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
Philip Falcone, the man behind Harbinger Capital Partners, one of the activist hedge funds that recently acquired a large stake in the New York Times, has outdone his partner, noted vagilante Scott Galloway. Falcone and his wife have officially purchased the Guccione mansion, the Post tells us today, for $49 million. In cash. The townhouse, which is on East 67th Street between Fifth and Madison, has 27 rooms, including a massive full-floor master bedroom with a study, a solarium and private terrace, a theater, a wine cellar, a "dance" room, a garden with a greenhouse, a sauna, servants' quarters, eleven bathrooms, eight fireplaces, and, according to the Observer, a "massive, shimmering Roman-style pool." Still, "It’s odd to talk about houses like this," the Corcoran agent who previously handled the listing told the Observer, "but that house had an odd energy to it … Whenever people brought in children, they were ready to leave." Well, yeah. Think of the things that must have gone on in that pool.THE $49M TOWN HOUSE [NYP]
Bob Guccione's Old Mansion, Despite 'Odd Energy,' Closes for $49 M. [NYO]
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]
• Scott B. Meyer, the chief of About.com, said yesterday that he would step down next week, on the heels of news that Scott Galloway and his merry band of vagilantes were going to try to pressure its parent company, the New York Times, to change the way they handle internet operations. [NYT]
• Two former Wall Streeters take responsibility for insider trading. [WSJ]
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]
• Ah, so that's where all the G5s on the Teterborough tarmac were headed! The private-equity world descends upon Munich for the annual spectacularly named Super Return conference. [DealBook/NYT]
• Vagilante Scott Galloway and Harbinger Capital Partners raise their stake in the Times to just over 19 percent. [NYP]
• Hey, everyone! Hedge funds are a risk to the entire financial system! No duh. [Business Week]
Scott Galloway started out slow with the Times. "There is nothing wrong with the New York Times Company that cannot be fixed with what is right with the New York Times," the former frat boy and current NYU professor wrote in early February, when his investor group, made up of his Firebrand Partners and Atlanta hedge fund Harbinger Capital, revealed that they had acquired a 4.9 percent stake in the company. Two weeks later, they doubled their investment to nearly 10 percent, met with Arthur Sulzberger Jr., and nominated Galloway and three others for seats on the board. But when the current board recommended shareholders not vote for the nominees put forth by Galloway and his band of Muffkateers, well, that must have pissed them right off. According to The Wall Street Journal, SEC filings today will reveal that Galloway's group has raised their stake in the Times again, and that their latest purchase will bring them "closer to matching the number of publicly traded shares owned by the Sulzberger family." Watch your back, Arthur. The Trim Reaper is coming, and he is coming for ye.
Investor Group Raises Stake in New York Times Again [WSJ]
Related: Intel's coverage of Scott Galloway
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'
Avast! According to documents filed with the SEC, Firebrand Partners and Harbinger Capital Partners, the hedge funds seeking to put their nominees on the board of the New York Times, have increased their stake in the paper to 9.8 percent. (It was previously reported they owned 4.9 percent). We're no good at math, but we'd say that there's a 90 percent chance that soon enough, Firebrand's vagilante founder Scott Galloway will be sitting on the board, breathing his fiery Johnny Walker breath all over Arthur Schlesinger and Times chief executive Janet Robinson.
Hedge Funds Lift Stake in New York Times [WSJ]
Earlier: Vagilante Shareholder Scott Galloway Takes on the ‘Times’
"He's a jackass," a student at NYU's Stern School of Business told Portfolio of professor Scott Galloway, the Firebrand Partners founder who, along with Alabama hedge fund Harbinger Capital Partners, recently disclosed a 4.9 percent stake in the New York Times and intends to use that stake to gain a seat on the company's board of directors. "He's not afraid to call you out if he thinks you don't know what you're talking about." Which is precisely what Galloway did on Friday, when he wrote a letter to Times Company’s chairman Arthur Sulzberger Jr. and CEO Janet L. Robinson, saying that the two funds wanted the Times Company to sell off some core assets and expand its digital presence, and announcing its intention to nominate four new directors, including Galloway, at the April shareholder meeting. We're sure that Galloway, who modeled in a 2006 fashion show sponsored by Johnnie Walker (above) and who Radar reports is not only a member of Carbon NYC, a $4,800-a-year, invite-only "virtual club," but also a fraternity brother who tags photos of his ZBT crew with charming captions like "The Snatch-Bucklers" and "The Vagilantes" will fit right in. Especially with whoever wrote that "Meat Guzzler" headline.
Boardroom Braveheart [Portfolio]
Earlier: Hedge Fund's Letter Explains Intentions Regarding the Times [NYT]
Potential NYT Director Scott Galloway a "Muffkateer" [Radar]