Fortune and BusinessWeek are piling on the story of Harbinger Capital Partners, a $19 billion hedge fund, seeking to take over the New York Times (NYSE: NYT). Harbinger now owns 19% of its Class A shares. Of course, Harbinger is not the only threat to management of the Times -- News Corp.'s (NYSE: NWS) Rupert Murdoch is doing his part as well. Will Steve Rattner, a long-time friend of Times publisher Arthur Sulzberger and Managing Principal of Quadrangle Group, come to the rescue and take the Times private?

In play here are Phillip Falcone, a Harbinger partner who made $1.7 billion last year, and the quaint idea of protecting a media company's founding family by maintaining two classes of stock: Class A for the public to make insiders liquid and Class B for the insiders. Murdoch and Sulzberger enjoy protection for their family dynasties thanks to that two-tiered structure.

Falcone thinks that the Times is leaving huge amounts of money on the table by not "monetizing" all the comments on its stories. What sparked this idea was a January opinion piece by Caroline Kennedy comparing Barack Obama with her father, President John F. Kennedy. There were only a few comments about the article on the newspaper's Web site, nytimes.com, but there were hundreds on Huffington Post and Digg.com. BusinessWeek quotes Scott Galloway, founder of hedge fund Firebrand Partners and Falcone friend who said: "We came to the collective conclusion that there was so much upside in terms of billions of pages the paper wasn't monetizing. He [Falcone] never looked back."

Try as I might, I 'm not sad that the Bancrofts may lose control of Dow Jones & Co. (NYSE: DJ) to Rupert Murdoch's News Corp (NYSE: NWS).

Though some journalists are arguing that a Murdoch victory would signal the end of civiilization as we know it, at least he'll take an interest in the Wall Street Journal, which is more than could be said about the Bancrofts. They watched idly as incompetent CEOs ran the publishing company into the ground and shareholders not related to them got the shaft.

Would Murdoch be that much worse? Compared with other publishing families, the Bancrofts have shown a remarkable lack of interest in their family business.

The New York Times Co. (NYSE: NYT) shareholders were urged by Institutional Shareholder Services, an influential proxy advisory service, to withhold their votes from the company's board of directors to protest the newspaper publisher's corporate governance.

At issue is the dual-class stock ownership structure at the Times, which enables the Sulzberger-Ochs family to retain control. Morgan Stanley (NYSE: MS) fund manager Hassan Elmasry has tried unsuccessfully to get the Times to change the stock ownership structure. Sulzberger responded by withdrawing his family's money from Morgan Stanley.

ISS recommends that the jobs of publisher and chairman held by Arthur Sulzberger Jr. be split up. It didn't call for the removal of the directors but argued that they should be more accountable to shareholders.

Good point

Shares of the New York Times have dropped more than 50 percent over the past five years. There is little hope that they are going to recover anytime soon.

As I've said before I think the Times is a great but flawed newspaper and would be far better off as a private company. Note that I've done freelance work for the paper.

The Wall Street Journal (subscription required) sums up the situation well.

"The fight is quixotic, however, because the stock structure can be changed only by the controlling shareholders, and they have been unwilling to do so," the paper said.