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New York Times' 'Slim' Prospects

With mounting debt and negative cash flow, the New York Times Co. has been seeking a number of options to alleviate its $1 billion-plus debt. The Times has sought to mortgage its Eighth Avenue building, sell its interest in the New England Sports Ventures, and now, get Mexican billionaire Carlos Slim to buy up more of the company.

According to the Wall Street Journal, the company will be holding a special board meeting this week to discuss the potential of having Slim - and/or other investors - inject some needed cash into the financially struggling company. Slim already owns 6.4% stake in the company after paying $127 million in September 2008.

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Carlos Slim

A potential hangup for Slim, or any investor, in buying up more of the Times is the dual-class structure the company is set up for its shareholders. Despite owning only about 10% of the total outstanding shares, the Ochs-Sulzberger families control more than 90% of the privately-held Class B stocks and with it, nine of the 13 seats on the board. In 2007, Morgan Stanley fund manager Hassan Elmasry staged an unsuccessful coup to change the structure, to no avail.

That the board is controlled by the Ochs-Sulzberger families should concern potential investors. The company's fortunes and the paper's prestige have been in perpetual decline since Arthur Ochs "Pinch" Sulzberger took over as publisher of the Times in 1992 and chairman of the board in 1997. His management ineptitude has been well-chronicled. But his stewardship of the paper might have done even more to damage the brand.

Sulzberger's appointment of Howell Raines as executive editor in 2001 proved to be an unmitigated disaster. Raines aggressively attacked Augusta National Golf Club for its membership policies, to the point of silencing his own writers who expressed contrary opinions. Sulzberger initially backed Raines even in the midst of the Jayson Blair scandal before finally sacking him in May 2003 when the New York Times newsroom was on the verge of a staff mutiny.

Raines' departure did little to halt the Times' drift and erosion of its reputation. Just in the most recent election cycle, the Times' two most noteworthy contributions were the thinly-sourced hit piece on Republican candidate John McCain and later its refusal to print his op-ed piece after publishing one from his opponent Barack Obama.

The Times' editorial direction under Sulzberger, not to mention management of the company, will be a source of contention for any potential suitor interested in reviving the once-great national paper of record. Without Sulzberger's relinquishing at least some control, the Times' prospects of a turnaround may be slim indeed.