The New York Times-20080126-Fund Seeks Board Seats at Times Co-
Return to: The_New_York_Times-20080126
Fund Seeks Board Seats at Times Co.
Full Text (554 words)An Alabama-based hedge fund gave notice Friday that it would try to elect directors to The New York Times Company board, a day after the same hedge fund gave similar notice to another newspaper company, Media General.
The hedge fund, Harbinger Capital Partners, a part of the Harbert Management Corporation, controls less than 5 percent of Times Company stock, a level that would require a declaration to federal regulators. It has accumulated control of more than 18 percent of Media General stock.
Even if it was successful in electing a slate of directors, Harbinger would not be able to take control of the board without an about-face by the controlling family at each company.
At the Times Company, the Sulzberger family owns the great majority of the Class B stock, which elects 9 of the 13 directors. The Bryan family, longtime owners of Media General, holds a similar position. Both families have stated that they do not intend to sell or to abandon the two-class arrangement that preserves their control.
In a statement, Arthur Sulzberger Jr., chairman of the Times Company, said, We have a strong and independent board, but our board's nominating and governance committee will review the nominations and make a recommendation to our shareholders in due course.
Times Company stock, which traded as high as $53 in 2002, closed Friday at $14.66. The company remains profitable -- through three quarters of last year, it reported net income of $155.7 million, or $1.08 a share -- but like the entire industry, it has been hurt by falling advertising revenue.
In addition to The New York Times, the company owns The Boston Globe, The International Herald Tribune and 15 other newspapers, and a number of Web sites, including About.com.
Media General's stock, which topped $72 in 2004, closed Friday at $19.06. Through three quarters of 2007, it reported $1.1 million in net income, or 5 cents a share.
The company publishes The Tampa Tribune, The Richmond Times-Dispatch, and The Winston-Salem Journal, along with 22 smaller daily newspapers and more than 150 other small publications. It also owns 23 network-affiliated television stations.
Harbinger's strategy is to invest in distressed assets, placing it in a class of investors sometimes known as vulture funds. The investments it has made in the last two years include Bally Total Fitness; United States Steel; Salton, the seller of George Foreman grills; and Gateway.
Last November, Harbinger and several other hedge funds injected $2.55 billion into Delphi, a car parts maker then operating in bankruptcy protection. Delphi said Friday that it had court approval for its reorganization.
A Harbinger spokesman said Friday that the fund would not comment on its investments, leaving its intentions toward the newspaper companies unclear. A Times Company executive said the company had never met with anyone from Harbinger.
Harbinger acquired a 9 percent stake in Media General in mid-2007, and more than doubled that recently. Marshall N. Morton, chief executive of Media General, said in an interview that his company had tried to contact Harbinger several times since the summer, but they haven't returned any of our calls, leading him to conclude that the fund's move was hostile.
Plunging stock prices have made newspaper companies attractive takeover targets; in just the last two years, Knight Ridder, Dow Jones and the Tribune Company have changed hands.
