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Are Media Businesses Becoming More Like Traditional Businesses?

This blog is about the media, but sometimes talking media means talking business. In this case, the business of the New York Times, which is facing a challenge from Morgan Stanley Investment Management, which owns 7.6 percent of the company. Morgan Stanley's Hassan Elmasry wants to (and stay with me here) dismantle the Times' two-tier stock structure, which he claims "fosters a lack of board and management accountability" because it gives too much power to the owners of the voting shares. Those owners are largely the Sulzberger family, which have been involved with guiding the paper since 1896.

What does all this mean? Basically, Elmasry wants the family to have less power than it does now, and to see the Times run more like a traditional public company. He has been critical of the size of the compensation packages for the paper's executives and the fact that the company is building a huge new headquarters while cutting staff.

Elmasry's gambit is not ultimately likely to work – six of the eight family members in the trust have to approve a change to the stock structure, "and they have given no indication of any desire to change it," as Times spokeswoman Catherine Mathis told the Wall Street Journal. But it's significant nonetheless. Newspapers like the Times have long embraced the two-tier system in an effort to maintain editorial independence. But shrinking profit margins have begun to make these types of arrangements increasingly difficult for media outlets to maintain. The Los Angeles Times was family owned until it was bought by the Tribune Company in 2000, and it has had trouble defining itself in the years since. If the Times shifts to a more traditional corporate structure, the Sulzbergers will have less power to intervene in the types of decisions that in most businesses are driven largely by the bottom line.

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