, hotels, railways, banking and printing. In all, his companies account for more than a third of the total value of Mexico’s leading stock market index, while his fortune represents 7% of the country’s annual economic output. (At his height, John D. Rockefeller’s wealth was equal to 2.5% of U.S. gross domestic product.)

The profile also noted he was a study in contradictions:

He hosts everyone from Bill Clinton to author Gabriel García Márquez at his Mexico City mansion, but is provincial in many ways, doesn’t travel widely, and proudly says he owns no homes outside of Mexico. In a country of soccer fans, he likes baseball. He roots for the sport’s richest team, the New York Yankees.

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