Is Morgan Stanley That Dumb?
Morgan Stanley isn’t happy with The New York Times. Specifically, the bank’s investment-management unit, which owns 7.6 percent of the New York Times Company, doesn’t like the way The Times structures its shares, an arrangement that gives the Sulzberger family complete control. As one of The Times’ largest shareholders, Morgan has now gone public with its displeasure, in a report which concludes that The Times’ dual-class share structure fails to maximize value for investors and results in poor governance. While the observation about the share structure is valid, the investment bank’s public grievances are frankly absurd.
It’s certainly true that The Times’ performance on the business side has been lagging over the past several years, due in part to inane decisions such as the purchase of The Boston Globe for well over $1 billion. (They could have bought Google, MySpace and eBay together for a lot less.) Meanwhile, the Washington Post Company, which has a similar dual-class share structure favoring the Graham family, has avoided any significant downturn because of a better business model. But The Post has Warren Buffett sitting on its board, and, well, there aren’t that many Warren Buffetts around. Thanks in part to Mr. Buffett, the Post Co. draws only about 25 percent of its business from its newspaper holdings.
It’s also true that the Times Co.’s uneven share structure zaps out values for the public shareholders. They’re not getting the market price they might be getting, because everyone knows the family will never sell the paper, and thus no one bothers to try to buy it. In addition, the class-A shareholders like Morgan don’t have any say over most decisions, such as executive compensation or the construction of the new Times building, because the Sulzberger family controls most of the class-B shares and appoints nine of the company’s 13 directors.
But for Morgan to raise a fuss is hypocritical: When Morgan bought the stock in 1996, the bank knew that the Times Co.’s capital structure gave the Sulzbergers control—it had been set up that way even before the paper went public in 1969. In other words, Morgan knew very well what it was buying, and what it wasn’t buying.
And while one can argue with some of the Sulzbergers’ business decisions, one cannot argue with the product. Starting with Adolf Ochs, who came up from Tennessee in 1896 and acquired The New York Times (at the time, the smallest-circulation newspaper in the city), the Sulzberger family has created and sustained the world’s most important newspaper over the past 110 years—truly an extraordinary achievement. The paper may be aggravating at times, self-important and blind to its own biases, but the worldwide scope of The Times’ influence is inarguable.
In the best of all possible worlds, The New York Times would be privately owned, with control in the hands of the Sulzberger family. There would be no public shareholders to contend with, and no unfair capital structure to raise doubts and hackles.
The Brooklyn Boom
There’s a building boom underway across the East River, in Williamsburg and Greenpoint. Blighted industrial areas, dormant for decades, are being transformed into new communities thanks to some creative urban planning by the Bloomberg administration.
This is a good thing. Or so you’d think.
But some critics are complaining that the area is changing too fast, and that developers are not living up to an agreement with the city to build below-market housing. These complaints, made in the usual accusatory tone that seems to accompany any effort to build anything in New York, are not justified. Good things are happening along the East River, and when these projects are finished, the neighborhood will be transformed to the benefit of all local residents.
City Hall’s vision for the Williamsburg-Greenpoint waterfront includes housing for low- and middle-income residents as well as protections for residents and businesses that might be forced out of the area by the ambitious project. In other words, this transformation isn’t intended to bring about just another gentrified, affluent community. The character of the neighborhood and its residents were very much part of the plan.
It’s clear that some critics simply don’t like change, even if it means trading old, dilapidated buildings for new residential towers, or transforming wasted industrial space into a vibrant residential community. Complaints about the number of building sites, the noise, the inconvenience, have to be viewed in perspective: The short-term problems that accompany any construction project will lead to a long-term revival of the Williamsburg-Greenpoint waterfront.
That said, officials in the Department of City Planning ought to make sure that this transformation takes place with as little chaos as possible; eager builders have to adhere to timetables and standards. There are indications from City Planning that officials are aware of these issues. Overall, however, it’s hard not to cheer as a blighted slice of Brooklyn is made over by private developers working in conjunction with a smart urban plan.
Years from now, people will wonder why it took so long for New York to dispose with the industrial past along the East River. They’d be right to ask such questions. For now, however, it’s enough to marvel that it is happening at all.
Polishing the Diamond District
Manhattan’s diamond district is a gem, but a gem that needs a new setting to make it thrive and flourish in the 21st century.
The plans for a new, state-of-the-art $433.5 million building in the district, and the city’s decision to give developer Gary Barnett a $37.5 million tax subsidy, have generated opposition, and that’s no surprise. A modern 750,000-square-foot tower on 47th Street—the cozy and boisterous home for six decades to most of the city’s high-end diamond manufacturers, retailers, traders and distributors—is bound to shake things up. Several landlords and tenants on 47th Street have hired lawyers and lobbyists and are asking the city’s Industrial Development Agency to block the project.
But the district, for all of its energy and life, is hardly the showpiece it could be, and speaks more to the past than the future. With surging competition from India and China, the new tower—which will include office space, an underground garage and a museum—would be a statement that New York intends to remain a world player in the industry. Similar modern diamond complexes have been built in financial centers such as Dubai, Shanghai and Antwerp. Why not New York?