This is a fascinating battle where two fundamental impulses–the right of shareholders to earn the best possible returns and the role of an independent media in the American democracy–come into conflict.
Disclosure: I’ve been writing for the Times for seven years, but think I can step back to frame the issue.
Two hedge funds have accumulated about 19 percent of the Times’ common stock, according to an article in today’s paper. They are trying to elect a dissident slate to the board of the Times company because they want the company to be more aggressive about making money (by selling assets), so that the value of their shares increase. In some senses, it seems patently unfair that the Sulzberger family has effective control over the board and the election of directors because of a two-tiered stock structure. That allows the Sulzbergers to control nine out of 13 seats on the board.
So seen in that light, a family is trying to control a high-profile asset even though it doesn’t own a majority of the common stock. Inherently unfair, right?
The counterargument is that the Times is such an important journalistic institution that we have to think of the company in a slightly different light. The American media is in deep trouble, lest anyone conclude otherwise. See my comments on the Overseas Press Club site here. If we allow all our journalistic institutions to go the way of Gannett, they will be stripped and denuded. That’s already happened at the vast majority of media outlets. The people with experience have been flushed down the great toilet of history.
One of the possible prescriptions for fixing the ownership of the media has been to create non-profit institutions to control news outlets, thereby insulating them from the brutal pressures of the market.
Which brings us back to the structure of ownership that the Sulzbergers have set up. In some ways, it may be just right–the company can raise capital in public markets and is accountable to the markets in many ways. Yet in the final analysis, it can’t be raided by hedge funds who are interested only in short-term pops in the price of the shares they control. They careth not about the importance of any media organization.
What is your view?
