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February 22, 2007
Shame On You, Pinch
A couple of weeks ago the Ochs-Sulzberger family pulled the majority of its assets (around $640 million) from Morgan Stanley, which had been the custodian of the family fortune for many years. The caption under a picture of Arthur (“Pinch”) Sulzberger on the FORTUNE website read, “Angered by a money manager’s challenge, Times chairman Sulzberger, Jr. will no longer do business with Morgan Stanley.”
I understand how Pinch could get pissed and defensive at Hassan Elmasry, a Morgan Stanly managing director who runs Morgan Stanley’s American and Global Franchise Strategies Portfolio. The fund has $11.5 billion in investments and owns about 7.6 percent of the NY Times Company stock. Elmasry has been urging a shareholder revolt against Pinch and the Ochs-Sulzberger family ownership of about 19 percent of the NY Times Company stock but all of the Class B voting shares, which allows the family to control nine of 13 board seats. The company’s stock is off 40 percent in the last two years and Elmasry thinks it’s probably Pinch’s fault. After all, he’s the Times’ CEO who is elected by the family-controlled board of directors.
But, shame on you, Pinch, for pulling your money out of Morgan Stanley in a snit. What would the NY Times or the Boston Globe say to an advertiser who used economic bullying by canceling its advertising because it didn’t like an editorial stance your papers took? Wouldn’t you say that they were trying to use their financial clout in an attempt to squelch your well-considered and well-researched position? Wouldn’t you defend freedom of speech and the notion that your editorials create a public dialogue about important public issues and that you would welcome and publish dissenting opinions in an attempt to create a robust marketplace of ideas? Wouldn’t you urge the advertiser to fight it out with you publicly, to put the ideas out, defend them, and let the public choose? Wouldn’t you accuse them of trying to bully you and interfering in your duty to your public?
In the FORTUNE website article (February 2) by Tim Arango, in which the picture and caption quoted above appeared, Morgan Stanley CEO John Mack was reported to have said that he would have preferred that Elmasry had never gone after the newspaper of record, but that he has never interfered because meddling would conflict with Elmasry’s obligation to his investors.
It’s ironic that the New York Times editorialized when the dot.com bubble burst and the subsequent scandal erupted about how some investment analysts should be punished because they gave positive ratings to turkey stocks because of pressure from the investment banking side of the house. It seems only fair and balanced that the Times should editorialize now against another type of economic bullying or else be accused of flagrant hypocrisy.
Posted by Charles Warner at February 22, 2007 12:19 AM