November 4, 2006
New York Times Woes
Stories of hypocrisy are so normal in the press that we have come to expect them. The charismatic, crusading minister who 1) cheats on his wife, 2) buys drugs, and/or 3) embezzles funds. Ho hum. Here is another ho hum story in another genre.
The New York Times, with its two sanctimonious reporters Grethchen Morgenson and Joseph Nocera, have railed against excessive executive compensation, pushed the an extension of shareholder voting rights and applauded new regulatory initiatives aimed at corporate governance. Their columns, after starting with good factual reporting, often conclude with over-the- top opinion -- indignant, sanctimonious and full of grand standing declarations. Yet we know that the NY Times itself has a corporate governance structure that is a mess. I have discussed it here (in several earlier posts).
The latest is a missive by a major NY Times shareholder, Morgan Stanley Investment Fund, complaining about the NY Times board. The investment fund, owned by Morgan Stanley, is run out of London. The fund owns 7.6% of the Class A shares.
A family trust, the Sulzberger family, owns Class B shares and elected 9 of 13 directors. Class B shares are a .6% of the voting stock of the company! Class A shares, the 99.4% of the rest of the shares are publicly-held and control only 4 of the 13 directors. [The family also holds 19% of the Class A.] The dual class voting structure has been in place since 1969, when the paper went public. The structure can be reversed only if 6 out of 8 members of the family trust, including the Times CEO himself, choose to reverse it. The top executives, several of whom are family insiders, get paid too much given the performance of the paper. Moreover the board has approved lavish new offices. The papers circulation is failing like a rock with revenues down close to 40%. The NY Times stock has lost one-half its value over the past four years. Apparently the high, soft-left profile of the paper is not attracting new readers and is losing old readers. [The young use the Internet; the older readers who are left do not like the constant, dreary and obvious anti-Bush style, in my humble opinion.]
In a hoot, the board turned to the number one anti-shareholder guy in the country for "advice" -- Marty Lipton of Wachtell Lipton Rosen & Katz. He issued a report stating that the structure was normal for the media and that the company, other than the dual class board, uses "state of the art" governance procedures. At some point this guy should have no credibility.
I eagerly await the next columns by Morgenson and Nocera on the New York Times governing structure. Buy the way the Ted Haggard story, the cheating minister, made the front page of the New York Times today.
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I'm sure Gretchen agrees with you on the NYTimes governance problems. I'm also sure she wants to keep her job, and at the least, not waste time writing a column her editors will return to her unpublished.
Posted by: Ian Welsh | Nov 6, 2006 3:28:06 PM