The New Billionaire Behind the New York Times

Jan. 22, 2009— -- Carlos Slim is unfathomably wealthy and undeniably powerful. Praised as shrewd and criticized as ruthless, the telecommunications mogul stands atop a fortune that rivals or exceeds those of business luminaries like Bill Gates and Warren Buffet.

So why would someone as successful as Slim -- who is estimated to be worth some $60 billion and was ranked by Forbes magazine as the second-richest man in the world last year -- risk massive amounts of cash on The New York Times, the storied newspaper company that, like the rest of the country's newspaper industry, is struggling beneath a dismal balance sheet and plummeting ad revenues?

One theory posited by Slim watchers: Because he can.

The $250 million that Mexican-born Slim is investing in The New York Times Co. -- a move announced late Monday -- is "tortilla money," said Riordan Roett, the director of Western hemisphere studies and the Latin American Studies Program at Johns Hopkins University.

"It is cheap money ... that is, not much [money] given his fortune," Roett said in an e-mail to ABCNews.com. It's "like saying I can afford pennies for tortillas."

In an interview with ABCNews.com, Slim deputy Arturo Elias downplayed the significance of the Times investment, which comes in the form of loans through Slim's Banco Imbursa and Inmobiliaria Carso companies.

"It's just another business. … The bank has done maybe thousands of loans and this is one more, and it's just that," said Elias, who is the director of Inmobiliaria Carso.

Juan Carlos Hidalgo, the project coordinator for Latin America at the CATO Institute, said Slim doesn't have much to lose.

"What happens if he goes wrong? He can just go back and start anew," Hidalgo said. "It's not a risky gamble when you have your bases covered."

Not that Slim expects to lose money. Asked about the wisdom of investing in what appears to be a crumbling newspaper industry, Elias expressed confidence in Slim's choice.

"We see it [the New York Times] as a company that knows very well how to handle information and deliver information," Elias said, "and we understand what you're saying is that paper is going down. But the information is going to be somewhere [and] we think the New York Times is doing a great job in delivering information.

"We think it's a great brand," he added. "We think it's a good financial opportunity. And that's what we thought to make these investments."

Carlos Slim: Media Shy or Savvy?

The potential fiscal benefits of Slim's growing New York Times stake -- he initially bought into the company in September -- are significant. His latest Times investment comes in the form of an interest-bearing bonds that stand to provide a relatively high return for Slim -- 14 percent.

But what may prove even more valuable for the 68-year-old billionaire is the notoriety that being a top Times stakeholder brings.

Slim's new status at The Times may represent "his coming-out party in the United States," said Armand Peschard-Sverdup, a senior associate at the Center for Strategic and International Studies.

"Regardless of what the New York Times books say -- whether they're in the red or in the black -- at the end of the day, it's an incredible calling card," Peschard-Sverdup said.

Elias rejected the idea that publicity played any role in Slim's decision. Slim, he said, doesn't seek attention.

"I will describe him as a the person with the lowest profile I've ever seen," he said.

Indeed, for all his fiscal success, Slim was, until recently, relatively unknown in the United States.

He garnered a large part of his fortune through Mexican investments, namely in the telecommunications industry. In 1990, he bought and privatized TelMex, the Mexican government's national phone company monopoly.

Slim later acquired a cellular service license and eventually, his America Movil company grew into a Latin American communications giant, with more than 150 million customers stretching from Argentina to Jamaica.

Along the way, Slim riled critics who allege that he built his success by exploiting his connections to high-ranking government officials who, in turn, ensured that competing communications companies were virtually locked out of the Mexican market.

"In the U.S., he would be a perfect target for investigative reporters curious about the ongoing relationships between the very rich and the very powerful politicians who make and enforce the laws," Wall Street blogger Douglas McIntyre wrote on the Web site 247WallSt.com. "If The Times were located in Mexico, Slim would probably get his share of headlines, some of which might not be flattering."

A New York Times spokeswoman told ABCNews.com that Slim's stake in the Times will not affect the paper's coverage of him.

Elias, meanwhile, dismisses allegations about Slim's rise to success. He conceded that Telmex had a monopoly on local land lines for the first six years of its privatization -- but that, he said, was it.

Succeeding With Struggling Companies

The Mexican market, Elias said, was open to other companies. But major ones -- namely AT&T and MCI, which counted Slim as one its investors -- didn't succeed.

According to the business information firm Datamonitor, Telmex still garners 80 percent of revenues in Mexico's "fixed line," or land line, market.

Whether Slim's methods are suspect or not, the power and influence he wields are legend.

"Usually, at least in his business dealings in Mexico, he's not someone who necessarily negotiates the terms of the deal -- he's someone who, more often than not, dictates the terms of the deal," Peschard-Sverdup said.

Elias paints a more genteel picture of Slim's business relations. Slim's companies, he said, work well with their partners and don't launch hostile takeovers.

"We have big partners all over the world and we've never have a conflict, never with anyone," he said.

Sergio Rodriguez, a director at Fitch Ratings, based in Monterrey, Mexico, said Slim's success is largely product of his own business foresight, not just his influence.

"You can have political connections, but if you're not good at managing the business, the business wouldn't be delivering good results," Rodriguez said.

Slim, he said, is visionary in his approach to business by investing in struggling companies and bringing them into the black. In this context, Rodriguez said, his stake in the New York Times is not surprising.

"He usually buys in downturns and into companies that he believes have potential for turnaround," Rodriguez said.

Slim has come under fire, however, for his turnaround tactics -- including his penchant for slashing payrolls.

Evidently, though, he won't be able to practice his strategies at The Times. Though his stake in the company is supposed to grow to 17 percent, a Times spokeswoman said that Slim would not have any control over company operations.

Slim learned about managing finances from his father, a Lebanese immigrant, he told ABC News in a 2007 interview. The elder Slim taught his son to keep a ledger of how he spent his 5-peso weekly allowance -- a ledger that he still keeps in his office.

Slim's humble beginnings are echoed in his personal style today: Though he maintains a valuable art collection, he generally doesn't flaunt his wealth and, Slim said in his ABC News interview, he doesn't understand the billionaires who do.

"You want to have a toy and another toy and that's not maturity," he said. "The biggest things in life are not materials."

Slim: A Winning Streak at Risk?

Slim began his career as a trader in Mexico. He would go on to form his own brokerage firm -- a firm that later expanded to invest in individual businesses, ranging from construction and manufacturing to retail and restaurants.

Though he limited his investments to Mexican companies at first, he would later set his sights on Latin America and the United States. His American forays have included investments in high-end clothing retailer Saks Inc., phone company MCI and electronics retailer CompUSA.

He sold his MCI stakes at a profit; his CompUSA venture was markedly less successful.

Slim "can be wrong sometimes," Rodriguez said. But, he added, "he hasn't been wrong in a big investment."

Whether his financial winning streak will continue with The New York Times remains to be seen. Other major investments in U.S. newspapers in recent years have fizzled: In 2007, the private equity firm Avista Capital Partners bought The Minneapolis Star-Tribune for $530 million, while real estate magnate Sam Zell engineered a multi-billion-dollar takeover of the Tribune Co.

Last month, the Tribune filed for bankruptcy. Earlier this month, it was the Star-Tribune's turn.

"There haven't been any real positive stories from either debt or equity investors' perspective over the past several years in the newspaper industry," said Mike Simonton, senior director in media and entertainment at Fitch Ratings.

Of course, the newspaper industry isn't the only one faltering amid the U.S. recession and, said Peschard-Sverdup, Slim isn't the only foreign heavyweight seeking opportunities in an ailing American economy.

"The economic recession here in the United States has a lot of these business tycoons bargain-shopping," he said. "Carlos Slim is no different."

ABC News' Jose Cohen contributed to this report from Mexico City.