BusinessWeek’s Ron Grover says Geffen “doesn’t so much see this as a business venture, but rather as a civic investment.” Newsweek’s Johnnie L. Roberts goes further, suggesting that Geffen would literally turn the Times into a nonprofit if he bought it.

Both Grover and Roberts are longtime media reporting pros, so when they cite sources with knowledge of Geffen’s thinking, I believe them. What I still don’t understand, and what observers and investors I’ve talked to are still puzzled about: How does Geffen plan to do that?

To reiterate: Geffen has reportedly tried to buy the 20 percent stake in the Times now owned by Harbinger Capital, though the two sides couldn’t agree on price. But even if they did, the transaction would only bail out Harbinger, not the Times.

And because the Times has a dual-class stock structure that keeps control of the company in the hands of the Ochs-Sulzberger family, taking on Harbinger’s stake doesn’t give Geffen a foot in the door to the company. It gives him the right to appoint two representatives to the company’s 14-member board of directors, but nothing else. Just ask the Harbinger folks.

Again, there are two plausible ways to acquire the Times:

1. Buy the super-voting shares outright from the Ochs-Sulzbergers, who have said they have no intention of selling. But then again, that’s what the Bancroft family said about Dow Jones, which owns the Wall Street Journal and this Web site. And News Corp.’s (NWS) Rupert Murdoch was able to overcome their objections by offering a 60 percent premium to the company’s share price. Maybe Geffen could try that.
2. Establish a large debt position with the company and exercise the power that comes along with that in the event of a restructuring. The problem: Billionaire Carlos Slim has already done that.

So. Anyone close to David Geffen want to explain what he’s really thinking? I’m all ears.

It’s a done deal: Billionaire Carlos Slim has given the cash-strapped New York Times (NYT) $250 million worth of breathing room. At a very high price.

Under terms of a deal announced late Monday night, the Mexican telecom magnate has lent the Times $250 million via senior unsecured notes that pay out at 14 percent annual interest. He also gets warrants on 16 million shares of Times “A” stock.

Slim already owns 6.9 percent of the company’s A shares, and the warrants will let him buy another 10 percent. But the Sulzberger family will retain control of the company via its ownership of its “B” class stock.

The Times will use the money to refinance some of its $1.1 billion in debt, including a $400 million revolver that expires in May.

But the cash won’t solve the company’s core problem: Its ads are disappearing, and it has yet to cut cost costs to reflect that reality. And now its costs just increased–it will have to pay Slim $35 million a year in interest.

Brutal. But so are the Times’s prospects.

Here’s the official release:

The New York Times Company Enters into Agreement with Banco Inbursa and Inmobiliaria Carso for $250 Million in Senior Unsecured Notes

The New York Times Company today announced that it had entered into a private financing agreement with Banco Inbursa, S. A., Institucion de Banca Multiple, Grupo Financiero Inbursa (”Banco Inbursa”) and Inmobiliaria Carso for an aggregate amount of $250 million ($125 million each) in senior unsecured notes due 2015 with detachable warrants. The notes will rank equally and ratably on a senior unsecured basis with all senior unsecured obligations of The New York Times Company.

“This agreement provides us with increased financial flexibility to continue to execute on our long-term strategy,” said Janet L. Robinson, president and CEO. “The proceeds from this transaction will be used to refinance existing debt, including amounts currently borrowed under a revolving credit facility that matures in May 2009. We continue to explore other financing initiatives and are focused on reducing our total debt through the cash we generate from our businesses and the decisive steps we have taken to reduce costs, lower capital spending, decrease our dividend and rebalance our portfolio of assets.”

“We are very pleased to expand our strong relationship with The New York Times Company,” said Arturo Elias, director of Inmobiliaria Carso. “We believe that with the strength of The New York Times brand, its national and international reach, its potential for digital expansion and most of all, its world-class news and information, the Company will continue to be a leader in the media industry.”

The notes have a coupon of 14.053 percent, of which the Company may elect to pay 3 percent in kind. The notes are callable beginning three years from the issue date at 105 percent of par, with subsequent call prices declining ratably to par.

Banco Inbursa and Inmobiliaria Carso also received detachable warrants for an aggregate amount of 15.9 million Class A shares (50 percent each), at a strike price of $6.3572. The warrants expire in January 2015.

Mr. Carlos Slim Helu and members of his family are the main shareholders of Grupo Financiero Inbursa, S.A B. de C.V., which is the parent company of Banco Inbursa, and are the owners of Inmobiliaria Carso, which currently holds 6.9 percent of the Times Company’s Class A shares.

[Image Credit: Agencia Brasil, via Wikipedia Commons]

The move is one of several the paper is going to make if it’s going to service its $1.1 billion debt load. It is also “re-evaluating assets” (i.e., looking for spare parts to sell), and while it has told its editorial staff that it will try not to fire anyone, it couldn’t make an ironclad promise.

That’s because the paper’s financial results continue to decline, and there doesn’t seem to be any light at the end of the tunnel. Even the promise of the Internet, where the paper has been devoting substantial resources and effort, is dimming.

The newest numbers, released yesterday: Revenue at the company decreased 9.4 percent in October, which is an acceleration from September, when revenue dropped eight percent. Ad revenue dropped 16.2 percent, compared to a 13 percent drop in the previous month.

And while the paper’s digital side is still growing, it’s growing much more slowly: Internet ad revenue grew just 5.3 percent, down from 16.4 percent in September; total Internet revenue, including the company’s About.com unit, was up 4.3 percent, down from 11.7 percent.

Is there any good news? Just a sliver: The Times’s readers still value the paper. Circulation remains steady, but circulation revenue continues to creep up. It bumped up 3.9 percent last month, up from three percent growth in September. But it doesn’t matter how loyal the Times’s readership is if the company can’t pay its bills. Expect more turmoil ahead.

[Image Credit: Joe Shlabotnik]