Washington Post's Graham defends Times' ownership

By Robert MacMillan

NEW YORK (Reuters) - Washington Post Co. Chairman Donald Graham defended closely held rival New York Times Co. on Monday, saying shareholder efforts to change its control structure could be a blow to journalism.

The Washington Post Co. operates under a similar dual-share structure as the Times, giving overriding control to the families that have owned the companies for many years.

The Times' corporate structure has come under close shareholder scrutiny ahead of its annual meeting on Tuesday, led by Morgan Stanley money manager Hassan Elmasry.

In an opinion piece titled "The Gray Lady's Virtue" and published in the Wall Street Journal, Graham urged shareholders to rebuff Elmasry's efforts.

"To support Morgan Stanley's campaign to eliminate the company's two-tiered stock structure is to run crazy risks with the future of its most important asset, the New York Times (newspaper)," Graham wrote.

Two prominent proxy advisers have also recommended shareholders withhold votes for the Times' board to prompt its controlling Ochs-Sulzberger family to improve accountability.

Changing the Times's structure could lead the publisher to be "auctioned off like a side of beef," with no assurance that a principled buyer dedicated to promoting unbiased journalism would be the winner, Graham argued.

"It isn't guaranteed that anyone owning the Times would spend more than $200 million on its newsroom budget, or deploy dozens of foreign correspondents around the world," he wrote.

With other media companies being snapped up by private equity firms and famous billionaires, a vulnerable Times could fall into the hands of an owner who is not "willing to anger its friends on a regular basis, as good newspapers do."

Graham's unusual plea on behalf of the Times comes as U.S. newspapers are fighting to keep advertising dollars and readers who seek their news and information on the Internet.

Some newspapers have sold assets or accepted offers to go private as they realign their businesses for the Web. While newspaper Internet sites are often their fastest-growing businesses, it may take years before they generate enough online revenue to offset declining print operations.

Pressure on the Times has increased with weakened financial results and a drop in its share price. The company reported last week a decline in quarterly profits and said online ad growth would be lower than a forecast of 30 percent.

"I would guess that in each of the last few years the Times has published the highest-profit newspaper in the United States," Graham wrote. "And going forward into the Internet age, what large newspaper holds cards as good as the New York Times and nytimes.com? (I can only think of one)."

The Journal is owned by Dow Jones & Co. , which also operates under a dual-class share structure controlled by the Bancroft family.