N.Y. Times braces for friction with shareholders


NEW YORK -- The New York Times Co. could face more blowback from dissident shareholders at its annual meeting Tuesday, led by a Morgan Stanley fund manager who wants the Times to abolish a two-class share structure that allows the Sulzberger family to control the company.

Last year, shareholders representing 30% of the company's publicly held shares withheld their votes for directors, and in recent weeks, two shareholder advisory firms have recommended that investors do the same this year as a way to press for corporate governance changes.

The two firms, Institutional Shareholder Services and Glass Lewis & Co., say the company should institute several changes including separating the roles of chairman and publisher of the Times, both of which are currently held by Arthur Sulzberger Jr.

However, the Times has found support from several quarters in the lead-up to its annual meeting, including a recommendation from a third shareholder advisory firm, Proxy Governance Inc., to vote for the four directors elected by public shareholders.

On Monday, Donald Graham, chairman and chief executive of The Washington Post Co., which has had its own disagreements with the Times in the past, wrote an impassioned defense of the Times and its leadership in an op-ed article in The Wall Street Journal.

In the article, Graham said that the recommendation from the Morgan Stanley money manager to scrap the two-tier share structure would "run crazy risks" with the future of the Times' most important asset, its flagship newspaper. He warned that loosening family control could cause the Times to be "auctioned off like a side of beef."

Like the Times, The Washington Post Co. and Dow Jones & Co., which publishes The Wall Street Journal, are controlled by families through special classes of shares that have powerful voting rights.

The Times also received a vote of confidence from Howard Milstein, the chairman of Emigrant Bank, which recently purchased a 4.3% stake in the Times.

An Emigrant official declined to comment, but Milstein's investment is believed to be a friendly one. Catherine Mathis, a spokeswoman for the Times, said, "We're delighted Mr. Milstein sees potential in the shares of The New York Times Co."

Hassan Elmasry, a fund manager at Morgan Stanley, has been vocal about his concerns at the Times, saying the two-class share structure fosters a lack of accountability to public shareholders.

Elmasry hasn't said definitively whether he will again withhold votes on the shares he controls -- which are currently worth about 7% of the company -- and a spokesman for Elmasry declined to comment.

Any withhold votes are likely to be largely symbolic since the Sulzberger family still controls the company and has the right to elect nine of its thirteen directors.

Newspaper ownership has become a hot topic after two major publishers, Knight Ridder Inc. and Tribune Co., were forced into sales following shareholder unrest.

Neither of those companies had dual-class share structures, and now, among the large, publicly held newspaper companies, only industry leader Gannett Co., publisher of USA Today, still has a single class of shares.

In addition to its namesake newspaper, The New York Times Co. also owns The Boston Globe, International Herald Tribune and 15 other daily newspapers, About.com, and two New York City radio stations. It has agreed to sell its nine network-affiliated TV stations.