NY Times activist shareholder selling stake: source
NEW YORK (Reuters) - A major shareholder who urged The New York Times Co (NYT.N) to change its voting structure to give equal rights to all investors is selling its stake in the publisher, a source familiar with the matter said on Wednesday.
The decision by Hassan Elmasry, a fund manager for Morgan Stanley Investment Management, is a win for the Sulzberger family and Chairman and Publisher Arthur Sulzberger Jr. The family has controlled the Times for more than a century and resisted demands to loosen its grip.
Elmasry "lost patience with the situation and was increasingly frustrated by the board and management, and thought there were better long-term investments," the source said.
The news pushed Times shares down 3.5 percent to $18.25, their lowest level in a decade, as it indicated the Sulzbergers had no desire to change the way they manage the newspaper publisher. The stock closed off 2.27 percent at $18.48.
"Well, he gave up," said independent newspaper analyst John Morton. "A snowball won't melt in hell before that changes. That finally was, I guess, driven home to Morgan Stanley."
Unlike the Bancroft family, which ultimately agreed to sell The Wall Street Journal publisher Dow Jones & Company Inc DJ.N to Rupert Murdoch's News Corp NWSa.N, the Sulzbergers present a unified front on issues regarding the Times.
Morton said this would be a good time for the Sulzbergers to take the Times private if they are tired of the financial community's demands, adding: "There's no better time to make a tender offer than when the stock is down in the pits."
Morgan Stanley Investment Management is the second-largest Times shareholder with 10.3 million of the common shares, or 7.21 percent of shares outstanding, on June 30, according to Reuters data. The shares are worth more than $190 million based on Tuesday's closing price.
Elmasry was unavailable for comment. "As a matter of policy, Morgan Stanley Investment Management does not publicly comment on changes in its portfolios," a spokesman said.
The New York Times declined to comment, as did T Rowe Price, the Times's largest institutional shareholder with about 14 percent as of June 30, and Private Capital Management, the fifth largest shareholder with 5.3 percent.
MESSAGE RECEIVED
Elmasry had spent the past two years urging the Times to scrap a dual-class share structure that gives the Sulzberger family more control over the company than common shareholders.
Investors followed his campaign with interest because of his contention that the publisher was poorly run. That culminated in April at an annual meeting in which more than 42 percent of share votes for a slate of directors were withheld in protest of the control structure and financial performance.
Elmasry's battle cuts to the heart of a dilemma facing publicly traded U.S. publishers -- how to balance the financial demands of producing quality journalism with investors' desire to maximize their returns.
As U.S. newspapers deal with falling ad sales and declining circulation, publishers are under pressure to cut costs, sometimes in the form of layoffs, less physical space for news and the shuttering of overseas bureaus.
The Times has trimmed costs, but maintains a large newsgathering organization. The Sulzberger family's control of the company is part of what allows it to keep that operation in place despite Wall Street demands for more cuts.
Tom Rosenstiel, director of the Project for Excellence in Journalism in Washington, said the angry tone in Elmasry's published comments about the Times showed that he saw the company's leadership as arrogant and elitist toward ordinary investors.
"Elmasry accomplished something in terms of sending a message," he said. "It's that you've got to be attentive to institutional investors. ... One of the best ways to maintain your independence is to be attentive and unfailingly polite to everyone."
(Additional reporting by Anupreeta Das)
