New York Times Co. foolishly punishes Morgan Stanley

Frustrated that one of its fund manager has criticized his company's performance, New York Times Co. (NYSE:NYT) Chairman Arthur Sulzberger has struck back at Morgan Stanley (NYSE:MS)

Sulzberger has recently put in a request to pull the majority of the Ochs-Sulzberger's family assets, including its sake in the newspaper publisher worth about $640 million, from the bank, according to Fortune magazine. That story was also confirmed by Bloomberg News.

The scion of the newspaper's family can certainly bank with whatever companies he chooses. This move, though, is silly. It looks spiteful and will only embolden his most vocal critic Hassan Elmasry, the London-based manager of Morgan Stanley's American and Global Franchise Strategies fund.

In April, Elmasry released a letter to the company calling for a shareholder vote on the company's dual class structure, which allows the Sulzbergers to continue to control the company even as they sell of shares. Elmasry believes it gives too much protection to management. He's also seeking to split Sulzberger's role as chairman and publisher of the Times.

The New York Times rejected his request to hold a shareholder vote on the dual-class structure. Bloomberg News points out that Elmasry has met with some success, getting Class A shareholders to withhold 28 percent of their votes at last year's annual meeting. Sulzberger's move will only make Elmasry a bigger hero in the eyes of investors, who have watched the Times' stock price crater 40 percent over the past two years.

Pressure is going to mount on Sulzberger, particularly if Elmasry lines up the support of Bruce Sherman, the head of Private Capital Management, who is the largest owner of Times stock outside the family. Elmasry has spoken with Sherman, who was instrumental in forcing the sale of Knight Ridder to McClatchy Co. (NYSE:MNI), according to Fortune. Sherman hasn't decided yet it he's going to wade into the fight, the magazine said.

I greatly admire the Times but I think the company can better service its readers if it were taken private. For Sulzberger to expect shareholders who aren't related to him to put up with a declining stock price just isn't fair.