Morgan Stanley Files Another Complaint About NYT Co. Inaction

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By: E&P Staff

New York Times Co. shareholder Morgan Stanley Investment Management (MSIM) has filed another letter with the Securities and Exchange Commission (SEC) today expressing “disappointment” that the company refused to consider dissolving its dual stock structure.

MSIM, which holds roughly 7% of the New York Times Class A shares, submitted a proposal on Nov. 8 calling for such action. Board members of the New York Times refused to include the proxy for the company’s 2007 annual meeting.

“It is unfortunate that we are coming up on another annual meeting with further deterioration in the Company’s fundamental position, an even lower share price, and no tangible evidence of managerial accountability,” the letter warns.

In April 2006, MSIM filed a similar letter citing the company’s falling stock price as evidence of mismanagement. Class A shareholder do not have the same voting rights as those holding Class B shares. The Ochs-Sulzberger family controls the company. The complete letter follows:


January 22, 2007

Dear Class A Directors:

We are disappointed that The New York Times Company has refused to include the non-binding shareholder proposal we submitted on November 8, 2006 in the proxy for the Company’s 2007 Annual Meeting.

Morgan Stanley Investment Management Limited has held shares in the Company on behalf of our clients for more than ten years. We are not seeking to undermine the quality of the journalism or the editorial independence of The New York Times. In fact, our goal is to protect the value of the Company and its key franchise from the corrosive effects of continud mismanagement.

Our motivating concern is that without independent action by the Board and real evidence of sustained accountability, further strategic missteps, capital misallocation, franchise abuse and overly generous compensation are inevitable. We are also concerned that the sharp deterioration at The Boston Globe may well be a preview of what will eventually happen at The New York Times.

Ordinarily when we are dissatisfied with the management of a company in our portfolio, we sell our investment. However, The New York Times Company is an exceptional case. Barron’s recently reported that several independent analysts have calculated that the Company’s shares are worth 50% more than the current stock price. We also believe that the shares do not reflect the intrinsic value of the Company if it were managed and governed properly. After patiently holding the stock for more than ten years, we do not believe that we would be serving our clients’ best interests if we sold at such a substantial discount to fair value.

We acknowledge the difficult position of the Class A directors. Even though you are elected by public shareholders representing more than 99% of the economic interest in the Company, family interests in control of the Class B shares thwart the normal checks and balances built into public company governance. This has effectively impeded accountability and protected a grossly underperforming management.

A precatory vote on the proposed resolution would have provided shareholders with a constructive forum to express their views on the Company’s performance and governance practices. By excluding the proposal from the proxy, the Company has left the Class A shareholders with limited avenues for expressing their dissatisfaction with the poor performance of the managers of their business.

We are relying on you to represent the interests of Class A shareholders and act in a way that ultimately protects the Company for all of its shareholders. At last year’s annual meeting, approximately 30% of Class A votes, including those cast by MSIM, were withheld from Class A Directors. We believe that this reflected a high degree of shareholder dissatisfaction. It is unfortunate that we are coming up on another annual meeting with further deterioration in the Company’s fundamental position, an even lower share price, and no tangible evidence of managerial accountability. The Class A shareholders must again consider whether to withhold their votes.


/s/ Hassan Elamsry

Hassan Elmasry
Managing Director

cc: Arthur Sulzberger, Jr., Chairman of the Board and Publisher
Janet L. Robinson, President and Chief Executive Officer

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