Investor group ready for New York Times proxy fight

By Kenneth Li and Michele Gershberg

NEW YORK (Reuters) - A dissident investor group that is now the largest shareholder in The New York Times Co (NYT.N) said on Thursday it was disappointed in a board slate recommended by the publisher and was preparing a proxy battle.

The group, comprised of hedge fund Harbinger Capital Partners and investment firm Firebrand Partners, disclosed in regulatory filings on Thursday that it had increased its stake in the Times to 15.6 percent from about 12 percent.

The Times said it was still reviewing the investor group's four board nominees, but in a preliminary proxy filed with the U.S. Securities Exchange Commission, it recommended that shareholders vote for its own slate of directors.

Times Chairman Arthur Sulzberger Jr said in the filing that the board "urges you not to sign or return any proxy card that you may receive from Harbinger."

Firebrand and Harbinger's increased holding makes it the largest public shareholder of the New York Times and International Herald Tribune publisher. The company is controlled by the Ochs-Sulzberger family through a dual-class share structure.

"Today's preliminary proxy filing by the New York Times Company is disappointing," a spokesman for Firebrand/Harbinger said in a statement.

"As the company's largest shareholder, with over 15 percent of the Class A shares, we are particularly concerned that the company refused to interview any of our nominees despite our repeated offers to meet at their convenience," he said.

The group has hired proxy solicitor DF King and plans to file its preliminary proxy next week. The company's annual shareholder meeting is set for April 22.

The Firebrand/Harbinger group aims to transform the Times from a company that does about 10 percent of its business in digital to a majority of its business in five years, a person close to Firebrand told Reuters last month.

To get there, it believes the company should sell off assets outside of its main businesses and buy up Internet companies to capitalize on the main source of industry advertising growth.

The shares of the Times rose 2.4 percent in extended trading. They had fallen 6.6 percent to close at $19.69 on the New York Stock Exchange earlier on Thursday.

TEMPEST IN A TEAPOT

Veteran newspaper analyst John Morton said the investor group might have a chance at getting some of its candidates on the Times's board, but doubted its ability to force change.

"All of this is a tempest in a teapot," he said. "The company is going to do what the family wants it to do."

Last week, the Times nominated two new candidates to its board: former Chief Executive of Salomon Inc Robert Denham and Drugstore.com CEO Dawn Lepore.