June 28, 2006

Direct Action: Hostile Takeover Of The New York Times?
— Ace

Cold Water: Commenters are telling me, so far, that only family members have Class A stocks, which control the company. Only Class B stocks can be bought, and they're nonvoting.

I wonder if there are any other big papers or wire services which are open to a hostile takeover.

Another Update: Professor Bainbridge on the Times' dual-share system and Morgan Stanley's efforts to fight it.

Thanks to Abe, I think, for that.

...

A commenter noted that the Times has an odd arrangement whereby the Sulzberger family retains control, somehow, despite not having the bulk of voting stocks.

Does anyone know how this arrangement works, exactly? And, more importantly, how it can be undone?

Suppose there are one to three million angry, blog-reading conservatives in total.

Suppose further that each would be willing to buy 5-100 shares, depending on one's resources, if we knew we could, were we to amass a big enough pile of stock between us...

* fire the Sulzberger family

* fire Bill Keller

* and fire Risen and Lichtblau

* and furthermore shitcan them with NO SEVERENCE PACKAGES WHATSOEVER.

Is this possible?

Can we simply cash these fuckers out?

Bear in mind -- the money fronted for this would most likely be lost. We'd immediately alienate the liberal readership of the Times and destroy its reputation by tainting it with conservative ownership. But it might be money well-spent anyway.

First Things First: If anyone knows, please let me know if there's anyway to override the Sulzberger family's control over the company.

And how much stock would it take to take over? Just need a ballpark here.

Hope Springs Eternal? Andy the Squirrel concludes "you can't do anything," but...

Works like this- A shares 4 seats on the board. B shares get 13.

The Och Sulzberger family holds the B's. The B's represent a teeny tiny piece of the equity of the NYT. Basically, they got their cake and ate it too- They retained control, but got the cashola from going public.

Some investors, notably Morgan Stanley, are fighting about this, and withheld their votes for the last board election, along with 23% of the total A-share float.

This whole deal seems pretty hinky. If Morgan Stanley is "fighting it," well...

Posted by: Ace at 10:38 AM | Comments (46)
Post contains 392 words, total size 2 kb.

1 Why bother? You're seeing the death knells right now. They are a product of their own insane policies.

I'd much rather buy stock in a Powerline, Pajamas, Michelle Malkin, and / or (gasp!) AOSHQ, The model's better, and I know what the heck I'm buying.

Posted by: John at June 28, 2006 10:41 AM (Bt2Y1)

2 John, don't dismiss this too quickly. The idea may be worth investigating. Imagine, this is almost like catching an enemy spy, and making him work for us!

Posted by: Tushar D at June 28, 2006 10:43 AM (tyRhL)

3 They use Class A and Class B shares. You can only buy the Class B shares so you can't get control and shitcan the lot of them.

I like the way you think, though.

Posted by: spongeworthy at June 28, 2006 10:46 AM (uSomN)

4 So Class B are nonvoting, or are, what, voting stocks which nevertheless can't be used to gain control?

And Class A aren't traded?

Posted by: ace at June 28, 2006 10:49 AM (h7Mal)

5 Class A shares are the family's shares and I doubt they'll sell out to the likes of us!

Posted by: karl at June 28, 2006 10:51 AM (LW8Xr)

6 Do Class B shares have any decisionmaking power at all? Choosing the board of directors, setting executive compensation, etc.?

Posted by: ace at June 28, 2006 10:52 AM (h7Mal)

7 re: Class B shares

In other words, yes, we'll take your money, but we won't let you help decide how it gets spent. Just shut yer yap and wait for whatever paltry dividend check we decide to hand out, maybe.

Posted by: OregonMuse at June 28, 2006 10:52 AM (UXBVD)

8 Well... there's always the dreaded shareholder derivative suit.

Posted by: ace at June 28, 2006 10:54 AM (h7Mal)

9 Even if voting shares could be bought , it would be futile. Why? Classic collective action problem.

Only if there was a way to gaurantee that all who said they would buy stock could be forced to go through the transaction would it work. And then only if you could first determine if enough people would be willing to buy.

You would probably get a lot of people who would "pledge" to buy shares, but then they'd think "How do I know every one else who has pledged will actually buy?" and then they wouldn't buy--because who wants to be the sucker.

A dude named Olsen identified three ways in which this dilemma could be avoided, but the two most important of these (economic & social benefits) don't seem to exist in this case. To overcome this problem, you'd need to form an organization dedicated to the cause in which these benefits could be actualized (such as a "kill the NYT discount at B&N or a "screw the Times" bowling league or something).

What you would get is an affect exactly opposite of what you want because there are always a few people who would buy despite the glaring irrationality of it. The increased demand for shares would drive the stock price through the roof enriching the Sulzberger family.

Posted by: Rusty at June 28, 2006 10:58 AM (simOF)

10 Works like this- A shares 4 seats on the board. B shares get 13.

The Och Sulzberger family holds the B's. The B's represent a teeny tiny piece of the equity of the NYT. Basically, they got their cake and ate it too- They retained control, but got the cashola from going public.

Some investors, notably Morgan Stanley, are fighting about this, and withheld their votes for the last board election, along with 23% of the total A-share float.

So basically, no you can't do anything, except maybe short their stock (at your peril- I do not suggest this, at all).

AtS

Posted by: Andy the Squirrel at June 28, 2006 10:59 AM (xDozT)

11 I like the idea of letting them die a slow death because better products prevail. It is so opposite of everything the New York Times stands for... what is the word for that, oh yea, American.

Posted by: Steve at June 28, 2006 11:00 AM (VWT9p)

12 I was thinking of using some sort of washable marker (to circumvent any charge of vandalism) and writing on the paper vending boxes and trucks:

NYT ♥ Terrorists.

Posted by: shawn at June 28, 2006 11:02 AM (yp3GE)

13 I worked for a company that had the class A/B share trick, the founder used it to totally control, with zero accountability, a publicly held company while holding around 20% of the stock. He got old & stupid & ran the company into the ground. Went bankrupt & is no more. All this while the industry (telecomm) had the biggest run up in history.

The A/B scheme was a well intentioned but stupid law passed to help companies avoid hostile takeovers, but was quickly used & abused by owners to retain control while taking investor's money - and leaving the investors with no say whatsoever in the running of the operation.

Posted by: West at June 28, 2006 11:08 AM (ANBeK)

14 Actually I'd say the bigger percentage play is on AoSHQ being bought out by NYT as they look to improve their online presense.

http://gigaom.com/2006/06/22/new-york-times-wants-to-be-more-digital/

So in 3 months from now Ace will be offering posts such as "At Home With: Andrew Sullivan's Chic Freak-out Batchelor Pad" and "Habitat: Co-existing with Oliver Willis, and Liking the View" we'll know why.


Andy the Squirrel

Posted by: Andy the Squirrel at June 28, 2006 11:09 AM (xDozT)

15 Thank you for posting this Ace. I know a lot of people will not believe me, but unless you are a high ranking CFR member, with like minded individuals, nothing is going to happen.

All this talking about hurting the NYT in the news is just that. The CFR wants open borders, Superhighway, (almost there), money out of the hands of Congress, (got it), and One World Government. Remember Bush Sr., and the new world order during the first gulf war?

Posted by: Leatherneck at June 28, 2006 11:11 AM (D2g/j)

16 Ace, are you a ranking CFR member? More to the point, Bainbridge had an interesting post regarding shareholder revolt: http://www.professorbainbridge.com/2006/04/ny_times_stockh.html
The comments that follow give some background as well.

Posted by: abe shorey at June 28, 2006 11:17 AM (LomBE)

17 Google is set up the same way, where the founders and CEO have a class of stock with increased voting rights (so even with a minority ownership share, they still control the company).

As noted in an earlier comment, it lets one group of shareholders have their cake and eat it too; they get to keep control of the company without assuming the risks of ownership.

Conversely, the public shareholders are essentially along for whatever ride the preferred shareholders choose to take them on. They get a share of the profits proportional to their ownership, but no mechanism to express dissatifcation (i.e. board replacement) with their current shareholder representitives.

Posted by: jmn at June 28, 2006 11:23 AM (s+V1c)

18 I always wondered why it took market forces so long to give us Fox News. The profit oppoprtunity was there for a long time.

Posted by: Mark at June 28, 2006 11:24 AM (QE/AK)

19 "We'd immediately alienate the liberal readership of the Times and destroy its reputation by tainting it with conservative ownership."

Whenever I mention the "liberal media" to my liberal friends, they always claim that they are not liberal because they are owned by big businesses, which are, for the sake of their argument, conservative. Therefore, in the minds of liberals, nothing should change as a result of such a buyout.

Posted by: Scotian at June 28, 2006 11:24 AM (FP5y4)

20 re: Class B shares

In other words, yes, we'll take your money, but we won't let you help decide how it gets spent. Just shut yer yap and wait for whatever paltry dividend check we decide to hand out, maybe.


I'm trying to remember the news reports (presumably not in the NYT) about shareholders being forced to buy Class B shares at gunpoint.

Aren't you essentially complaining about capitalism, here?

Posted by: Auguste at June 28, 2006 11:29 AM (c7rNU)

21 On the charge of liberal bias, Sulzberger laughed.

"I hear more complaints that the newspaper is in the pocket of the Bush administration than that it is too liberal," he said.

Posted by: Mark at June 28, 2006 11:42 AM (QE/AK)

22 Whenever that asshole says that, I wish a reporter, any reporter, would have the guts to follow up with, "LIKE WHO PINCH? WHO ACCUSES YOU OF BEING IN BUSH'S POCKET?"

AtS

Posted by: AtS at June 28, 2006 11:47 AM (xDozT)

23 Isn't this just a common stock/ preferred stock split?

Leatherneck, I know of conservatives in the CFR. They don't decide anything, they're just a think tank with honorary memberships.

It's really the Templars who are running everything.

Posted by: See-Dubya at June 28, 2006 11:47 AM (jaCyN)

24 Even if we could grab control of the NY Times, I'd rather not run up the stock price and allow these pigs to cash out.

They made their beds, let them lie in them.

Posted by: The Warden at June 28, 2006 11:51 AM (8WTw1)

25 I'm trying to remember the news reports (presumably not in the NYT) about shareholders being forced to buy Class B shares at gunpoint.

Aren't you essentially complaining about capitalism, here?

I don't know. If this was concocted as a liberal reaction to the scary-evil hostile takeovers of the eighties, then this scheme is in fact anti-capitalism.

As for preferred/common stock--

in those schemes, don't nonvoting stocks get a bigger slice of the profit pie in exchange for giving up control of the company?

This seems to be different. If it's not different, I don't know why they don't just call the shares common and preferred.

Posted by: ace at June 28, 2006 11:53 AM (h7Mal)

26 Isn't this just a common stock/ preferred stock split?

Not exactly; preferred stock (despite the name) usually doesn't have voting rights and is held by insiders (and is often convertable to common stock at some point in the future). This is more or less the reverse of the NY Times situation.

Preferred stock dividends must be paid before any dividends can be paid out to common stock owners, however.

The correct terminology for the NY Times structure is different share classes (as has been used throughout this discussion); it's all common stock, just different classes of common stock.

Posted by: jmn at June 28, 2006 11:58 AM (s+V1c)

27 Well Enas, you see, you got the Illuminati moving in and taking over, using the Templars as "muscle".

thanks for the review of common/preferred stocks...I thought corporations were able to put whatever funky restrictions on the different stock classes that they wanted to, so I guess this split doesn't bother me too much.

Posted by: See-Dubya at June 28, 2006 12:11 PM (jaCyN)

28 The hell with stocks. Where's the news on Gaza? I want Israel to raze Gaza. Just knock down every building, bridge, road, house . . .

Posted by: shawn at June 28, 2006 12:16 PM (yp3GE)

29 See-Dubya, Bush is suppose to be conservative, but the border has been wide open. Yes, I understand it is a think tank, and most of the government are members. I just think it has become a danger to this country that so many within the CFR are for a North American free trade zone, Superhighway, and more power to the U.N.

The NYT is an endowment, or foundation, we can never touch it without force of arms. Ace's stock plan was very smart, but this type of group was created to hide, and keep wealth, and pass it on to their American hating kids.

Posted by: leatherneck at June 28, 2006 12:26 PM (D2g/j)

30 "Preferred" usually refers to the place in line a preferred stock holder stands to receive consideration in the event of a liquidation bankruptcy, behind bond holders but ahead of common stock owners.

The voting class of shares are usually not publicly traded and can only be sold back to the company in a private sale. Ford Motor, at least up until recently, still had a similar structure since going public in the late 40's I think.

Many companies with a strong founding family presence use this type.

Posted by: slatz at June 28, 2006 12:47 PM (xG58s)

31 "Preferred" usually refers to the place in line a preferred stock holder stands to receive consideration in the event of a liquidation bankruptcy...

That's correct; another type of stock somewhat similar to the NY Times multi-class shares is Restricted Stock, which is increasingly being given to employees as stock-based compensation (in lieu of stock options). This is basically common stock, except that it can't be sold (but unlike the NY Times stock, does not have any special voting rights); it may also have to be sold back to the company if the employment relationship ends.

I believe Ford family does still have the higher-voting rights shares - does anyone really think that Henry Ford's grandson (or is it great-grandson?) is really the most qualified CEO avaialble, and that he would have been hired had the decision been made by unbiased (i.e. not the Ford family) investors?

Posted by: jmn at June 28, 2006 01:35 PM (s+V1c)

32 I wonder if Pinch would be more concerned about the bottom line if his personal wealth was more tied to the fortunes of the Times. He can't be fired no matter how poorly the Times performs so he is free to run them into the ground while still collecting his paychecks and patting himself on the back for his speaking truth to power despite the damage to the Times bottom line. How courgageous of him to piss away other peoples money in fealty to his progressive views. In fact when you think about it its kind of metaphorical for the entire progressive movement.

Posted by: Big E at June 28, 2006 02:05 PM (0YKcF)

33 Geez, Ace, someone must have slept through Business Admin the day they taught enforcing voting agreements for shareholders.

I know I knew this stuff once.

Posted by: joeindc44 at June 28, 2006 02:10 PM (oPaLb)

34 Buy enough shares to get to the shareholder's meeting. Once there, you should be able to get some access (like the Rachel Correy protesters at the Caterpillar stockholder's meetings) to the talk directly to the family.
Do you think the NYT would have the testicular fortitude to not publish a big stockholder's protest at their own stockholder's meeting? It certainly would be interesting. And you should be able to get in with a minimal number of shares.

Han

Posted by: Han at June 28, 2006 02:28 PM (BqK8N)

35 BIRDCAGE LINNER BIRDCAGE LINNER I DONT WANT IT ON THE BOTTOM OF MY CAGE I,LL PICK THEIR EYES OUT SQUAWK

Posted by: spurwing plover at June 28, 2006 04:13 PM (n7v4a)

36 Oooh, what a clever plan. And you know so much about stocks! Wow! Did you take a night school course? You're so smart, when you say Class A and Restricted and Preferred and stuff! Smart means you're only one step away from being rich, right? When you're rich, I want to know you! Please be my smart, rich, conservative friend, please? Then we can shoot the liberals who came up with twisted stock schemes!
Oh wait, another good idea, let's go to the shareholders meeting! I'm sure no one ever thought of that with Exxon and other companies, right? Wow, you're so smart!
Awesome! I'm so glad I know you guys, because you're smart AND almost rich! Fight the power, guys!

Posted by: Patriotical Guy at June 28, 2006 05:44 PM (oxnFJ)

37 The Boston Celtics used this arrangement when the team went public. Mostly, it was a sucker bet.

For the NYT, it lets the non-voting investors show their support with their stock purchases. Kinda like giving the Pope a new ruby pinkie ring in exchange for an indulgence - it helps get you into Liberal Heaven.

Posted by: Whitehall at June 28, 2006 05:46 PM (1XkY8)

38 Hey Patriotical Guy! What a clever comment! And you know so much about sarcasm! Wow! Did you take a night school course? You're so funny, when you say "You're so smart" and "let's go to the shareholders meeting" and "Fight the power" and stuff! Funny means you're only one step away from being attractive to women, right? When you're attractive to women, I want to know you! Please be my funny, attractive to women, liberal friend, please? Then we can shoot the conservatives who aren't as funny and sarcastic as you! Oh wait, another good idea, let's go to the comedy club! I'm sure no one ever thought of that with your hi-lar-i-ous sarcasm, right? Wow, you're so funny! Awesome! I'm so glad I know you, because you're funny AND almost attractive to women! Fight the unattractiveness, guys!

Posted by: Over-obvious-sarcastical Guy at June 28, 2006 06:05 PM (+lA9g)

39 man, looks like you guys have been eating the industrial grade crack again.

after this, you can take over GM and start producing really bitchin hot rods, too!

Posted by: JD at June 29, 2006 05:43 AM (xD5ND)

40 Actually JD ya might be able to buy what is left of Gm for less that ya think in a few years. From what I understand the company is in debt up to its ears.

Posted by: jones at June 29, 2006 08:54 AM (lJUwT)

41 Look if you don'y like the NYT don't buy it: either the stock or the daily paper. But for Chr*st's sakes please stop WHINNING about it. Go back to whinning about Cindy or Ted for a change. How about France ?? Haven't heard about them in a while.

Posted by: JOHN RYAN at June 29, 2006 08:54 AM (TcoRJ)

42 John how about you run along to Kos or DU where they never whine about anything. Rather, they have reasoned debates about topical issues representing a wide range of opinions.

Of that's right, none of that is true. Nevermind.

Posted by: JackStraw at June 29, 2006 08:59 AM (J8+2b)

43 Never mind him, Jack. There's one or two guys who keep coming to dead threads and trying to get in a last sarcastic word. I've seen it happening in several threads already.

Posted by: jhc at June 29, 2006 09:28 AM (+lA9g)

44 Perhaps John should be WHINING about the quality of his spelling teachers.

Posted by: JD at June 30, 2006 04:27 AM (xD5ND)

45 No, let him keep up his WHINNING. That's the sound an ass makes.

Posted by: Muskwa at July 01, 2006 06:05 AM (mShGb)

46 Good design!
http://vngqzrfo.com/tehk/hcqu.html | http://dhxuhljd.com/floz/bgka.html

Posted by: Jason at July 14, 2006 10:15 PM (d4Z47)

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