Hedge Funds Take Another Shot at Times, Sulzberger

The gut wrenching transition from the print world to digital has been well chronicled, and led to steep losses in many newspaper stocks. Everyone seems to be seeking a fix to the problem; a hedge fund manager from Morgan Stanley recently threw in the towel after agitating for change at the New York Times; the Sulzberger’s voting stock puts them in a position to dismiss any and all suitors.

But that has not stopped Harbinger Capital Partners LLC and Firebrand Partners, which have teamed up to buy a near 5% stake in the Times. But they are criticizing the Times digital strategy, which has been slowly but surely taking shape, and want a say in the future allocations of capital to the nascent business. They are taking a different approach than Morgan Stanley, and merely want a say in the future direction of the company. And their nominees to the board of directors certainly have some street cred in all things digital:

The nominees proposed by Harbinger Capital Partners LLC and Firebrand Partners, which together hold a 4.9% stake in the Times, include Firebrand Partners founder Scott Galloway, Mayfield Fund media-focused VC Allen Morgan, former AOL executive Gregory Shove and Kohlberg & Co. co-founder James Kohlberg, Galloway said in a letter toting their “experties in capital allocation, Internet media and brand strategy.” The investors seek the “redeployment of capital to expedite the acquisition of digital assets.” The Deal

The Times’ stock printed $14.01 last week, and the company’s enterprise value is in the tank. Indeed, it is approaching a level that makes a deal of sorts plausible, or offers a chance to hop on board, take advantage of the valuation, and wait for the evolving business model to pay off. 

We had thought that there was a chance the controlling shareholders were willing to stand back and let the stock fall to a level that would allow them to launch a leveraged buyout. Although with the credit markets in the tank patience might be needed, and it is not likely an option at the moment.

The family seems unwilling to give up their prized property. And while they might end up partnering with Steven Rattner or another media mogul, until they come up with a successful digital strategy the company is likely to flounder, public or private.

The digital deals that the NYT’s critics find wanting
Corporate Dealmaker

Letter to Times Management
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