New York Times Agrees to Shareholders’ Directors

The New York Times Co. defused a standoff today with its largest outside shareholder, Harbinger Capital, by agreeing to support two people nominated by the hedge fund as directors at its annual meeting next month.Harbinger had accumulated a 19% stake in the company in recent weeks, rivaling the amount held by the Sulzberger family. The Sulzbergers still control the company through a special class of shares which allow them to name 70% of the board.The Times will expand its board from 13 to 15 to accommodate the new nominees, one of whom is a New York University marketing professor and shareholder activist who has been advising Harbinger, Scott Galloway.The agreement calls for Harbinger to halt its campaign to have its own slate of four directors elected at the shareholder meeting. In addition to Mr. Galloway, the Times has also agreed to support the co-founder of the investment firm Kohlberg & Co., James Kohlberg, as a director.Harbinger and Mr. Galloway have argued that the Times need to take drastic action to shed assets outside of its core newspaper and invest aggressively in building up its online businesses.Times executives told investors at a recent conference that the company was always re-evaluating its portfolio of assets and moving quickly to expand readership and revenues on the Internet.In addition to its main newspaper, the Times company also owns The Boston Globe, a stake in the Boston Red Sox, its headquarters building in Manhattan, a group of smaller newspapers, and the International Herald Tribune. It also owns About.com, an online consumer information business.Last fall another dissident investor, a Morgan Stanley Investment Management fund manager, Hassan Elmasry, abandoned a two-year campaign to press for changes in the Times’ dual-share structure and other areas of corporate governance.While Mr. Elmasry’s efforts didn’t result in any corporate changes, other public investors also signaled their unhappiness by withholding 42% of their vote for publicly elected directors last year. The previous year, shareholders withheld 30% of the vote.Messrs. Galloway and Kohlberg will stand as directors elected by the Times’ publicly traded Class A shares, along with a former CEO of the investment bank Salomon Inc., Robert Denham, a German media executive, Thomas Middelhoff, and the chief financial officer of Verizon Communications Inc, Doreen Toben.Harbinger has agreed to support the entire five-person slate of Class A proposed by the Times. The other 10 directors will be elected by the Sulzbergers, who control the company’s supervoting Class B shares.Like other newspaper publishers, the Times’ stock has declined sharply in the last year over concerns about weakening revenue trends as more readers and advertising dollars go to the Internet.The shares have rebounded in recent weeks after Harbinger’s campaign for changes there became public, but they’re still down about 20% over the past year.Unlike Mr. Elmasry, Harbinger and Mr. Galloway have said they don’t intend to challenge the two-class share structure that allows the Sulzberger family to maintain control.The media company’s Class A shares rose 23 cents to $18.73 in afternoon trading today.

New York Times Agrees to Shareholders’ Directors

New York Times Agrees to Shareholders’ Directors

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