The New York Times in Play

When I covered the mergers and acquisitions beat, I learned about the concept of a company being "in play." It's really rather simple: If hostile investors, or just one angry large shareholder, start making noises about buying the company or overhauling management, the company is in play, in Wall Street parlance. The buzzards are circling, the sharks are in the water, the stock market is paying attention, other investors are considering making bids.

Basically, it's a death sentence. One way or another, the company is going to get sold or broken up, or there's going to be a significant change in management. There are exceptions: Disney was in play when Comcast offered to buy it a couple of years ago, but it wriggled free by ousting CEO Michael Eisner and making some other changes. But usually, once a company is in play, it's basically toast.

We're seeing this more and more in the newspaper business. Knight Ridder is (um, was) Exhibit A—as soon as its largest shareholder, Bruce Sherma's Private Capital Management, began agitating for change last year, Knight Ridder was on the slippery slope that led to its acquisition and dismemberment by McClatchy. Tribune Co. was in play as soon as the Chandler family lost its patience a few months ago, and now potential buyers are circling various Tribune properties and the company has investment bankers looking at ways to sell the company in whole or in parts. It's safe to say that Tribune won't exist in its current form next year at this time.

And now The New York Times Co. is in the crosshairs. Investors have been muttering about management performance for the past couple of years, former GE CEO Jack Welch is openly bidding for the Boston Globe, and now Hank Greenberg, the former CEO of insurance giant AIG, reportedly is buying blocks of Times stock and putting together a group of investment bankers to lay siege to the company. Another big shareholder, Morgan Stanley Investment Management, already is calling for a change in the corporate structure to make a change of control easier.

While the Times' dual-tier stock structure makes it very hard to wrest the company away from the Sulzberger family, the company nonetheless is in play. If there's enough disgruntlement in the family for Greenberg and Morgan Stanley to get some leverage, the company could be sold, or split up, or new management could be brought in. It's seems unthinkable that the Sulzbergers would lose control of The New York Times—but nobody thought that Knight Ridder or Tribune could be targets, either. It's not impossible that the Sulzberger family simply decides that the challenges facing the company are so daunting that it's worth taking an lucrative offer to sell. At the very least, the Sulzbergers are likely to have to make significant changes to mollify the angry shareholders. That's the price for being in play.

Ultimately, this is about much more than The New York Times Co., or Tribune, or Kinght Ridder. The whole industry is in play. Where does it end? Gannett doesn't have the kind of stock protections that the Times has; some investor might eventually jump that company. McClatchy could be a target, if it can't adequately digest Knight Ridder. Cox still is basically family controlled; so is The Washington Post Co., where the Graham family has an iron grip on the voting stock and happy large shareholders like Warren Buffett. Those two are probably safe. But these are very unusual times in the media business, with unprecedented competitive challenges and predators. If the New York Times Co. could be in play, anything seems possible.

UPDATE: A representative for Greenberg is denying that he's amassing shares—but doesn't deny the rumor that he's talking to investment banks about a play for the Times. This is actually pretty classic "in play" situation: Rumors of bidders swirling around the company usually mean that something is indeed going on. Where there's smoke, there's fire.