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Tuesday, January 20, 2009

NY Times Takes Out Subprime Mortgage

On the morning of the inauguration, when attention was focused on the peaceful transition of power from George Bush to Barack Obama, the NY Times disclosed that it had taken out a loan from Mexican financier Carlos Slim on terms that would shame the worst subprime lender:

The New York Times Co., which has been struggling with declining advertising sales and is facing deadlines to repay hundreds of millions in debt, is getting a $250 million infusion from Mexican telecommunications billionaire Carlos Slim.

The Times is paying a hefty price for the investment — an interest rate of 14 percent for the six-year notes — and is giving Slim warrants that he could use to boost his stake in the company to 17 percent from the current level of 6.9 percent.

There is something ironic about the situation. The NY Times Editors have lambasted the mortgage industry for making subprime loans to the hispanic community. Now a hispanic is making a subprime loan to the NY Times. Maybe the NY Times should just say no to the money, or urge the passing of a law prohibiting such loans. Or maybe the NY Times is just waiting for its bailout package.

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