Two Views of the Times

Here are two distinctly different opinions on last week's shareholder uprising at the New York Times Co. annual meeting.

The first (below), which appeared on Jim Romenesko's site as a letter from BU professor Chris Daly, provides the passionate, journalism-oriented view of the Times Co. and says a pox on Morgan Stanley:

Concerning the recent stories about the threats by Morgan Stanley to try to change the stock ownership plan at the New York Times, under which the Sulzberger family, through its ownership of Class B stock, retains the power to appoint the majority of the company's board of directors, I have a suggestion: Keep your hands off the paper!

If you guys at Morgan Stanley think you know so much about running a newspaper, then go ahead and found a great metropolitan daily yourselves and run it for 150 years. I'll buy a subscription.

If you don't like owning non-voting stock, here's another suggestion: DON'T BUY IT. No one put a gun to your head to buy the stock in the first place. And no one misled you about your voting rights. If you don't like the stock's performance, here's a third suggestion: SELL.

The fact is, the Times is a national treasure, like Yosemite or the Navy band. It is not a normal corporation, and it should not be. If you think market-driven journalism is such a great thing, then buy shares in Gannett and subscribe to USA Today.

The NYTimes is not perfect (but, come to think of it, neither is Morgan Stanley). But the fact is that the highest and best use of the NYTimes as an institution is not to enrich outsider stockholders. The highest and best use of the NYTimes is to be strong and independent enough to engage in knock-down journalism that challenges powerful institutions. From its investigations into watered-down milk and the Tweed Ring in the 19th Century to the Pentagon Papers case, Abu Gharib, and the wireless wiretapping expose, the Times has stood up to bullies, frauds and scoundrels. That is not normal corporate behavior, and so much the better.

The fact that the Sulzberger family chooses to run the paper on principles that are not strictly economic is a virtue, not a flaw. The surest way I can think of to destroy it would be to run it like a normal business.

Now, here's the bottom-line business view of the Times Co. articulated in this posting. In this case, there's regret that the Morgan Stanley rebellion didn't catch fire.

Stocks: New York Times tripped up by leadership

Even with the stock trading at a five-year low, The New York Times Co. looks like a bad bet, straining under weak revenue and shareholder unrest.

Last week, tense relations between the Times Co. and its stockholders reached a new low when clearly frustrated money managers at normally unflappable Morgan Stanley actually demanded that the founding Sulzberger family give up a two-class stock system that effectively allows it to control the company.

In a press release, Morgan charged that the company has ignored calls "to operate the business better and allocate capital more efficiently." Unlike other shareholder revolts, such as the one that forced Knight-Ridder to put itself on the block, the Morgan-led putsch quickly fizzled.

Too bad. Last week, the Times Co.'s shares managed to fight a rising tide in the market and sink another 2%, closing at $24.48. "There is no real sign of any short-term catalyst [to boost the stock]," says Edward Atorino, an analyst with The Benchmark Co.

Last year, the Times Co. posted revenue of $3.37 billion, a meager 2.1% ahead of 2004's results, and far too little to absorb a big 7.9% surge in expenses. This year, analysts forecast that the decline will continue.

Whether you're rooting for the newsroom or Wall Street, keep an eye peeled on the storm clouds gathering around Sulzberger. There is plenty of ripple effect to this, including persistent speculation that Boston Globe publisher Richard Gilman could be replaced in the not-too-distant future.

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