A little more light is being shed on the late Friday announcement that hedge fund Harbinger Capital Partners is nominating candidates for four seats on the board of The New York Times Company (NYSE: NYT). Turns out Harbinger is working with activist investment firm Firebrand Partners LLC; together, the two control just under 5 percent of NYTCo’s publicly traded shares — just enough to show the company they were serious and not enough to trigger an SEC filing about their holdings. That is about to change.
A source familiar with the situation tells paidContent.org that Harbinger and Firebrand intend to hold a larger stake but had stayed under the limit to keep their communications with the company informal The source says when the company didn’t respond to initial overtures prior to the deadline for nominating directors, they had to either forge ahead or wait another year. They sent the nominations and then today sent NYTCo Chairman Arthur Sulzberger, Jr., and Janet Robinson, president and CEO, a two-page letter outlining their stance that will be filed Monday with the SEC. We have obtained a copy of the letter, which is signed by Scott Galloway, founder/CIO of Firebrand and one of the four nominees. (Click on the image to the right to read.)
NYTCo spokesperson Catherine Mathis said, in response to a question, that Harbinger and Firebrand did not seek a meeting prior to the nominations. (The letter sent today does include a formal request.) Mathis: “We regularly have detailed discussions on these kinds of strategic issues with our investors and our Board regularly reviews our portfolio of businesses to determine if they meet our targets for financial performance, growth and return on investment while remaining relevant to our strategy. As always, we remain open to ideas from and dialogue with our investors.”
So what do Harbinger and Firebrand want? According to our source and Galloway’s letter, they are not seeking to undo the dual-class structure that gives the Sulzberger family control but they do want to nominate four directors who have what Harbinger and Firebrand consider more relevant experience. In addition to Galloway, the partners’ nominees are James Kohlberg, a buyout specialist and co-founder of Kohlberg and Co.; Allen Morgan, managing director for VC firm Mayfield Fund (it does not appear that Mayfield is involved); and Gregory Shove, a former AOL (NYSE: TWX) exec and advisor to Firebrand.
(The NYTCo’s Class A shareholders elect four directors at each annual meeting; the Class B shareholders elect nine. The nominating and governance committee hasn’t yet announced the nominees for 2008.)
The letter echoes what our source said: “The problem that the Times faces now is the way the stock price is going, the company is going to be ripe for an approach by someone who is not dignified and constructive.” Our source also stressed that “this is absolutely an attempt to deal constructively with the board of directors
Comments have been disabled for this post