by Lawrence Wright
When the credit window suddenly slammed shut last fall, the New York Times Company found itself with a four-hundred-million-dollar line of financing scheduled to expire in May, and no obvious way to raise the money. Advertising revenue at the Times was tumbling, as it was at every American newspaper, and the company was servicing $1.1 billion in debt, which was more than the business was worth. Standard & Poor’s had reduced the company’s credit rating to below investment-grade status, making it difficult for the paper to secure new financing. While Times reporters were chronicling the implosion of some of the country’s most significant brokerages, banks, mortgage lenders, and insurance companies, their own institution seemed to be on the verge of collapse.
When the credit window suddenly slammed shut last fall, the New York Times Company found itself with a four-hundred-million-dollar line of financing scheduled to expire in May, and no obvious way to raise the money. Advertising revenue at the Times was tumbling, as it was at every American newspaper, and the company was servicing $1.1 billion in debt, which was more than the business was worth. Standard & Poor’s had reduced the company’s credit rating to below investment-grade status, making it difficult for the paper to secure new financing. While Times reporters were chronicling the implosion of some of the country’s most significant brokerages, banks, mortgage lenders, and insurance companies, their own institution seemed to be on the verge of collapse.
In October, 2008, Chris Wood, a representative of SunTrust, an Atlanta bank that had loaned about eighty million dollars to the Times, approached Inbursa, a bank in Mexico City that belongs to Carlos Slim Helú, a Mexican businessman who is sometimes ranked as the richest man in the world. A month earlier, Slim had taken a substantial position in the Times Company. Wood asked Slim if he would lend the company two hundred million dollars. Discussions went on until Thanksgiving, when an informal agreement was reached. The terms were onerous: the loan was for six years, at an interest rate of fourteen per cent—essentially, the going rate for a junk bond—and it came with limitations on incurring further debt. But the negotiations hadn’t focussed on the interest rate; instead, they had centered on Slim’s demand for millions of dollars in stock-purchase warrants, which could dramatically increase his ownership stake in the company. The Times Company agreed to award Slim warrants on 15.9 million shares if he raised the loan amount to two hundred and fifty million dollars. The deal was finally signed in January. Slim became the company’s largest creditor and was poised to become one of its largest stockholders—after members of the Ochs-Sulzberger clan, which has controlled the Times since 1896.A Times correspondent who covered Mexico for the paper was stunned when he heard that the company had been bailed out by a man he considered an exemplar of Mexico’s crony capitalism. “Slim is the consummate monopolist,” the reporter said. “Does being embroiled in a business culture of back-scratching and unseen forces make him a great partner for the Times? I don’t think so.”
In modern history, no one has dominated a major economy as overwhelmingly as Carlos Slim does that of Mexico—a country of a hundred and ten million citizens, in which the per-capita income is little more than ten thousand dollars. In August, 2007, Eduardo Porter, a member of the Times editorial board, wrote on the Op-Ed page, “Growing up in Mexico City, I always knew Mexico was an unjust country—a place where small coteries of the privileged control all power and wealth while half the population lives in poverty. But it never occurred to me that Mexico would have billionaires.” Porter was referring to a report in Forbes that listed, among the world’s nine hundred and forty-six billionaires, ten Mexicans, including Slim, and to an article in Fortune that named him the world’s richest man, worth, at the time, fifty-nine billion dollars—equivalent to five per cent of Mexico’s total annual production of goods and services. Comparing Slim to the robber barons of America’s Gilded Age, Porter observed, “It takes about nine of the captains of industry and finance of the 19th and early 20th centuries”—he listed John D. Rockefeller, Cornelius Vanderbilt, John J. Astor, Andrew Carnegie, Alexander Stewart, Frederick Weyerhaeuser, Jay Gould, and Marshall Field—“to replicate the footprint that Mr. Slim has left on Mexico.”
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