• by Erik Sass  @eriksass1, February 5, 2007

Morgan Stanley may have gone too far in advising shareholders in the New York Times Corporation to press the Ochs-Sulzberger family to revise the company's unusual two-tiered share structure. Making the Ochs-Sulzbergers' shares equal in weight to other shareholders would be a major step toward reducing the family's control of the company. Last week, according to CNNMoney.com, the Ochs-Sulzbergers retaliated by withdrawing their personal assets from Morgan Stanley--a move involving hundreds of millions of dollars.

According to the same report, the pressure to revise the company's share structure came from Hassan Elmasry, a portfolio manager at Morgan Stanley Investment Management. Morgan Stanley Investment Management owns approximately 7% of NYTCO shares. As a member of the NYTCO board, Elmasry has the option of withholding Morgan Stanley's votes at a general shareholder meeting in the spring. However, the Securities and Exchange Commission said in December that NYTCO is under no obligation to put its two-tiered structure up for a vote.

Last month, Elmasry wrote a controversial letter to NYTCO shareholders outside the Ochs-Sulzberger family which read, in part: "Our motivating concern is that without independent action by the board and real evidence of sustained accountability, further strategic missteps, capital misallocation, franchise abuse and overly generous compensation are inevitable. We are also concerned that the sharp deterioration at The Boston Globe may well be a preview of what will eventually happen at The New York Times."

The New York Times Co.'s troubled New England division, led by The Boston Globe, contributed to an overall $648 million loss for the company in the fourth quarter. The New England properties cost the company $814 million in the form of "the write-down of intangible assets at the New England media group," says New York Times CEO Janet Robinson. The write-down means a 60% decrease in the value of the Globe and Worcester Telegram & Gazette, which the company bought for $1.4 billion in the 1990s. Annual ad revenues at the New England division declined 9% from 2005 to 2006, as revenues dropped 11.5% in the fourth quarter. Separating the New England division's performance from the rest of the company, however, the company would have earned $87.9 million--an almost 40% increase.