The Ochs-Sulzberger family managed to cling to their control over the New York Times (NYT - Get Report) last year, but they may not be able to keep dissidents off the publisher's board of directors this time around.
Scott Galloway of investment firm Firebrand Partners, with financial backing from activist hedge fund Harbinger Capital Partners, has hired D.F. King, a proxy solicitation firm, to press its case with New York Times shareholders in the lead-up to the company's annual meeting on April 22, according to a source familiar with the matter.
Meanwhile, a consortium of investors including Harbinger -- already the company's largest nonfamily shareholder -- have been adding to their stake. The firm disclosed in a regulatory filing late Monday that it has lifted its ownership in New York Times to 19% of shares outstanding from 16% -- giving it a stake on par with that of the Ochs-Sulzbergers.
Galloway has said in regulatory filings that he plans to nominate himself, along with three others, to represent public shareholders on The Times' board and push the struggling publisher in a new direction.For its part, the company has nominated its own directors for Class A shareholders in a preliminary proxy filing with the Securities and Exchange Commission and hasn't included the Harbinger nominees. It pressed shareholders to spurn overtures from Galloway and his partners. "Our Board of Directors unanimously recommends a vote for the election of each of our Board's nominees on the enclosed white proxy card and urges you not to sign or return any proxy card that you may receive from Harbinger," said Times chairman Arthur Sulzberger Jr. Sulzberger's family controls the company through a dual-class share structure. Its members effectively hold all the company's Class B shares, which have the voting power to elect nine of the 13 directors on its board even though they amount to a tiny slice of the company's shares outstanding. The Class A shares, which are mostly owned by the public, elect just four directors. Such arrangements are common in the media industry, where moguls like to shelter their long-term editorial mission from the short-term whims of Wall Street.