Mexican Billionaire's NYT Deal Leaving Sulzbergers on Shakier Ground
The New York Times appears to be on the verge of signing a deal with Mexican billionaire Carlos Slim to invest $250 million in the company. If your last name is "Sulzberger," be concerned.
News of Slim's possible investment broke over the weekend, and now the Times itself says an announcement could come as soon as tomorrow. Slim, one of the world's richest people, would essentially be loaning the struggling newspaper a quarter of a billion dollars in exchange for convertible shares paying him high annual dividends. But he would have the right to convert that stock into common shares—and if he did, he would own about a third of the NYT Co.
The Sulzberger family controls the company through a special class of voting stock, which ensures no one can take over the company simply by buying up regular stock. But historically, the Sulzbergers have always been the largest shareholders as well. With this deal, Slim would be in a position to become a larger shareholder than the family that's run the paper for generations. That would make the dual-class structure—which has already pissed off large investors and caused them to dump their NYT stock—even more tenuous. If Slim were to convert his holdings into regular stock, he would only have to join with one or two other large shareholders to form a bloc representing more than half of NYT stock. The Sulzbergers may be putting themselves in a very shaky position if someone decides it's worth their while to make one more public assault on the stock structure that keeps them in power. [NYT]