Holy moly! We thought it would never happen. Arthur Sulzberger Jr. has loosened his viselike grip on the Times and agreed to give Scott Galloway a seat on the board. In case you missed it, Galloway (shown in a picture we can not get enough of) is a former ZBT frat boy who reportedly refers to himself a "vagilante," and the founder of Firebrand partners, a hedge fund that, along with Harbinger Partners, recently amassed a 12 percent stake in the Times. The two groups were leveraging said stake to get four seats on the Times board; however, Sulzberger gave them only two. Still, the Times itself points out, this is the first time the family given seats to people nominated by outsiders since 1967, so it's nothing to sneeze at. Galloway will occupy one of the two seats; the other will be occupied by James Kohlberg, the chairman of Kohlberg & Company, who was also nominated by Firebrand/Harbinger. Harbinger's Philip Falcone, who recently bought Bob Guccione's mansion, was not invited. The hedge funds have said that their aim is to get the Times to sell off some of its smaller assets (shares in the Boston Red Sox, the Boston Globe and smaller newspapers, and buildings like maybe even their headquarters) and focus more on digital media. Presumably, they also think they should drop the bridge column, but we're just guessing.
Times Co. To Give Seats to Hedge Funds [NYT]
Earlier: Intel's coverage of Scott Galloway
• Manhattan's Tonic East restaurant will pay $35,000 to settle a lawsuit alleging that the eatery discriminated against blacks wearing hip-hop clothing and urban wear to a Super Tuesday event for Barack Obama supporters. [NYT]
• Office procrastinators might have to look for a new method for wasting time: Scrabulous is under fire. [DealBook/Alley Insider]
• Airborne, the cold-relieving drug of choice for many cube dwellers around the city, will pay $23.3 million to settle claims of false advertising. Says one critic, "Airborne is basically on overpriced, run-of-the-mill vitamin pill that's been cleverly, but deceptively, marketed." Holy wow. Anyone want to come together and ratchet this up to class-action against "second-grade teacher" founder Victoria Knight-McDowell? [CNN]
Sarah Jessica Parker is not confident that her unreleased movie, Spinning Into Butter, will ever see the light of day. Barack Obama and his wife are slated to attend the opening of Cat on a Hot Tin Roof with Oprah on Thursday. Cosmetics heir Olivia Chantecaille got engaged to banker boyfriend Ren Grady. Gossip Girl's Blake Lively took a bunch of friends shopping to Armani Exchange on Fifth Avenue. Shake Shack is opening a location on the Upper West Side! Sting, Diddy, and Josh Hartnett all hung out at Half Nelson producer Charlie Corwin's birthday at Socialista, which is now back open after the hepatitis scare. Michael Musto will appear on the cover of The Village Voice spoofing this magazine's Lindsay Lohan shoot.
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We're feeling sort of bad for Pinch Sulzberger. Not only is the Times under attack by activist shareholders trying to place their own snatchbuckling vagilantes on the board in order to tell him how to run his business, he also has to deal with growing tension between the business and editorial sides over newsroom cuts he said last month were imminent. Apparently, the business side is acting all smug about the impending layoffs, since they think, a source tells Portfolio, "they've taken the majority of the hits so far while the newsroom has stayed untouched." Meanwhile, the editorial side, more neurotic than ever, has got its back up about the effectiveness of the business side: "Are they doing all that they can to operate in such a way that the business could be profitable enough to pay for all that great journalism?" one Times source asks Portfolio, of the business side. But really, can't they all just get along? "Having a big fat debate … while Murdoch's saying 'I'm going to take you out' — tell me how that's supposed to make sense," a former Times exec beseeched Portfolio. "They ought to be looking outward, at how they can work together." It's enough to give anyone an ulcer. Or something more serious? "Page Six" reported today that Pinch has sold his wife their Central Park condo — for estate-planning purposes. Pinch is only 57! Does he think this is going to drive him to an early grave?
Strife at the New York Times [Portfolio]
Penny Pinch-er [NYP]
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Arthur "Pinch" Sulzberger and the board of the New York Times have agreed to meet with four nominees being put forth by Scott Galloway, of Firebrand Partners, and his partner, Atlanta-based investment firm Harbinger Capital, Times spokeswoman Catherine Mathis confirmed to the AP today. Up until now, the board has declined a meeting with the activist shareholders — who earlier this month announced they'd like the Times to cut several small businesses from their portfolio and build up their online operations — and have essentially ignored the nominees they proposed adding to the board, swashbuckling former ZBT brother and Red Envelope founder Galloway included. This is likely because Sulzberger was thinking something along the lines of, "What the eff does an ex–frat boy b-school professor with a moderate-to-undistinguished investing record know about the newspaper business? Fuck 'em!" But over the past month, the firm has amassed a somewhat terrifying 19 percent stake in the Gray Lady, and now, apparently, Pinch & Co. don't feel they have a choice. The Times' annual meeting is set for April 22.
N.Y. Times to Meet With Board Nominees [AP]
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Swiftly after yesterday's news that Firebrand Partners and Harbinger Capital Partners increased their ownership of the New York Times to nearly 10 percent, we learn that Arthur Sulzberger has made his nominations for the two empty seats on the company's board. The two hedge funds were hoping to seat two of their own people on the committee, to steer it toward focusing on its core assets and developing its digital brands. To do that, they nominated four digital and financial gurus: AOL's Gregory Shove; James Kohlberg, co-founder of the private equity firm Kohlberg & Co.; the Mayfield Fund's Allen Morgan; and our favorite vagilante ever, Scott Galloway. The Times, in retaliation, nominated Drugstore.com CEO Dawn Lepore and former Salomon CEO Robert Denham. The hedge funds met with Sulzberger on Friday and urged him to have his nomination committee interview their candidates, but apparently Sulzberger was uninterested. In our inexpert opinion, the board should just vote to approve whichever new member will support more Britney Spears coverage. Because apparently that's the only way to make money in print these days.
Sulzberger Strikes Back [Portfolio]
Related:Vagilante Shareholder Scott Galloway Takes on the 'Times', A Harbinger of Things to Come? Hedge Funds Increase Share in 'NYT'READ MORE »
Okay, so there was a debate last night. All of the Republican presidential candidates got together to chat about whom people should choose in the voting booth (we'll have details for you later). But, see, you might not hear much about it because it didn't really matter. Why not? Because the Times bogarted all of the primary discussion this morning with their unsurprisingly self-righteous endorsements. For the Democrats, they chose Hillary Clinton because they "are hugely impressed by the depth of her knowledge, by the force of her intellect and by the breadth of, yes, her experience." (Don't worry, though, they totally heart Obama, too.) And for the Republicans, they begrudgingly chose John McCain. Except it wasn't so much an editorial supporting McCain as it was one attempting, once and for all, to obliterate Rudy Giuliani.
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• The credit crunch may take down high-flying real-estate baron Harry Macklowe, who bought $7 billion worth of midtown office space with a mere $50 million of his own money. Here's a tip — when journalists start calling you "high-flying," you know you're in for a fall. [NYT]
• The man behind the biggest fund in New York may be state comptroller Thomas DiNapoli, the sole trustee for the $154 billion state pension plan. Most states use a multi-trustee board, and some are complaining that DiNapoli has too much power. [NYT]
• Warren Buffett, looking to cash in on the credit crunch, may buy failing Countrywide. Meanwhile, you still can't buy an apartment. [DealBook/NYT]
While we're all distracted by the newspaper family currently confabbing in Boston — and there's no movement on the Bancroft-o-Meter today, as we haven't seen any news reports speculating further on who in the family stands where — some intriguing news came yesterday from the New York newspaper family that's been busy moving great-grandpa's keepsakes around the corner in Hell's Kitchen. The New York Times Company released its second-quarter financials yesterday, and in what can only be dispiriting news to the Sulzbergers, income from continuing operations fell an impressive 59 percent from a year earlier as advertising continues to crater.
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It might still be up in the air between Hillary Clinton and Barack Obama. Republicans might all be holding their breath for the inevitable explosion of the Rudy bubble and the subsequent inflation of — who? McCain? Romney? — a successor. But one primary has solidified in the last few days: Media moguls are backing Mike Bloomberg for president.
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Billie Jean King says she wouldn't mind taking fellow lesbian Rosie O'Donnell's spot on The View. Socialiterank.com will post no more, but its (still anonymous) founders do have a book deal. Arthur Sulzberger Jr. was marginally insensitive toward deaf people at the New York Times Co. annual meeting. American Idol contestants put on a private performance at Rupert Murdoch's house. Christie's exec John Hays made a quip about Katie Couric at the Children for Children benefit. Cameron Diaz went shopping in Soho, then freaked out when the paparazzi showed up. Kate Winslet likes New York's paparazzi more than London's. A woman obsessed with Sandra Bullock tried to run over Bullock's husband with a car. Hugh Grant was arrested on an assault charge after throwing baked beans at a paparazzo.
A Reuters item from this morning that's worth not overlooking:
NEW YORK (Reuters) — New York Times Co. investors should not expect the Sulzberger family to change the way it runs the company despite pressure to scrap its dual-class share structure, a close adviser to the publisher said on Wednesday.
"There's no possibility of it changing," Quadrangle Group managing principal Steven Rattner told the Reuters Hedge Funds and Private Equity Summit. "I don't think this is a situation where you're going to find some surprise ending to the story."
In his new memoir, former Time Inc. editor-in-chief Norm Pearlstine accuses New York Times publisher Arthur Sulzberger of being more concerned with publicity than with the law during the Judith Miller saga. (Of course, Pearlstine was concerned with neither, happily capitulating to the prosecutor!) Tom Brady and Gisele went to Easter Mass in Little Italy. Disgraced former Miss USA Tara Conner has left New York for L.A. Scarlett Johansson and Ryan Reynolds now seem to be an item. Socialite Dori Cooperman was arrested and charged after she allegedly stole and cashed a $4,300 check. A Gawker editor had a tough time handling Jimmy Kimmel's questions on Larry King Live. Giada De Laurentiis may be one of Tiki Barber's co-hosts on the Today show.
• Pinch Sulzberger: "Will we print the NYT in five years? I don't care." [Haaretz via E&P]
• GE CEO Jeff Immelt calls a Post story about a sale or spinoff of NBC Universal, "more or less made-up stupid drivel." [Fortune]
• Will Ferrell and Sacha Baron Cohen "too big" to share VF's Hollywood cover. Ben Stiller, Owen Wilson, Chris Rock, and Jack Black apparently not so big. [Deadline Hollywood/LA Weekly]
• The Ochs-Sulzberger family wants their money out of Morgan Stanley, after a London-based Morgan managing director tried to incite a shareholder revolt at the Times. [Fortune via CNNMoney]
• Hedge-fund heavies like T. Boone Pickens, Paul Tudor Jones II, and Carl Icahn have all donated to Rudy Giuliani's exploratory committee. They maxed out their donation: a whopping $2,100. [DealBook/NYT]
• Equity Office's board rejects Vornado's cash-and-stock takeover bid and instead goes for Blackstone's cash offer of $54 a share. Shareholders will likely vote next week. [CNNMoney]
Speaking of loving the Times, this seems as good a time as any to make a few points about Hank Greenberg, dual-class ownership structures, that prig Hassan Elmasry at Morgan Stanley Investment Management, and the great, good benevolence of the Ochs-Sulzberger family. It's simple, really: Notwithstanding whatever noise to the contrary you've been hearing lately, the New York Times Co. will not be sold. Say it again, together: The Times Co. will not be sold. The Sulzbergers have all the power, and — much as one might like to mock their current leader, Arthur Jr., and much as he may have made a series of a stupid strategic decisions — they're not going to let anyone else buy it.
And that's a good thing.
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