Hedge Funds Pressure N.Y. Times Co.
Group That Plans to Oust 4 Directors Discusses Nominees With Top Executives

New York Times Co. stock has lost about two-thirds of its value in the past four years. (By Andrew Burton -- Bloomberg News)
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Who's Blogging» Links to this article
By Frank Ahrens
Washington Post Staff Writer
Tuesday, February 12, 2008; Page D03

The top two executives of the New York Times Co. met Friday with a hedge fund group that wants to kick out four of the media company's directors, according to financial filings.

A partnership between Firebrand Partners and Harbinger Capital Partners maintains that the Times Co. is underperforming and needs a new digital strategy. The partnership began buying Times Co. stock in December and now holds nearly 10 percent of the company, making it the Times Co.'s second-largest non-family shareholder.

Times Co. Chairman Arthur Sulzberger Jr. and President Janet L. Robinson met with Firebrand founder Scott Galloway at the Times Co. headquarters in New York to discuss Firebrand's nominees for the Times Co.'s board of directors, according to a Securities and Exchange Commission filing yesterday.

Firebrand, an investment firm, is partnering with Harbinger, a buyer of distressed properties, to try to turn around the Times Co.'s flagging stock, which has lost two-thirds of its value in the past four years. Times Co. shares closed yesterday at $17.16, up 2.3 percent.

Galloway first contacted Sulzberger and Robinson in January, when he wrote: "There is nothing wrong with The New York Times Company that cannot be fixed with what is right with The New York Times."

According to yesterday's SEC filing, Firebrand-Harbinger now holds 9.96 percent of Times Co. stock, up from nearly 5 percent last month. T. Rowe Price, with 12.68 percent, is the company's largest non-family shareholder.

The Times Co.'s board meets in late April, when Firebrand-Harbinger hopes to propose its slate of directors. All director nominees must be approved by the Times Co.'s nominating and governance committee, however, which can block the Firebrand-Harbinger nominees from appearing on a shareholder ballot.

"We are looking forward to continuing a productive and positive dialog," Galloway wrote to Sulzberger and Robinson. "Accordingly, as we discussed on Friday, each of our director nominees is free to meet with the members of your nominating committee at their convenience."

Firebrand-Harbinger's slate includes Galloway, Firebrand adviser and former AOL executive Gregory Shove, Mayfield Fund managing director Allen Morgan and James Kohlberg, co-founder of private-equity firm Kohlberg & Co. Galloway said that all four are leaders in new media and digital delivery of content.

The Times Co., like many media companies, has a dual-class ownership structure that gives it access to public money while allowing the Ochs-Sulzberger family to retain control through super-voting Class B shares. Family members represent nine of the company's 13 directors.

Investors holding the public Class A shares can vote for four directors. The Times Co. has not decided which four of its directors will be designated as class A at the April 22 shareholders meeting.

A year ago, institutional investor Morgan Stanley was mounting a proxy fight of its own at the Times Co., with 7.6 percent of the company's public shares.

Unlike the Firebrand-Harbinger plan, Morgan Stanley wanted to abolish the Times Co.'s dual-class stock ownership structure, an effort that was viewed as hostile by the Times Co. The bid to unseat Class A directors failed, though shareholders withheld 42 percent of their votes for the directors in protest. Morgan Stanley later sold its Times Co. stock.

Morgan Stanley fund manager Hassan Elmasry publicly criticized the company's performance. It took Elmasry nearly two years to meet with top executives at the Times Co.

Galloway's meeting came within two months of commencing his build-up of Times Co. stock.

Neither the Times Co. nor Firebrand had a comment yesterday.

[LOL!,gee,you mean the N.Y. Slimes is having "difficultys"-awww aint that a shame LOL,jco]