• by Erik Sass  @eriksass1, February 19, 2010

After a high-profile attempt to shake up corporate management at the New York Times Co., it was the intruders who were finally shaken out. Shareholder Scott Galloway is leaving NYTCO's board of directors.

Following the departure of Galloway and Daniel H. Cohen, another relatively new director, the board will return to its original size; Galloway will likely be replaced by Carolyn Greenspon, a member of the Ochs-Sulzberger family that controls NYTCO.

Galloway, the boss of Firebrand Partners, joined forces with Harbinger Capital to quickly accumulate a large stake in NYTCO, rising from 4.9% in January 2008 to 19.9% the following month.

Seeming to catch the board off-guard, Galloway and his allies then mounted a campaign challenging the Ochs-Sulzbergers' control of NYTCO -- enabled by the family's ownership of "super-voting" Class B shares.

They cited growing criticism from Class A shareholders that the company wasn't moving fast enough to adapt to the changing digital media landscape. Faulting the board for not "inspiring the requisite bold action this media environment demands," Galloway proposed four new candidates for election to the board at the annual shareholders' meeting in April 2008.

In March 2008, the company agreed to a compromise, adding one new member elected by its regular "Class A" shares (for a total of five) and one elected by the "Class B" shares owned by the Ochs-Sulzberger family (for a total of 10). This arrangement allowed Galloway and James Kohlberg, a Harbinger nominee, to stand for election to the board of directors. In return, Galloway and Kohlberg dropped their original four-person slate for the election, which included two other nominees in addition to themselves.

However, previous history suggested the Ochs-Sulzbergers would not tolerate any challenges to their control.

In the middle years of the decade, the company's dual-class share structure became the topic of a public dispute with Hassan Elmasry, a London-based portfolio manager with Morgan Stanley, who said the Ochs-Sulzberger's grip on the company kept its management from adapting quickly to the changing media landscape.

The bitter conflict eventually led the family to withdraw over $100 million from Morgan Stanley's management, and Morgan Stanley to dump its Class A NYTCO shares, representing a roughly 7.2% stake in the company.

Indeed, the Harbinger-Firebrand campaign appears to have unraveled in similar fashion. In May 2009, Galloway tried to sell Firebrand's stake in NYTCO to moguls David Geffen and Larry Page. In September 2009, it was revealed that Harbinger had sold 18% of its shares in NYTCO, lowering its total stake to 16.3% -- followed by another round of sales in November, lowering it to 14.6% -- suggesting a general move by both partners to extricate themselves from the company.