The white flag has been hoisted in the fight by Morgan Stanley (NYSE: MS) to force a change to The New York Times Company (NYSE: NYT)'s dual-class share structure. Today the MS Investment Management announced it has sold the 7.2% share of the company it compiled in its Global Franchise fund since1996.According to the New York Times (which, to its credit, seems to have kept decent editorial perspective on the situation), the fund's manager, Hassan Elmasry, was unable to convince Ochs-Sulzberger family members to give up their stranglehold on directorships via their 89% ownership of Class B shares. The Global Franchise fund, which looks for undervalued but world-renowned brands, spent the first part of 2007 in a full-court press, attempting to change NYT's direction. Among Elmasry's concerns were (in his view) overstaffing, the cost of a new headquarters, a flawed internet strategy, and too-generous option grants.
As the Wall Street Journal (subscription) reported, when Elmasry fired his first salvo in the assault on NYT in June of 2005, his fund held a 5% stake in the company, which was selling in the mid-30's. At the time of this writing, it was down to $18.30. I'd say Class A stockholders are taking Morgan Stanley's exit as a big reality pill demonstrating the company isn't going to willingly open up its management and shake out some cash any time soon.
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