Why Would Mexican Carlos Slim Even Think Of Buying The New York Times When All He Has To Do Is Remember What Americans Did To Mario Vasquez Rana When He Bought UPI

Philip Stone March 4, 2010 (Follow on Twitter)

Rupert Murdoch caused a stir this week when he said he doubted the rumors that the Sulzbergers might sell The New York Times to Mexican billionaire Carlos Slim. “I don’t believe it,” Murdoch said, “The family treats it as a great heritage,” and if the family were to sell, he added, it would be “least of all to a Mexican.”

That last line about “Mexican” raised a few eye-brows, but Murdoch said he wasn’t being racist, but rather he thought Slim was too smart to do such a deal (and no doubt Murdoch hopes there really is no such deal because the money Slim could bring to the New York Times would not bode well for his Wall Street Journal’s new New York City section that starts next month).

But with the NYT company shares spiking at one point Monday by 11% because of the rumors it’s a fair question to ask how a Slim purchase of the most prestigious US newspaper would be accepted? Well, all one has to do is think back 24 years to when Mexican billionaire Mario Vasquez Rana bought United Press International (UPI)  the second largest US news agency. The reception and treatment he got at the time was about as racist as it could have been.  Really shocking.

Vasquez Rana in 1986 bought UPI out of bankruptcy for $40 million. He had made his fortune in the furniture business and then in 1976 he started his Organizacion Editorial Mexicana (OEM) which today is the largest Mexican print media company and the largest newspaper company in Latin America.

Even in those days his OEM was raking in the pesos so $40 million was just a drop in the petty cash, and yet surely this was an inexpensive opportunity for Rana -- who was the principal Mexican representative to the International Olympic Committee (IOC) and whose dream back then was to be IOC president -- to become a US household name, a major media baron north of the Rio Grande River.

But it turned out to be two of his most disappointing years. For one thing he discovered UPI’s  “gringos” didn’t take to following orders as systematically as the way things worked in Mexico. For another, he didn’t speak English and this really did make communications difficult in a very true sense, whether in person or on the phone.  He took the UPI manager in Mexico City, a Dutchman, as his personal translator and everywhere Rana went to speak with staff or clients along went the translator in the mogul’s private jet. And that was another thing -- private jets were not part of the UPI mentality, nor was the briefcase stuffed with US dollars that travelled with him.

If one actually did speak Spanish that was a quick route to the top – for instance in Dallas, where UPI’s technical center was located -- a low-level manager originally from Puerto Rico suddenly became one of Rana’s most trusted lieutenants – he was a smart guy but the key was speaking Spanish.

The Associated Press was strong and getting stronger as UPI’s clients that were not also AP clients  had gravitated to the larger US agency once UPI was in bankruptcy court, so Vazquez Rana tried to counter by adding investment. There were more reporters, overall spending was increased, and with Mexico hosting the 1986 World Cup he made that a showcase ensuring that UPI had plenty of editorial representation  and all the technical facilities necessary even though the original budget was about non-existent.

But he had a real thing about trying to contain costs and that brought him in conflict time and time again with what he believed to be an intransigent Wire Service Guild representing UPI’s 800 US editorial staff. The Guild went strictly by the contract; not by what the new boss ordered.

One example that sums up differing mentalities came when Vazquez Rana was addressing, via his translator, a meeting of senior UPI business executives. His lieutenant walked in the room, whispered something in his ear, gave Rana copies of some bills, and then Vasquez Rana went ballistic. Rising, his face beetroot in rage, he asked via the translator, “Do you know why I often compare UPI to a whorehouse?”  Well that certainly got everyone’s attention.  “Because of things like this,” he yelled, slamming down the bills. “I spent so much money ensuring that UPI would have the best coverage possible from the World Cup, and what do I get in return? $24,000 worth of personal phone calls home made by staff while they were in Mexico. I’m going to get every penny of that back,” he exclaimed, and there was no doubt in any`one’s minds that he would do just that.

Vasquez Rana had contempt for how he was treated by clients and staff alike. He thought US publishers would see him as the UPI savior, but it was more as though they had hoped UPI would disappear in bankruptcy to leave the field clear for the preferred AP and they blamed him for the resurrection. It was bad enough news for publishers when they learned EW Scripps had given UPI away in 1984 in a secret deal for $1  to a couple of unknowns who were not-so-quietly damned for their Baha’i faith – more racism --  but it was just over the top for them to accept  that it fell to a Mexican to bail a great American institution out of bankruptcy; there would probably have been contempt for any foreigner doing that, but a Mexican … Much to the US media’s shame they never gave him a chance. 

Finally, after two years of about $1 million in monthly losses Vazquez-Rana figured it just wasn’t worth it anymore and he sold the right to operate UPI to an investment group associated with the Financial News Network, headed by  Dr. Earl W. Brian, who later went to prison for fraud, but that’s another story. UPI then turned up in Saudi hands, they saw it wasn’t going to make a success under their business plan of emphasizing Middle East news, and they then dumped it in the lap of the Reverend Moon’s Unification Church. 

Seeing what UPI is today, it’s a really sad finale to what was once a once greatly respected international news service. Who knows, if Vazquez Rana had been offered a fair chance by staff and clients alike perhaps the UPI of old would still be around to give AP a run for its money – if AP had some stiff competition perhaps its rates wouldn’t have risen as much as they did over the years which caused so many problems last year, but US editors and publishers have only themselves to blame for that.

Slim should not forget the Vazquez Rana experience. Circumstances and times have changed, and Slim would do things his way, but doubtful there is much change to the undercurrent. He already has a 6.9% stake in the Times Company and he has also lent the company $250 million at a whopping 14% interest rate. In addition that loan gives him warrants, that expire January 15, 2015,  to buy 15.9 million shares at  $6.3572 and with shares now around $11.50 he is already showing a nice paper profit.

There are some who are questioning whether those business transactions have bought Slim something more – NYT editorial silence on stories that might embarrass him.   There’s currently a big complicated court battle involving US banker J.P. Morgan, and the two largest Mexican telecom companies, one of which is owned by Slim. The comments and testimony so far put the bank and Slim’s company in a particularly dim light. Yet while the likes of Reuters, The Wall Street Journal, and The Christian Science Monitor and others gave prominent coverage to the case there was nothing in the NYT print newspaper or its web site. Bloggers rightly asked,  “How come”?

Well, until last week that was not 100% so. While it’s true there were no staff or agency reporting of the court case in the news pages -- and it is a legitimate question why not -- the issue did get prominent coverage on the NYT’s Carlos Slim Archive page. Doing an NYT archive search on Slim took you to his page in “Times Topics”, and the middle column titled, “Headlines Around the World” had as its four main headlines, probably automatically generated via word search, all from non-NYT sources: “The Biz Story the NYT Ignored”, “Is The NYT Ignoring a JP Morgan Bombshell Because It Makes Investor Carlos Slim Look Bad?”, “The Story the New York Times Won’t Touch”, and “Mexico: Cell Phone clash of Titans”.

We wrote at the time, “A perfect example showing when one goes for automation instead of editors that you may get exactly what you don’t want.” And you know what, go do that same exercise today and those four headlines are gone and the column is nearly blank.

Maybe it really is a legitimate question to ask if Slim did buy more than just shares and make a loan? Whatever happened to “All The News Fit To Print”?

See also in ftm Knowledge

Rupert Murdoch and News Corporation

News Corporation has a global footprint. Rupert Murdoch has a global fingerprint and when he talks everybody hears it. Update includes News Corporation and News International resturcturing, European television and newspapers. 108 pages PDF (April 2009)

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