Least Likely To Attack The New York Times

Upon review, I see that this is cryptic even by my standards. The key to understanding this post is that the New York Times Company has two different classes of common stock. One publicly available and one owned by the Sulzberger family. All of the power over the corporation is locked into the stock owned by the Sulzbergers to ensure that they remain in control. The company is currently being run by Arthur Ochs Sulzberger Jr., known as "Pinch" to his friends, of whom he has many, I'm sure. Although there are a lot of unhappy public shareholders, the best they can hope for is that the combination of bad financial results (which hits the Sulzbergers where it hurts) and public outcry forces the family to replace him with one of his cousins.

A mutual friend points me to this article in OpinionJournal about my good friend and college roommate:

[I]t's hard to resist the urge to cheer on Hassan Elmasry. He's the mutual fund manager who last spring organized 28% of the shares to withhold their votes from Times directors at the company's annual meeting and last week proposed to put before the next annual meeting the question of whether to end the special voting rights that allow the Sulzberger family to control the company while owning less than 5% of the shares.

Mr. Elmasry is a fund manager associated with Morgan Stanley's Van Kampen outfit, but he's based in London and began his campaign long before the Mack allegations emerged (so forget the idea that his motive is anything but to rescue his fund's long investment in the New York Times Co.). The selling point of his fund is its disciplined focus on buying a handful of companies (no more than 40) with unique franchises, holding them for the long term and watching them carefully. The New York Times Co. has been in his portfolio for a decade.

This hasn't stopped the usual kibitzers from suggesting that his Times campaign is just a "typical" Wall Street effort to squeeze out short-term profits at the expense of journalism. But Mr. Elmasry actually has a record of taking a dim view of companies that don't protect and burnish the long-term franchises that attracted him to invest in the first place. Thus when he writes to Times shareholders that the company's voting-rights rules are "eroding the foundations of the enterprise which they were created to protect," it's worth considering, in light of all the accidents the Times has inflicted on itself lately, whether he might be right.

I assume that no one will be amazed that my college friends at the University of Chicago tended to be rightwing or libertarian, but Hassan has always been a liberal
Democrat and moves farther left as he grows richer. He hates George Bush, that American Fuhrer. Nonetheless, he is a good guy and good American and a good human being -- and a very good fund manager. I could wish the Sulzbergers no better enemy.

Nonetheless, I don't expect much in the way of success. (I've never discussed this with Hassan, so none of this represents his views.) The Sulzbergers run the Times for the good of the Sulzbergers. The hold on the corporation is firm and I don't see the mechanism through which the public shareholders can leverage themselves into a position of power. There hope would seem to be to either shame the Sulzbergers into giving up total control or waiting until the paper is in such dire straits that they have no choice. By that time, the brand will not be worth anything.