Hard Times: Morgan Stanley Sells Off Entire NYT Stake, Other Institutional Holders Likely To Follow Suit

Meh. I don't think the douchey Sulzberger family cares that much. They're rich enough to not care about money, and to imagine the family will always have it.

There's a bit of an asterisk on this story as it seems to come from one source, though neither Morgan Stanley or the NYT is commenting, which suggests it's for realies.

Morgan Stanley, the second-biggest shareholder in New York Times Co., sold its entire stake today, according to a person briefed on the transaction, sending the stock to its lowest in more than 10 years.
The person declined to be identified because Morgan Stanley hasn't made the sale public yet. Traders with knowledge of the transaction said Merrill Lynch & Co. sold New York Times stock worth $183 million in a block trade.

...
New York Times shares slid 48 cents, or 2.5 percent, to $18.43 at 12:44 p.m. in New York Stock Exchange composite trading and fell as low as $18.28, a level not seen since January 1997.
If Elmasry has sold the stock, ``it's almost a dead certainty there would be a bailout of other institutional holders,'' Bibb said in an interview. ``If that happens and there is a sharp drop in the share price, the Sulzbergers have to sit down and decide whether now is not a good time to take the company private.'

But the Sulzbergers would presumably come out ahead -- outside investors bought high, and now the family would be buying them back out at, I imagine, a sharply lowered price. The difference went into their pockets and would stay there.

Kind of like Enron. Perhaps former Enron advisor Paul Krugman will take this opportunity to expound on callous plutocrats preying on middle class investors.

Posted by: Ace at 03:24 PM

Comments

They're not at risk.

Dammit.

Posted by: Dave in Texas at October 17, 2007 02:26 PM (FXakj)

NYT has two kinds of shares. A shares and B shares.

A shares (all owned by Sulzberger family) come with voting rights.

B shares (hypothetically) come with an ability to get dividends.

Morgan Stanley tried to force NYT to give voting rights to B shares. They failed, so now they are bailing out. If they had succeeded, they could have whipped NYT back in shape with shareholder pressure.

Posted by: Tushar D at October 17, 2007 02:34 PM (IlgNp)

3 They'd better take it private before the valuation forces them to take it private. The NYT is rapidly descending to penny stock. Wow.

Posted by: Chip at October 17, 2007 02:38 PM (wtg+1)

4 HEARTACHE!

Posted by: Morween Dowd at October 17, 2007 02:47 PM (AQj/2)

A second source: http://www.nytimes.com/2007/10/17/business/media/17cnd-paper.html?ref=business

Not that they can be trusted, of course.

Posted by: Confederate Yankee at October 17, 2007 02:53 PM (ScOBm)

6 This was pointed out to me awhile ago, but I find it really funny:

Apparently the aggregate value of all NY Times shares is less than the value of the real estate the NY Times owns. So according to the market, the NY Times brand actually has a negative value.

Posted by: Ryan Frank at October 17, 2007 02:53 PM (j0mjH)

7 Morgan Stanley tried to force NYT to give voting rights to B shares. They failed, so now they are bailing out. If they had succeeded, they could have whipped NYT back in shape with shareholder pressure.

As I understand it, the NYT would rather fold than have anyone else tell them what to do--even if it might benefit them.

Posted by: CT at October 17, 2007 02:54 PM (KV/Mz)

8 Time to sell those guys short.

Posted by: Iblis at October 17, 2007 02:56 PM (9221z)

9 BWAHAHAHAHAHAHAHAHAH! It couldn't have happened to a nicer bunch of people.

Posted by: adamthemad at October 17, 2007 03:09 PM (kIjlp)

This is sure not the right time to go private with all the disruption in the Credit Markets. To do it they would probably need a sponsor like TH Lee, Appollo or KKR - those guys would whip the Times into shape faster than Morgan ever would.

Posted by: holdfast at October 17, 2007 03:30 PM (Gzb30)

11 I doubt that the Sulzberger's could find a banker to finance the buyout. As holdfast noted, folks like KKR are a lot harsher than JP Morgan wrt operations.

I still am surprised the class B shareholders weren't willing to institute a shareholder action against the boardmembers. Clearly Pinch et al are completely indifferent to maximizing shareholder value, which I thought would put them at risk for a successful lawsuit. Maybe JP Morgan didnt' have the stomach for a fight like that.

Posted by: iconoclast at October 17, 2007 04:04 PM (TzLpv)

It's the damn Joos. They want to drive the stock down and go private. Crazy like a Canadian. The Sulzberger family, they're Mohammedans, right?

Kemp

Posted by: kempermanx at October 17, 2007 04:05 PM (iLWmI)

13 iconoclast - I'm no expert in the field, but my personal philosophy is that the Class B holders knew what they were buying - and were stupid to buy. That sort of idiocy should be punished in the market. You don't see a lot of straight managemetn LBOs these days (at all?), and I don't think Pinch would like to be Henry Kravis' bitch (though Ms. Kravis is apparently quite comely, see Mark Steyn's blog from the Black trial at Macleans.ca).

Posted by: holdfast at October 17, 2007 06:06 PM (Gzb30)

14 At this point I think newspapers like the NYT believe they are on a holy crusade, and losses are a noble price to pay for Doing the Right Thing�.

Posted by: Christopher Taylor at October 17, 2007 06:43 PM (wmgz8)

15
#11 iconoclast said I still am surprised the class B shareholders weren't willing to institute a shareholder action.

I thought there had been two shareholder actions already, BICBW. This probably is just one more step in a long journey to the Sulzbergers taking the company private for pennies on the dollar.

Speculating wildly, it's possible this is a setup by the Sulzbergers to drop the stock price within their reach while the NY Times is still profitable enough for their credit rating not to completely collapse, which would bring about the end of the newspaper.

&nbps

JSYK, the San Francisco Chronicle has been losing $1 million a week for years, totalling to more than $330,000,000 in losses.

Posted by: Looking Glass at October 17, 2007 07:08 PM (42wFw)

16 holdfast

While class B shareholders were stupid, they still have many rights. And the board of directors has many responsibilities, first of which is to maintain/increase shareholder value.

Take a look at some of the "activist" funds, like Barington Capital.

Anyway, at some point the Sulzbergers may notice that Pinch is pissing their money away and take steps themselves.

Posted by: iconoclast at October 17, 2007 07:13 PM (IAKPF)

17 Maybe, or maybe they view it as a price worth paying for making a better world. It's hard to know what's going on in the mind of the left.

Posted by: Christopher Taylor at October 17, 2007 07:41 PM (wmgz8)

If it were resuscitated, it�s not like it would turn into a paper that�s sympathetic to Republicans or even neutral--just a somewhat less reflexively liberal paper with wider readership and fewer consistent knocks on its credibility.

So - it probably can�t be peeled away from Pinch�s control, but whoopee - that just means a solidly liberal and biased organ will continue to lose readership and continue to lose respect.

Posted by: AD at October 17, 2007 08:17 PM (B8Zms)

19 Are you sure the family bought those shares? Because Rupert Murdoch is awfully liquid, if you know what I mean. Just saying.

Posted by: comatus at October 17, 2007 09:12 PM (VjNM6)

20 Rupert Murdoch is awfully liquid, if you know what I mean.

Oooooooooo, now that would be interesting.......

Posted by: wiserbud at October 17, 2007 09:34 PM (rt8oV)

21 I thought there had been two shareholder actions already, BICBW. This probably is just one more step in a long journey to the Sulzbergers taking the company private for pennies on the dollar.

oooh, I hope it is that transparent. That kind of manipulation will land somebody in jail.

Board members have two primary duties. A fiduciary duty and a loyalty duty. Breaching either in a public company can land you in a whole lot of hot water.

Posted by: iconoclast at October 17, 2007 11:39 PM (jjtMr)

22
Didn't Murdoch just buy Dow Jones, including the WSJ? And buying up the stock won't do any good, it won't give control of the Board of Directors. That's the whole trouble with the NY Times' two-tier stock system.

Otherwise a low enough stock price would lead a corporate raider to buy the Times just to break it up and sell for an immediate profit.

Posted by: Looking Glass at October 18, 2007 12:51 AM (42wFw)

23
James Felix on Hot Air explains it better.

Posted by: Looking Glass at October 18, 2007 12:56 AM (42wFw)

24
Walter Duranty, NY Times Editor and Pulitzer Prize winner blogs from Hell.

We tank the business and when the stock price starts hitting the carpet, we take the whole show private and keep the change.

Lots more NY Times parogy entertainment there.

Posted by: Looking Glass at October 18, 2007 05:47 AM (42wFw)

Sure, lower the price, take it all private shelling out the money to do so - and then hope that the NYT hasn't been so badly damaged that it can be resurrected (attracting new and former readers without ticking off those readers that had remained).

Or the Sulbergers and the Ochs may just pay to be the only mourners at the funeral.

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