Wednesday, April 19, 2006

Institutional Investors in NY Times Protest Rigged NY Times Board of Director Elections

Here’s a good one, some institutional investors are genuinely upset with the corporate structure of the NY Times, a structure that they feel shortchanges the voting rights that should come with ownership. In all fairness to the Sulzberger family, these investors knew this when they bought the Class A shares. The class B shares that are primarily held by the Sulzberger family elect nine of the thirteen members of the Board of Directors. Today’s Wall Street Journal reports (likely still behind the subscription wall) that Morgan Stanley Investment Managing refused to even vote their shares in the recent Board of Directors election. These investors want more representation on the Board in order to help the stock price; I am sure that the Sulzbergers structured the company in this way to protect the newspaper and its editorial policies from the demands of money managers. One of Morgan Stanley’s arguments is likely that they are not making demands as newcomers to the Times; they have owned shares in the company since 1986 and currently own more than 5% of the Class A shares. This could be an interesting conflict; how important is the share price of the NY Times to its primary owners, the Sulzberger family? A rebuff of the institutional guys would likely mean less support from a large segment of the investment community and a likely sizable liquidation that would pressure the share price, especially if others follow Morgan Stanley out the door. On the other hand, acquiescence to the institutional investors would likely mean less power in the hands of Publisher Arthur Sulzberger and could even affect what many of us have seen as an overt liberal bias. I would expect the family to rebuff the institutional guys baring true stock price pressure.


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