“This is a thriving, dynamic region that needs a strong, sustainable Boston Globe playing an integral role in the community’s long-term future,” Mr. Henry said in a statement.

Mr. Henry benefited in the deal from the fact that the Times Company has agreed to hold onto the group’s pension obligation. While it remains unclear, including to some analysts, how much exactly that is, as of the end of 2012, the Times Company’s overall pension obligation was around $2 billion and was underfunded by $400 million. The company declined to comment on the pension obligations. The Times Company presently has 5,363 employees, of whom 1,849 are employed by the New England Media Group.

The sale continues a recent trend in the struggling newspaper industry: newspapers being returned to local owners, often at bargain-basement prices. When the possibility that the Tribune Company would sell its newspapers emerged this year, both The Los Angeles Times and The Baltimore Sun quickly attracted interested local buyers. Rick Edmonds, a media business analyst for the Poynter Institute, said the trend was driven by locals wanting to give back to their hometowns and also by the economic value of the buildings that house the newspapers.

“There’s a sort of pride of community,” Mr. Edmonds said. “If it doesn’t work out, the value of the paper is equivalent to the value of the real estate.”

But turning around a newspaper in the current environment takes more than financial skill and renewed focus.

“People who have had success with turnaround in other businesses confront a different challenge in metro newspapers,” said Ken Doctor, an analyst at Outsell. “It is not just a newspaper that is distressed, it is the entire industry, and no one has had much success in making it work.”

The reaction to the sale around Boston was cautiously optimistic. Gov. Deval L. Patrick of Massachusetts and Mayor Thomas M. Menino both welcomed the deal. In a statement issued by the Boston Newspaper Guild, which represents more than 500 reporters, photographers and editors, union officials called Mr. Henry “a local and deeply respected businessman.”

For most of American history, newspapers were owned and operated locally, often by families, business or political interests that used barrels of ink to advance broader agendas. It was only when the industry began to generate reliable profits in the middle of the last century that newspapers were scooped up and folded into larger enterprises. Many regionally dominant metro papers landed in the hands of Knight-Ridder, McClatchy, Tribune Company and Media News.

Newspapers were typically passed around a fraternity of known buyers already in the business. But the local monopolies that made the newspapers attractive to acquirers have now disappeared, and the chains have gone through bankruptcy or are a shadow of their former selves.

The Globe, which was put on the market in February, attracted a number of local buyers like Mr. Henry and national buyers like Doug Manchester, a real estate developer who bought the San Diego Union Tribune in 2011. Despite the demand, Craig Huber, an independent research analyst with Huber Research Partners, said Mr. Henry’s winning bid did not mitigate the challenges he faces ahead.

When The Times bought The Globe in 1993, it paid $1.1 billion, and it bought the Worcester paper for $295 million in 1999. Mr. Huber estimated that the entire New England Media Group, which has grown to include other assets, was now worth $100 million. Despite the even lower price The Globe fetched, Mr. Huber called The Globe a “management headache” and raised concerns about its finances.

“The U.S. is littered with people trying to buy metro papers here in the last five to 10 years that turned out to be very unsuccessful,” he said.

He estimated that while The Times generated profit margins for the overall company of more than 15 percent, the New England Media Group generated profit margins of less than 5 percent. Mr. Huber said he was more troubled by its digital outlook: he calculated that The Globe’s 30,000 digital subscribers generated $8 million in subscription revenue.

Even local buyers facing the grimmest financials still extol the benefits of local ownership. Brian Tierney, a Philadelphia businessman, bought The Philadelphia Inquirer and its sister newspaper, The Daily News, in 2006 from the McClatchy Company for $515 million. After Mr. Tierney’s purchase, national advertising plummeted and circulation continued to tumble. Despite laying off 400 people to cut costs, the newspaper company ended up in bankruptcy in 2009.

After a protracted battle, the newspapers went up for auction and the company’s creditors bought the properties for $139 million. Their building was sold in 2011.

By 2012, a group of local businessmen led by George E. Norcross III bought the newspaper for $55 million, a little more than a tenth of what the newspapers were worth six years before. Reached on the phone last Friday, Mr. Norcross said the operational challenges remained significant in the current environment, but the local nature of the investors was an asset.

“There is no doubt in my mind that local ownership matters in a big way,” he said. “Local engagement by owners can drive ad sales, we have better relationships with the unions and we are making $15 to $20 million in capital improvements.”

Sometimes a newspaper does not have to turn a big profit to benefit a local owner. In San Diego, Mr. Manchester, a real estate developer, bought The San Diego Union Tribune in 2012, changed its name to The U-T San Diego and immediately began pushing his development agenda and candidates for public office who shared those values.

While many Bostonians welcomed a local owner back to The Globe, they also raised Mr. Henry’s potential for conflicts of interest. Dan Kennedy, a journalism professor at Northeastern University, said in a phone interview that The Globe still would be responsible for covering Mr. Henry’s Red Sox, city issues related to the Red Sox like pregame street closures around Fenway Park and the Jimmy Fund, a charity that the Red Sox have long been involved with. But he said he still felt that local ownership was more preferable.

“A local owner by definition is more invested in the community than any out-of-state corporate chain can be,” Mr. Kennedy said.

Mary Williams Walsh contributed reporting.

Article source: http://www.nytimes.com/2013/08/05/business/media/boston-globe-is-another-metro-paper-gone-local.html?partner=rss&emc=rss