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Two Classes of Stock, One Outrage

This column was originally published on RealMoney on Jan. 9 at 10:58 a.m. EST. It's being republished as a bonus for readers. For more information about subscribing to RealMoney, please click here .

"Emmis Investor Seeks End of Dual-Class Stock" is the headline on a Wall Street Journal story about Martin Capital Management trying to get Emmis' (EMMS - Get Report) Jeff Smulyan, CEO and chairman, to eliminate the main obstacle to takeover, the A and B shares.

Of course, dual classes protect management. In this case, Smulyan has control of 66% of the votes with less than 20% of the shares.

That's a similar situation to the one of the activists who're trying to change the voting control provisions at The New York Times (NYT - Get Report).


The reason management set up the two classes of stock is because they never want anyone to have control other than themselves. Undoing it is like saying, "We want to lose control." Why would they want that?

When we started (TSCM), the bankers asked us if we wanted to have two classes of stock, because many media companies desire such a structure so they can insulate themselves from pressure.

I asked them, in my own ridiculous bluntness: "Are you out of your minds? Why would I want to hose our own shareholders?"

That's what these two classes of stock do. I think they are an outrage. One man, one vote should be the only standard.

What I don't get is who in heck would want to own one of these companies, especially when the only way out when they go bad is to sell your own stock, not to sell the company? The notion of value is hidden and never to be unlocked.

I believe that those who are trying to wrest these companies away from their owners are wasting their time. Go get other stocks. And those who are speculating that these stocks are worth getting into, now that these managements are being pressured?

Don't waste your time.

Please note that due to factors including low market capitalization and/or insufficient public float, we consider Emmis Communications to be a small-cap stock. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.
At the time of publication, Cramer was long

Jim Cramer is a director and co-founder of He contributes daily market commentary for's sites and serves as an adviser to the company's CEO. Outside contributing columnists for and, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for Action Alerts PLUS . Watch Cramer on "Mad Money" weeknights on CNBC. Click here to order Cramer's latest book, "Mad Money: Watch TV, Get Rich," click here to order his book, "Real Money: Sane Investing in an Insane World," click here to get his second book, "You Got Screwed!" and click here to order Cramer's autobiography, "Confessions of a Street Addict." While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column by clicking here . has a revenue-sharing relationship with Traders' Library under which it receives a portion of the revenue from Traders' Library purchases by customers directed there from

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