Harbinger Letter to NYT Co. Explains Hedge Fund Move on Company

By: Jennifer Saba Scott Galloway, the founder and CIO of Firebrand Partners -- the company behind the hedge fund Harbinger Capital Partners -- sent a letter to executives at The New York Times Co. explaining the rationale behind the intention to nominate four Class A directors.

In the letter dated Jan.27 and filed with the Securities and Exchange commission today, Galloway stressed how Harbinger's action differ from that of other disgruntled shareholders like Morgan Stanley and asked for a meeting with executives.

Morgan Stanley had agitated for the New York Times to restructure the company from a two-tiered stock structure into one common class of stock.

On Friday, the New York Times disclosed that the Cayman Island-based Harbinger had intended to nominate four Class A directors. Harbinger is also making a hostile run at Media General.

Galloway addressed New York Times Chairman and Publisher Arthur Sulzberger, Jr., and President and CEO Janet Robinson writing that they move beyond "the old dichotomy of 'hostile' and 'friendly' and focuses instead upon our shared interest in building shareholder value."

Those values include a focus on digital media, which Firebrand believes can be achieved with the nomination of its slate of directors. The nominees are Galloway, one former AOL director, a venture capitalist and a private equity executive.

Galloway is an associate professor at New York University's Stern School of Business where he teaches an MBA class on brand strategy. He is also the founder of Red Envelope, mainly a dotcom gift retailer and of the brand strategy firm called Prophet.

"Our desire is to serve as an honest broker between the Company, its stakeholders and the opportunities presented for shareholder appreciation," wrote Galloway.

A full copy of the letter follows.

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Mr. Arthur O. Sulzberger
Chairman and Publisher
Ms. Janet L. Robinson
President and Chief Executive Officer
The New York Times Company
620 Eighth Avenue
New York, New York 10018

Dear Arthur and Janet,

I hope this letter finds you well.

We had hoped to be able to meet with you informally to introduce ourselves and to initiate a constructive dialog. By now, I expect that you have had an opportunity to review the notice regarding our intention to nominate four Class A directors to The New York Times Company's Board at the 2008 Annual Meeting of Stockholders.

It has been, and remains, our intention to pursue this effort in a spirit of cooperation with the Board and management that moves beyond the old dichotomy of "hostile" and "friendly" and focuses instead upon our shared interest in building shareholder value. To that end, I am writing on behalf of Firebrand/Harbinger, LLC, a company formed by Firebrand Partners and Harbinger Capital Partners, who together own approximately 4.9% of the outstanding common equity of the Company, to request a meeting with you and your Board.

I want to assure you that we are not pursuing a change in the dual class shareholder structure. The New York Times is a great institution controlled by the Sulzberger family and we have no illusion about, or desire to change, that fact. Our efforts are focused on how we can work with management and the Board for the benefit of all stakeholders.

The New York Times is the world's foremost evangelist for democracy, capitalism and culture. This "public trust" is not at odds with the pursuit of shareholder value, but is complementary, as the Company's ability to fulfill this role is a function of its economic viability. The greatest threat to The New York Times is the continued diminution of its business model and destruction of shareholder value, both of which imperil the Company's ability to invest in and maintain the tradition of journalistic excellence that has made The New York Times one of the most trusted brands in the world.

There is nothing wrong with The New York Times Company that cannot be fixed with what is right with The New York Times. We believe a renewed focus on the core assets and the redeployment of capital to expedite the acquisition of digital assets affords the greatest shareholder appreciation and creates the appropriate platform to compete in today's media landscape.

The current Board, while impressive in stature, has not been effective in inspiring the requisite bold action this media environment demands. Our nominees bring deep expertise in capital allocation, Internet media and brand strategy. In addition to myself, our director nominees include: Allen Morgan, Managing Director at venture capital firm Mayfield Fund, whose investing practice focuses on internet media; Gregory Shove, a former executive at AOL and advisor to Firebrand Partners; and James Kohlberg, co-founder of private equity firm Kohlberg & Company. We are also joined in this effort by Harbinger Capital Partners, which has a long track record of identifying undervalued public companies with untapped potential and investing substantial resources to maximize shareholder value.

Our desire is to serve as an honest broker between the Company, its stakeholders and the opportunities presented for shareholder appreciation. In our meeting, we hope to discuss the optimal capital structure and a path for transforming The New York Times from a low growth company to a robust firm that is both the newspaper of record and the most trusted starting point on the Internet.

I look forward to hearing from you.

Scott Galloway

Founder and CIO, Firebrand Partners