Like Napoleon retreating from Moscow, Harbinger Capital Partners is continuing its slow withdrawal from The New York Times Co. after its attempt to shake up the venerable publisher ended in defeat.
Most recently, Harbinger revealed that it sold 2.9 million shares on Thursday, not long after NYTCO reported another round of revenue declines and a $4.3 million loss in the third quarter of 2010. The latest sale brings Harbinger's stake in NYTCO down from 9.4% to 7.4% of the company.
Harbinger has been steadily divesting itself of NYTCO stock over the last year. After peaking at 28.53 million NYTCO Class A shares, representing 19.94% of the company, the first round of selloffs came in September 2009, when Harbinger sold 5,000,000 shares, bringing its stake down to 16.38%.
Another round of sales in November 2009 lowered its stake to 14.6%. Then in March, Harbinger sold 1.5 million shares, bringing its stake down to 11.68%. Most of these sales have represented a significant loss for Harbinger on its NYTCO investment.
The majority of the shares were purchased over the course of 2007-2008 at a price ranging from $15-$20, as Harbinger and its ally, Firebrand Partners, joined forces to quickly accumulate a large stake in NYTCO, aiming to accomplish what other "Class A" shareholders failed to do -- exercise real authority over NYTCO's management.
The NYTCO's two-tiered share structure gives the majority of seats on the board to owners of special "Class B" shares, including members of the Sulzberger family.
In March 2008, Harbinger and its ally, Firebrand Partners, forced NYTCO to add an extra director to the board, elected by "Class A" shares. Still, the Sulzbergers maintained control of the majority of the board, with 10 seats to regular shareholders' five. Then in February of this year, Firebrand boss Scott Galloway left the NYTCO board, which has returned to its previous size.
NYTCO's total revenues declined 2.7% from $569.5 million in the third quarter of 2009 to $554.3 million in the third quarter of 2010, due to a 1% drop in advertising revenues and a 4.8% drop in circulation revenues.
Separately, Moody's Investors Service recently downgraded its outlook for the newspaper business as a whole from stable to negative. Overall, Moody's sees annual revenue declines of 5% to 6% for newspapers in 2010 and 2011, raising the prospect that publishers -- having cut other parts of their businesses to the bone -- will be forced to begin making deeper cuts in newsroom staffs.
In addition to reducing the amount of content available for monetization, this will raise severance costs.