Wednesday, 24 August 2016
Last updated 13 hours ago
Jan 28 2008 | 7:43am ET
Times are tough for newspapers, with advertising sales and stock prices plummeting. As if that wasn’t bad enough for the broadsheet barons, the weakness is attracting the attention of activist hedge funds.
Harbinger Capital Partners is trying to force its way onto the boards of the New York Times Co. and Media General, both said on Friday.
Birmingham, Ala.-based Harbinger said it planned to proffer four nominees for the Gray Lady’s board at its annual meeting in late April. Nine of the company’s 13 directors are elected by its Class B shareholders, primarily members of its controlling Sulzberger family.
But unlike last year’s bid by a Morgan Stanley money manager to force the Times to change its ownership structure, a hedge fund backing Harbinger’s bid has assured the newspaper that it has no intention of trying to force the Sulzbergers to relinquish control.
“The New York Times is a great institution controlled by the Sulzberger family, and we have no illusion about, or desire to change, that fact,” Scott Galloway, CEO of Firebrand Partners, wrote to Times Co. executives. Instead, the hedge funds want to encourage the Times to focus on its core publishing business, including asset sales and finance digital media deals, Galloway said.
Combined, Harbinger and Firebrand control roughly 4.9% of the Times Co.’s Class A shares. Among Harbinger’s proposed nominees are James Kohlberg, founder of private equity firm Kohlberg & Co. and the son of Kohlberg Kravis Roberts founder Jerome Kohlberg.
In a statement, the Times said it is “open to ideas from and dialogue with our investors.”
Harbinger’s other effort, Media General, is unlikely to be quite as congenial.
“We are frankly puzzled as to what Harbinger hopes to achieve by its hostile actions,” Marshall Morton, CEO of Media General, which publishes the Richmond (Va.) Times-Dispatch and Tampa (Fla.) Tribune, said.
Like the Times Co., Media General has two share classes, giving controlling families over-representations on their boards. Harbinger, which owns some 21% of Media General’s shares outstanding, plans to nominate three candidates for election to the company’s nine-member board. But Morton says that Harbinger has been unwilling to discuss its demands.
“Had Harbinger chosen to talk to us, it would have learned, if it does not already know, of the many strategic, operational and financial steps we have taken and are taking in response to the challenges facing the newspaper and broadcast industries today and, with respect to Media General in particular, in response to the currently depressed Florida economy.”