Times Shareholders: The 28 Percent Uprising

There is a front page, above-the-fold story in the New York Times today buried on page C-3.

Written by Katharine Seelye, it provides more details about the Times shareholders' revolt Mickey Kaus blogged about yesterday. Details that don't bode well for Arthur Sulzberger. Hence the C-3 placement?

According to Seelye, investors holding 28% of the company "withheld their votes for directors at the annual [shareholders'] meeting yesterday, registering their dissatisfaction with how the company is performing" (Morgan Stanley says it was 31%). By comparison, just 1% of shareholders withheld their votes last year.

The only dissenting shareholder to go public was Morgan Stanley, the Times' fourth largest shareholder, with 5.8 percent of the stock. But sources close to shareholders tell me that the mutineers included the Times' top two Class A shareholders: Bruce Sherman, of Private Capital Management, which controls 14.2 percent and T. Rowe Price, the investment house which controls 13.6 percent (Adding together all of Sherman's, Price's and Stanley's shares produces a total of 33.6 percent of the stock. So the Times pegs the percentage of shares withheld at 28%, Morgan Stanley puts it 31%, and my math puts it at 33%. Whatever the exact total, it's more than a quarter of the company's shares.)

Sherman's no vote of confidence is particularly significant since his dissatisfaction helped force the sale of Knight Ridder last month.

Such an outcome is extremely unlikely at the Times, which has a dual class stock structure that gives the Sulzberger family voting control over nine of the 13 seats on the company board.

But having three of the four biggest shareholders in the company withhold their votes (and one of them publicly question the performance and salaries of top management) must put extraordinary pressure on the family to consider making a change in management - i.e. finally address its Pinch problem.

Besides having to deal with unhappy shareholders, I hear the Sulzberger clan is also getting an earful from friends on the dinner party circuit from New York to Paris (where a possible contender for Sulzberger's job, Michael Golden, is now publisher of the International Herald Tribune). They are troubled by the Times Company's plummeting stock price (down 47 percent since January 2004, 11 points worse than the industry average), the ongoing problems in the Times newsroom, and the ongoing Judy Miller/Scooter Libby embarrassment.

The problems are only exacerbated by the imperiousness of Sulzberger who, sources tell me, waited months before finally deigning to listen to Morgan Stanley's concerns.

The imperiousness appears to be contagious. Seelye's story included this gem: "The Times Company declined to comment on the vote." Stonewalled by your own ownership. What next, two word "No comment" editorials?

The Times' two-tiered stock structure can only insulate the Sulzberger clan up to a point. If the 28 percent uprising becomes a 48 percent revolution, will the Times Company -- and the Sulzberger family -- still be able to remain silent?