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April 10, 2007

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Comments

Dan Mitchell

Here's a note I sent to Romenesko this morning, which he has apparently decided not to run.

As unlikely as it seems, I suppose there may be a "schism" developing in the Sulzberger family over the New York Times Company's stock price. I highly doubt it, but I have no way of knowing. And neither does Mark Potts.

You'll notice, though, that unlike him, I haven't written an authoritative-sounding blog post about it, and had it linked from Romenesko for all to read.

Mr. Potts' post is not based on anything other than stuff he made up, apparently out of thin air. Like a similar recent post by Alan Mutter, there's no reporting there, and not even anything outside his own misguided internal musings to back up what he is writing.

Similarly, Mr. Mutter's post of a few days ago was based on a whole series of false premises: chiefly, that stockholders have some kind of "legal" options to rid the company of its dual-class stock structure. He was called on that by commenters, and yanked the reference. But he further asserted that the same kinds of pressures that led to the buyouts of Knight Ridder and Tribune could be brought to bear on NYT, but he didn't explain how, exactly, given the share structure, that would work. He essentially compared those companies to NYT as if they were equivalent. They are not.

Mr. Potts went even further with his mystical prescience, writing that "it's highly likely that some sort of major change will take place in the company's corporate structure as a result of the current Wall Street pressure."

Highly likely based on.... what, exactly? Mr. Potts doesn't say.

From that made-up premise, he concluded that this "could mean taking the company private, as Mutter suggests; a management change; a sale of assets (already underway, in fact); or some combination of all three. Bet on it."

Bet on it! The best Mr. Potts could do to back up his assertions was to write that "Any smart corporate mergers and acquisitions expert or investment banker will tell you that where there's smoke, there's fire." Note that he apparently didn't actually *talk to* any of these smart M&A experts or bankers about this particular case. He just assumed that this is what they would say.

And he didn't stop there. He even put a timeline on how long it will take before the NYT is "a very different company": a few months. Why not next week, or a year from now? We don't know. But apparently it's "inevitable and inexorable when pressure like this builds."

The Wall Street Journal recently examined the pressures facing the company. What Journal reporter Sarah Ellison did was, she talked to people who are closely involved with the company, with its critics, and with outside observers. In the news business, this is called "reporting." When one financial advisor suggested that the company consider going private, the board quickly dismissed the idea, according to Ms. Ellison's account, opting instead to sell off a few assets. Ms. Ellison's sources told her that is appears highly unlikely that the company will go private, and even less likely that it will end the dual-class structure.

Ms. Ellison's story appeared on March 21. What has happened since then to change the situation? Not much more than the random, wholly unfounded speculations of a couple of bloggers.

Some bloggers back up what they write, or at least know what they are talking about. Others don't. We need to recognize the difference, and pay attention only to those who do.

Now, it may well be that the directors of NYT are indeed reaching their wits' end, and will do a rather abrupt and startling turnabout and force an end to the dual-class structure, demand an LBO, or take some other drastic action. And it may be true that a "schism" has developed in the family. It seems unlikely, but it's possible. Yet there is simply no indication that this is the case. Stating otherwise as if it were fact is the height of irresponsibility.

Disclosure: I do regular freelance work for the Times, but of course I am speaking only for myself, and I would have written this note even if I worked for a competing newspaper.

Mark Potts

Thanks for your comment, Dan. You're entitled to your opinion, just as I am entitled to mine, and my blog is an expression of my opinion, based on my experience reporting corporate takeovers, previous examples in the newspaper industry, and widely reported accounts of how the Wall Street pressure is affecting internal discussions and decisions at the Times Co. and in the Sulzberger family. It will be interesting to see what happens.

Dan Mitchell

Well, "we're both entitled to our opinions" only goes so far -- and as usual, that's not very far at all. Your opinions are still backed up by nothing, and your reportorial experience doesn't really change that. You make a bunch of hard assertions, and even predictions, without providing anything at all to substantiate them. Even the previous examples of newspaper companies and family strife don't measure up, since that's apparently all you have. By itself, all it is, is "it's happened this way before, so it will surely happen again in this case." But the cases are very different, and unless you have some particular knowledge conversations taking place within the Sulzberger family, or a source that knows what's happening, those other cases remain irrelevant.

I'd be interested to see examples of the following, and how those examples back up your assertions:

>widely reported accounts of how the Wall Street pressure is affecting internal discussions and decisions at the Times Co. and in the Sulzberger family.

Dan Mitchell

And here we are, two years later....

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