Ordinarily, anxiety would seize the entrenched management of a financially challenged public company when an outsider suddenly shows up with a sizeable new holding of its battered stock. But not Arthur Sulzberger Jr., chairman and scion of the beleaguered New York Times Co., which has increasingly become the target of investor angst and ire.
In a previously scheduled town-hall meeting Thursday at New York Times headquarters, Sulzberger disclosed that the purchase of a 6.4 percent stake in the Times Co. by Mexican telecommunications billionaire Carlos Slim Helú and his family came as no surprise. According to staffers who attended the meeting, Sulzberger said he'd been aware of the potential for an investment as a result of previous conversations he'd had with Slim's representatives about the Times's plight and prospects.
Sulzberger, who in addition to his top corporate role is the newspaper's publisher, was "confident and comfortable," said one staffer at the meeting, and disclosed that he and Slim's representatives "had been talking for a while." The source added that Slim or Slim's representative had alerted Sulzberger of the pending investment. The Times boss told the gathering of employees that he and Slim were "on the same wavelength" in their positive outlook about the company's future, and that Slim "wants to be along or with us for the ride."
The investment first came to public light in a regulatory filing Wednesday. Based on the publishing company's share price of almost $14 at the end of trading Wednesday, Slim's holding was valued at $127 million. A spokesman for Slim's telecommunications empirem, Telmex, confirmed the investment Wednesday in a statement to the newswire Agence-France Presse, describing the holding as "a financial investment like many others by the Slim family." The spokesman said the family doesn't intend to try to involve itself in the management of the publishing company. A spokesperson for the New York Times didn't respond to an e-mail or phone message before NEWSWEEK's deadline.
The Times has watched its share price collapse in recent years from a peak of almost $53 in 2002 (the publishing company's shares closed at $15.23 in New York Stock Exchange trading Thursday, up more than 9 percent on news of the Slim investment). Such dramatic deterioration in share prices has swept the entire industry in recent years as newspapers struggle with a profound shift in the business of journalism—and specifically its financial lifeblood, advertising—to the Internet and as the economy has softened. Slim is one of several investors in recent years to acquire a Times stake large enough to require disclosure under U.S. securities regulations. Morgan Stanley sold its 7.2 percent New York Times stake in 2007 after a fruitless two-year campaign to force the company to end its dual-class voting shares; under the structure, Class B shareholders—of which the Sulzbergers are the predominant members—elect 70 percent of the board of directors, while Class A shareholders vote in the rest. On the heels of Morgan Stanley's rebuff, a pair of hedge funds acquired a stake of more than 20 percent in the Times. Initially seeking to install four directors through a proxy fight, Harbinger Capital and Firebrand Partners negotiated a compromise with company management for two board seats, ending a hostile bid to shake up the company.