Gadflies Are Buzzing the Gray Lady

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There's an old adage that says if something's not broken, don't fix it. As a former journalism professor, a corollary might now be applied to daily newspapers -- yes, including those of The New York Times (NYSE: NYT) -- that some things become too broken to repair.

Nevertheless, a couple of hedge funds, which collectively own 4.9% of the Gray Lady's stock, would like to haul out their tool boxes to minister to the Times company's papers. The funds, Firebrand Partners and Harbinger Capital Partners, have told the powers that be at the Times that they plan to post the names of four directors for election to the company's board of directors on April 22. The firms contend that the Times hasn't kept up with the changes that have altered the media industry.

And apparently, those efforts won't stop with the Times. Harbinger also intends to nominate directors to the board of Richmond-based Media General (NYSE: MEG). The two companies, with the likes of McClatchy (NYSE: MNI) and Washington Post (NYSE: WPO), are all under the control of families.

In the case of the Times, the Sulzberger family's ownership of supervoting stock allows it to control the election of nine of the company's 13 directors. The two investment firms are seeking to fill the company's other slots.

In the past several years, the share prices of the major newspaper chains have slid like tots on a playground. In the Times' case, the price has plummeted from close to $50 in 2004 to the mid-teens. Following Monday's announcement by Firebrand and Harbinger, however, the price shot up by nearly 10%, evincing hope among shareholders that the director gambit can somehow breathe new life into the company.

But -- and let me don my professor's tweeds here -- it's difficult to imagine what the two firms ultimately expect to accomplish. Quite simply, increasing numbers of former readers are now obtaining their news and information from the Internet, and advertising revenues are following them. And while News Corp. (NYSE: NWS) will surely make some aggressive changes (or not) to The Wall Street Journal on the heels of its acquisition of Dow Jones a month ago, the Journal's readership carries different demographics from the general circulation masses.

Here, then, is a suggestion for Fools to watch what could become an interesting saga. But please don't participate in the action with your hard-earned shekels. There's no old adage of physics that says what goes down must later go higher.

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