Martha’s Vineyard Gazette sold to KKR co-founder Kohlberg
I’ve always been thankful that my grandparents were good at playing the real estate game. Among their unlikely coups was buying a house in the 1960′s in Edgartown, the tony enclave on the island of Martha’s Vineyard, whose exclusive address had no correspondence to their income level. If they hadn’t bought it, there’s no way that my journalist’s salary would have been able to scoop up property like that. In the more than three decades that I’ve been going there, I’ve become a regular reader of the Martha’s Vineyard Gazette, the enormous broadsheet newspaper that has resisted the cost-cutting size reductions that many other newspapers in the United States have sustained.
That allegiance to the paper (and its weekly competitor, the Martha’s Vineyard Times), as well as my continuing nostalgia for my former media beat — the future of newspapers, publishing and journalism — made it all the more interesting when I read on Friday that the Reston family is selling the 164-year-old paper to Jerome Kohlberg. It’s the story that has it all for a business reader, really: Daily paper, read by rich and powerful residents who are captains of the financial world (and hopefully Reuters clients), sold to a true bigwig of the private equity world, and a strange connection to The New York Times to boot.
Richard Reston took over editing and publishing the paper, as the Times’s Jacques Steinberg relates in this 2003 story, after leaving the Los Angeles Times where he was a foreign correspondent with stints in Northern Ireland, the Soviet Union and Vietnam. His family has owned the paper since 1968, as the Vineyard Gazette reports here, when the late James “Scotty” Restonbought it from Henry Beetle Hough. Scotty Reston, of course, was a top editor at The New York Times for many years. ((In a bit of Vineyard cultural trivia, the Gazette has long been seen as the newspaper of the tourists and the seasonal visitors, while many year-round islanders favor the Times).
What strikes me as odd is the choice of buyer: Jerome Kohlberg, who co-founded the private equity firm Kohlberg Kravis Roberts, has another connection, once-removed, to The New York Times. Kohlberg’s son was nominated to that company’s board by Phil Falcone, the hedge fund manager at Harbinger Capital Partnerswho amassed a half-billion dollar’s worth of New York Times shares in a bid to shake up the company’s management and operations. Ultimately, Kohlberg’s son James did get nominated to the board, but Harbinger’s bet on the Times did not work out. The stock price tanked after Falcone’s move, and Harbinger since then has reduced its stake from about 20 percent to, as of this week, just above 2 percent. Kohlberg is still on the board, though Scott Galloway, the investor who came up with the Harbinger plan, has moved on.
Jerome Kohlberg is 85 and has been visiting the island from his Mount Kisco, New York home since 1943. He also appears to be taking a more friendly approach to his foray into newspapering. Here’s an excerpt from the press release:
In a separate transaction, a gift has been made to Martha’s Vineyard Preservation Trust from a fund established by the Kohlbergs, to buy and preserve the Revolutionary War-era Gazette building and property on South Summer Street in downtown Edgartown. The Trust is a non-profit organization dedicated to preserving and managing island landmarks. It is anticipated that the newspaper will continue to operate from the historic building under a lease to be negotiated with the Trust.
And as the Vineyard Gazette reports, the Trust will get $1.5 million. As for the paper and the real estate, that will cost $3.5 million. Maybe hostile takeovers don’t necessarily run in the Kohlberg family.
New York Times struggles — silently
The New York Times spits out thousands of words a day through its newspapers. If it would only start coughing a few more up about Hollywood mogul David Geffen, who wants a piece of it, if not more. If the Times doesn’t tell its story soon, everybody else will.
So far it has made no comment. That might not be such a slick move. Speculation over the Times’s future has grown during the past few years as its finances worsen because of advertising revenue declines, more than a billion dollars in debt that it has to pay off and the nearly annnual assaults on the company’s management by shareholders and others who think they know how to do the job better.
The latest news frenzy came when Fortune writer Richard Siklos said that Geffen wanted to buy a nearly 20 percent stake owned by one-time dissident shareholder Harbinger Capital Partners, but was rebuffed. Nearly every news outlet got the story (though most of us paid less attention to a report that a Harbinger-nominated director tried to get Google to buy the Times — and failed), while the Financial Times said that Geffen wants to buy the whole company.
That would be next to impossible, as would any friendly or hostile move at taking control, because the Ochs-Sulzberger family under nearly every circumstance doesn’t have to cave. That hasn’t stopped the frenzy, of course, because the Times’s flagging fortunes have led some to conclude that the Sulzbergers will get sick of seeing themselves growing poor and demand an exit of some kind.
Now, two days after the reports of Geffen’s interest surfaced, the speculation is in full force. Why Geffen? What does he want? What will the Times do?
The Times’s answer? It sent out a press release about a feature on nytimes.com that allows you to see the news appear in chronological order as the Times adds items to its site. Cool? Yes. Is it what everybody wants to hear from the Times right now? No.
People want a public utterance of some kind from Chairman Arthur Sulzberger Jr.
Cablevision gets big new stakeholder, a Harbinger of things to come?
Cablevision has a new(ish) big stakeholder and things could get interesting as it is activist investor Harbinger Capital. According to a regulatory filing Harbinger now owns a combined 11 million shares in Cablevision through two funds as of June 30th, making it the 5th largest external stakeholder in the New York cable operator.
Harbinger, lest we forget, has been shoving around the media companies in which it has snapped up stakes to find to boost share prices, notably with New York Times and Media General earlier this year.
Harbinger will be joining Mario Gabelli (pictured left), of Gabelli & Co, which owns around 20 million Cablevision shares and has been very loudly pushing for the company to consider selling assets such as its cable networks. Gabelli wants Cablevision to use the funds from such an asset sale to buy back stock. Other big name Cablevision shareholders are ClearBridge Advisors (part of Legg Mason), T Rowe Price and London-based Marathon Asset Management.
Richard Greenfield of Pali Research, who brought the Harbinger filing to our attention, makes an interesting point that the top five stake holders now own 108 million of the total 295 million float. The Dolan family, who control the company, own around 72 million.
In Greenfield’s view:
This fact will help propel Cablevision shares if they begin to buy back shares in the fall.
Sulzberger masters hedge funds, Sudoku
New York Times Co Chairman and Publisher Arthur Sulzberger Jr. managed to deflect major shareholder insurrection this year by agreeing to offer two board seats to a dissident investor’s rival slate, where one presumes they might be somewhat more placid than when they were banging on the walls of the Gray Lady. Now it looks like he might be working the same charm on disaffected puzzlers.
At Tuesday’s annual shareholder meeting, one woman who said she was an investor in the company asked why the Times didn’t run a Sudoku puzzle. Such a move, she explained to Sulzberger as he stood before his audience at the lectern, would no doubt be a big boon for circulation.
Here’s Sulzberger’s response:
I know it’s something we’ve looked at but I cannot answer the question as to why we haven’t done it yet. Our puzzle is one of the great puzzles of the world and it continues to be a huge draw for us. But I will certainly make your thoughts known to the puzzle people.
If nothing else, he’s more than assured us that his puzzle people will never be considered “synergies,” and if they were, they could probably hide out in the Sunday acrostic all day long.
And on an endnote, perhaps if the shareholder checked nytimes.com, she might find all manner of Sudoku.
(Photo: Reuters, ‘Father of Sudoku’ Maki Kaji)
Falcone takes raincheck on newspapers
Most everybody in the U.S. newspaper publishing world knows Philip Falcone’s name nowadays, but it’s not entirely clear that he knows theirs. The Harbinger Capital Partners hedge fund manager’s notoriety comes from bankrolling efforts to secure large positions in the New York Times Co and Media General Inc, and then shake up the publishers by trying to get his own nominees elected to their boards.
At Media General, this has generated rancor not just for what the Richmond Times-Dispatch publisher sees as an unwanted assault, but for Falcone’s full schedule making him too busy to even meet the top executives whose strategy he’s trashing. Instead of responding to their overtures, he sent his colleague Joseph Cleverdon as his proxy.
We were unsuccessful in reaching Falcone as well, and Harbinger was too busy working on other projects to respond to Media General Chief Executive Marshall Morton’s letter to shareholders explaining why Harbinger’s bid to elect rival directors to the board was something only slightly better thought out than the Bay of Pigs operation.
The Wall Street Journal reported on what Falcone might have been doing that took up so much time while Harbinger was busy buying up Times and Media General shares. In two words: Bear Stearns .
Large hedge funds — including Harbinger Capital Partners, Greenlight Capital, Tremblant Capital Group and Paulson & Co. — made millions of dollars as Bear Stearns’s shares tumbled and various bearish positions rose in value, according to securities filings and people close to the firms.
Harbinger Capital, the $19 billion hedge-fund firm run by Philip Falcone, a former head of high-yield trading at Barclays Capital*, had a short position on Bear from the summer of 2007 until Monday, according to a person familiar with the matter. The stock fell to $5 from $150 in that time period. In a short position, an investor borrows shares and sells them, hoping to replace them at a later date at a lower price, pocketing the difference in the shares as profit.
To be fair, CEO Morton and Falcone are supposed to address institutional investors on Media General at a forum hosted by investor Mario Gabelli early next month — assuming Falcone’s dance card is still free by then.
Will Harbinger Capital buy Navistar International NAVZ?
http://messages.finance.yahoo.com/Stocks _%28A_to_Z%29/Stocks_N/threadview?m=tm&b n=12322&tid=37795&mid=37910&tof=7&frt=2
Media General: We’re not the New York Times
The New York Times made its peace with hostile hedge fund Harbinger Capital Partners by nominating two members of its rival slate to its board, but a few hundred miles south in Richmond, Virginia, Media General declared war instead.
Media General Chief Executive Marshall Morton stopped just short of challenging Harbinger executive Philip Falcone to a duel, and instead derided the lack of experience of three board members that Harbinger is trying to elect to the company after building up an 18.2 percent stake.
Morton elucidated in an interview with Reuters on Wednesday:
- On why the newspaper publisher and broadcaster has suffered a 61 percent stock drop in the past year: Today’s world is a world where the customer is in charge, not us anymore. Media General was pretty early in figuring out that the customer was platform-independent.
- On what Harbinger might do to help Media General negotiate the tricky newspaper landscape: We have yet to hear any concrete plans as to what they would have us do differently. … I don’t want anyone to think we don’t listen to new ideas. We’re in search of them. (Media General publishes the Richmond Times-Dispatch, as well as the Tampa Tribune, among other papers)
- On why a buyback or special dividend to jumpstart the share price isn’t a hot idea: We’d rather invest that kind of money in new businesses or in revisions to our existing business. … Those are short-term impact kinds of actions that don’t add value to the cashflow stream.
- On Media General’s family control through two classes of stock. What does the family, including Chairman J. Stewart Bryan III (who holds some 80 percent of the B shares) think about the stock price and your strategy? They’re completely on board with us.
