Sale to Minority Team May Reap Tax Benefits : New York Times Agrees to Sell Cable System

The New York Times Co. said Monday that it has agreed to sell its cable television system for $420 million to a venture that will be managed by a minority investment group.

The price amounts to nearly $2,600 per subscriber, which industry analysts said made it one of the more expensive cable system sales to date.

Because the sale was to a minority-managed venture, the deal may also qualify for tax advantages that would boost its effective value to the Times.

Parties to the transaction also said it would be the nation’s biggest cable television system with sizable minority ownership.

J. Bruce Llewellyn, who heads a soft drink bottling concern in Philadelphia and is one of the nation’s top black business executives, will head the minority group being assembled that will manage and have at least a 20% interest in the new cable venture.

The other investors, which will split evenly the remaining ownership in the venture, are two cable TV companies based in the Philadelphia area, Comcast Corp., the nation’s fourth-largest cable operator, and Lenfest Communications Inc.

The system being sold is NYT Cable TV of Cherry Hill, N.J., which serves 162,000 subscribers in 59 communities in southern New Jersey, a suburban area that analysts said should prove attractive to advertisers.

The Times had put the cable system up for sale in late October, saying it wanted to concentrate on its core businesses that include newspapers, magazines, broadcasting and forest products. It bought the system in 1981 when it had about 72,000 subscribers.

David Gorham, chief financial officer for New York Times Co., said the Times expects to record an after-tax gain of about $183 million, or $2.34 per share, on the sale. The deal is expected to close in the second quarter after various federal regulators complete their review.

As a result of the minority group’s involvement in the purchase, the Times requested that the Federal Communications Commission grant a tax certificate in connection with the sale that will entitle the Times to defer payment of about $138 million in taxes on the transaction, Gorham said.

The tax-deferral provision was created by Congress in 1978 to encourage minority ownership of communications companies. The minority group must be the managing partner for the deal to qualify.

Gorham declined to say how much the deferment would mean to the Times, but others familiar with the deal said that during negotiations with a number of prospective buyers, the Times valued it at $55 million.

That would push the effective value of the deal to the Times to $2,932 per subscriber.