In the October issue of Portfolio magazine, an article by Sheelah Kolhatkar covers at some length the recent investment in the New York Times by Harbinger Capital Management, a hedge fund founded by the Harbert family of Alabama. The article is fascinating for a variety of reasons, among which is the internal family issues surrounding the Harbert family and their wealth. But the article also provides interesting details about the way the fund is approaching their 20% stake in the Times’ class A shares (worth about $360 million).
One quote in particular caught my attention and made me chuckle out loud. It comes from Scott Galloway, a New York University marketing professor best known as the founder of internet retailer Red Envelope. Galloway and his company, Firebrand Partners, have acted as the public face of Harbinger’s investment in the Times in exchange for 10% of the profits. His investment thesis centers around his belief that the New York Times brand is grossly undervalued and that the company should be thought of as ‘Yahoo with content.’ But in describing the rest of the industry, Galloway states:
“Let me be clear: I think the [daily] newspaper business is a shitty business. The Sacramento Bee, the Chicago Tribune – I think a lot of those newspapers are fucked.”
A rather blunt yet accurate assessment and one with which I could not agree more.