Shareholder activism.
Get used to it. Something tells me that we’re going to see more and more of this. As a Yahoo! shareholder with a 6-digit investment in the company, I am personally growing tired of Yahoo!’s direction, management and rhetoric. Last week I published a post called “Memo to Yahoo!: Barbarians at the Gates.”
CNET has braced itself for a hostile takeover from Jana Partners.
It’s not just new media, old media is also getting the similar treatment.
As reported in the NYT itself (pretty cool, I must say):
An Alabama-based hedge fund gave notice Friday that it would try to elect directors to The New York Times Company board, a day after the same hedge fund gave similar notice to another newspaper company, Media General.
The hedge fund, Harbinger Capital Partners, a part of the Harbert Management Corporation, controls less than 5 percent of Times Company stock, a level that would require a declaration to federal regulators. It has accumulated control of more than 18 percent of Media General stock.
Of course, due to these companies dual class share structure, the ownership in percentage terms by any one shareholder - be it individual or institution - is meaningless:
Even if it was successful in electing a slate of directors, Harbinger would not be able to take control of the board without an about-face by the controlling family at each company.
At the Times Company, the Sulzberger family owns the great majority of the Class B stock, which elects 9 of the 13 directors. The Bryan family, longtime owners of Media General, holds a similar position. Both families have stated that they do not intend to sell or to abandon the two-class arrangement that preserves their control.
Are the families running these companies realistic in wanting to preserve such structures? It depends. It’s complicated, that is for sure. You have to respect ownership and such great families who have contributed so much to the history and legacy of publishing. But, on the flip side, you have to honor your fiduciary duty to shareholders once you decide to accept the public’s money. This is a difficult balance to maintain.
In a statement, Arthur Sulzberger Jr., chairman of the Times Company, said, “We have a strong and independent board, but our board’s nominating and governance committee will review the nominations and make a recommendation to our shareholders in due course.”
Words are cheap, critics would say. The market is right and the market is not very encouraging.
Times Company stock, which traded as high as $53 in 2002, closed Friday at $14.66. The company remains profitable — through three quarters of last year, it reported net income of $155.7 million, or $1.08 a share — but like the entire industry, it has been hurt by falling advertising revenue.
In addition to The New York Times, the company owns The Boston Globe, The International Herald Tribune and 15 other newspapers, and a number of Web sites, including About.com.
Digital Dreams
Ah yes, About.com. I listed NYT’s purchase of About.com as one of the best Web M&A deals of all time. I included that deal when I published the list all the way back in Fall of 2006. But now, it’s been 18 months since that list was published, but more importantly, it’s been 3 years since the deal took place. The deal was pretty cheap, at $410M, relative to prices these days. But how much has the NYT leveraged About.com to accelerate its digital strategy? I don’t know.
I commend the NYT for investing in Wordpress (HipMojo.com is powered on Wordpress), and NYT is extremely progressive with its overall digital strategy.
Martin Nisenholtz seems to be one of the most gifted digital heads of a traditional media company, and this explains why NYT is a massive online operation and the largest of any print company’s… but why is it not more?
Missed Opportunities
From my vantage point, I am shocked, for example, at some of About.com’s missed opportunities.
Take for example About.com’s relative lack of video content (disclaimer: WatchMojo.com has pitched About.com numerous times on a video content partnership). Consider the video library available on About.com:
food - 441 videos
health - 270
home and garden - 180
computing & technology - 221
parenting - 134
style - 43
autos - 20
electronics & gadgets - 25
travel - 65
cities & town - 37
entertainment - 74
business & finance - 55
A quick calculation shows that the final count is a “mere” 1,500 videos. That’s not bad compared to most media organizations’ library size, but come on: 1,500?
WatchMojo.com is a self-funded, bootstrapped startup with a (relatively speaking) tiny staff and we have more than twice that many videos since launching two years ago on January 23, 2006. Two years ago!
That’s inexcusable, especially since online video is very much incremental for print media companies (though it is cannibalistic for TV companies). All in all, I’m not sure what will happen with Harbinger Capital Partners’ efforts, but if the situation at CNET is any indication, this story will be popping up in the headlines in the weeks and months to come.
Related:
- Can Magazines Create Video Content?
- Digital Revenues are Never Incremental for Old Media
- How To Videos: Demonstrating vs. Storytelling
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