Dec. 29 (Bloomberg) -- New York Times Co., facing a 60 percent drop in its stock price in 2008 and a $400 million debt repayment, is pursuing asset sales almost a year after its biggest investor demanded changes to the business.

New York Times is seeking a buyer for its 17.5 percent of the holding company for the Boston Red Sox baseball team, according to a person with knowledge of the discussions.

A sale may appeal to shareholder Harbinger Capital Partners, which earlier this year challenged New York Times Chairman Arthur Sulzberger Jr. for board seats and told him to invest in the company’s main business and Internet assets. The Red Sox stake is worth as much as $166.3 million, according to Barclays Capital, and New York Times says a sale-leaseback of its headquarters building would raise $225 million.

“One could argue that they waited a little too long to do this,” said Lauren Rich Fine, a researcher at Kent State University in Ohio and a former newspaper industry analyst. “In this environment, Manhattan real estate is finally being hit. While there’s always going to be an appetite for a stake in the Red Sox, the number of buyers is going to be limited.”

Selling the minority interest in the team and the headquarters could prove difficult amid a U.S. recession and tight credit markets. Stakes in several other Major League Baseball franchises are also up for sale, including the Chicago Cubs and the San Diego Padres. Commercial real-estate values are slumping, and Reis Inc. predicts the number of non- residential properties at risk of default may triple.

Acquisitions, Divestitures

New York Times sold its broadcast television stations and radio station WQEW-AM in 2007, before Harbinger acquired its stake.

“We’ve been very clear that we were going to rebalance our portfolio and by rebalancing our portfolio that meant both acquisitions and divestitures,” company spokeswoman Catherine Mathis said yesterday.

A spokesman for Harbinger wasn’t available to comment.

New York Times, the third-largest U.S. newspaper publisher, already slashed its dividend by almost three-fourths last month as it confronts declining revenue and repayment on its $400 million credit line in May. November advertising sales tumbled 21 percent to $149.9 million, the company said last week.

“NYT does not have the ability to manage its capital structure organically,” Barclays Capital analyst Hale Holden said in a Dec. 23 research note.

New Credit Facility

He predicts the company will most likely negotiate a new credit facility, dispose of a smaller asset, and sell and lease back its headquarters building near Times Square. The 52-story tower, designed by Renzo Piano, has housed the company’s corporate offices and flagship newspaper since June 2007.

Asset sales could be used to pay down long-term debt of $672.5 million at the end of the third quarter and may help pare losses in the New York Times stock. The shares rose 2 cents to $7.02 at 4:15 p.m. in New York Stock Exchange composite trading, after surging 17 percent on Dec. 26 following reports of the Red Sox sale.

“Selling assets in this market is not an attractive proposition, but the Red Sox stake is both non-core and relatively valuable,” Fitch Ratings analyst Mike Simonton said in an e-mail yesterday.

The Wall Street Journal reported last week that the company was seeking a buyer for the Red Sox, citing two unidentified people familiar with the discussions. The Journal said that the sale could include the Boston Globe newspaper.

Reinvesting Funds

Harbinger, working with Firebrand Partners, pressured New York Times this year to reinvest funds to accelerate Internet acquisitions. The company owns 26 floors in the Manhattan skyscraper that houses its headquarters; 16 smaller, regional newspapers and a minority stake in the Red Sox, Fenway Park and a regional sports network that televises the games.

“It’s only a 17 percent stake that’s for sale, so it’s not a controlling stake” in the Red Sox, Roger Altman, chief executive officer of Evercore Partners Inc., said today in a Bloomberg Radio interview. “It’s not an opportunity to buy the team.”

Altman said his New York-based investment bank is working with the New York Times, without being more specific.

Harbinger and Firebrand own almost 20 percent of New York Times’ Class A stock. The hedge funds ended a proxy campaign in March after New York Times agreed to add two of the four directors they nominated.

Since that time, the advertising environment has worsened and credit markets have tightened. New York Times said this month it is weighting asset sales as well as funding options that include revolving debt, public offerings and private placements.

“There is no doubt that 2009 will be among the most challenging years we have faced and more steps will be needed,” New York Times Chief Executive Officer Janet Robinson said in the company’s Dec. 9 statement about potential asset sales and talks with lenders on financing.

To contact the reporter on this story: Sarah Rabil in New York at srabil@bloomberg.net

Last Updated: December 29, 2008 16:59 EST