By: Jennifer Saba Morgan Stanley Investment Management's (MSIM) reported decision to sell its 7% stake in The New York Times Co. will do little to move the company's current stock price, asserted Goldman Sachs.
MSIM is one of the New York Times' biggest shareholders outside the Ochs/Sulzberger family. For two years, head MSIM fund manager Hassan Elmasry has been agitating for the New York Times to eliminate its dual-class stock structure, which allows the family control of the board. Elmasry was also an outspoken critic of the company's executives and board directors.
In a note to investors released on Wednesday, Goldman Sachs analyst Peter Appert wrote "While we understand investor frustration with the underperformance of the New York Times shares (and the newspaper sector), we believe there is virtually no chance the Sulzberger family will give up control of the company.
"Limited prospect of private value realization and challenging operating fundamentals have been the key reasons for our sell rating."
The two-class structure allows Class B shareholders to elect nine of the 13 board members. The Ochs/Sulzbergers control about 90% of Class B shares and about 19% of Class A shares.
According to Goldman Sachs, as of June 30, MSIM was the New York Times' second largest institutional shareholder behind T. Rowe Price Associates (which owns 14% of Class A shares).
Shares of the New York Times are trading down 23 cents to $18.24 as of mid-morning.
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