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Carlos Slim no threat to New York Times' family control

By Jessica Tasman-Jones

The dual-class share structure of The New York Times Company means Carlos Slim’s reported plans to increase his stake in the media empire is unlikely to threaten the Sulzberger family’s control, according to a media economics expert, despite many US media dynasties losing their grip on the industry.

Mexican-based Slim, one the world’s wealthiest individuals and chairman of America Movil and Telemex, currently owns 8% of common shares, but intends to more than double his stake to 19% by the year’s end, Bloomberg reported last week.

A deal he made with the company in 2009, when he loaned it $250 million, means he would be able to buy 15.9 million shares at a rate of $6.36, a bargain compared to the $15.86 they were selling for at the beginning of this week. The offer expires in January 2015.

But Professor Robert Picard, media economics specialist at the Reuters Institute for the Study of Journalism at Oxford University, says Slim and the Sulzberger family have worked together now for several years and “seem to get along fairly well”.

Picard says because the Sulzbergers retain control through their majority stake in class B shares, which allow them to vote for approximately 70% of seats on the 14 member board, Slim’s increased stake in class A common shares would not threaten family control.

The media company is currently led by fourth-gen Arthur Sulzberger Jr, and last year saw revenues of $1.6 billion. Picard explains, however, the family has been under pressure from class A shareholders to increase returns. For the five years the company did not pay dividends due to significant declines in print advertising income, something that was only remedied in the fourth quarter of 2013.

Last year the company sold The Boston Globe to Boston Red Sox owner John W Henry, for $70 million. It was one of a number of sales of family-owned newspapers and media companies that happened last year with the most notable being the sale of the Graham family’s The Washington Post to Amazon founder Jeff Bezos for $250 million.

The high profile transaction prompted Sulzberger Jr and his cousin Michael Golden, who is vice chairman, to release a statement confirming the paper was not for sale. The New York Times is one of the last major US newspapers that remains a family business.

Picard said family-owned firms were struggling with challenges currently being faced by the media industry as they are often averse to risk, with the second generation onwards being both careful to look after their parents’ or grandparents’ company and wanting to preserve an income generating entity for the next generation.

Picard added: “You have declining readership, you have declining advertisers in newspapers, and if you want to remain in news and you want to remain in information provision you’re going to have to move to more digital products. [Family-owned media companies] are going to have to move to products different to the same type of newspaper they’ve produced up to now.”

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