ALEX CHADWICK, host:

Back now with DAY TO DAY. I'm Alex Chadwick.

More bad news for the newspaper business today and it's right at the top of the media food chain. The New York Times reports a 10 percent drop in ad revenue last month. And a group of dissident shareholders now say they want to try to shake up the New York Times, noted as this country's greatest newspaper. It's the second shareholder uprising against the Times in three years.

MARKETPLACE's Sammy Eaton is back with us. Sam, what's the shareholder protest about?

SAM EATON: Alex, it's about something that's been pretty tough to find in the newspaper industry these days - profits. A group of dissident shareholders is trying to put four of its own people on the New York Times board in an effort to speed the newspaper's move toward digital media. The two hedge funds, Harbinger Capital Partners and Firebrand, own a 19 percent stake in the New York Times, making it the largest public shareholder.

I talked to media consultant Merrill Brown, and he says these so-called dissident investor groups have one function - and that's to find untapped opportunities at companies like the New York Times and then cash in once those opportunities are realized.

Mr. MERRILL BROWN (Media Consultant): At a minimum, it's an opportunity to run up the price of their investment in the New York Times Company. And on the other end of the spectrum, it's calling attention to the fact that somebody, perhaps a Sam Zell or a Rupert Murdoch, will offer a share price for the New York Times Company that they'll have to take very seriously.

EATON: Now, Brown says if Harbinger can gain enough influence on the Times' board to orchestrate a sale of the paper, something along the lines of Dow Jones' recent sale to NewsCorp, they could double or even triple the share price at a time when actual profits for the company are sinking.

CHADWICK: Really? Well, what are the prospects of something like that?

EATON: Well, it'd be a major challenge. The New York Times is a pretty different beast than Dow Jones. The Sulzberger family, which controls the Times, are a much more cohesive bunch than the Bancrofts over at the Wall Street Journal. And even though the family's shares in the company are about equal to the dissident hedge fund groups, they own nearly 90 percent of the Times' voting shares. That makes a shareholder revolt pretty tough to pull off, but it may not matter so much in the end. The New York Times' stock prices are already risen by more than a quarter since the investor group first announced its intentions late last month.

CHADWICK: Okay. Well, maybe there is something good for the future of the newspaper industry then.

EATON: Well, it's definitely a new and unpredictable landscape. Warren Buffett's old model of buying great franchises and then holding on to them is no longer a viable investment strategy. Short-term gains are essential for hedge funds, which now own most of the shares of the New York Times, and that's driving much of the push toward digital media. You just look at Internet-based ads for the company; they rose nearly nine percent last month. It really shows where the growth is. That's good news if you read the paper online, but bad news for the thousands of newspaper reporters being cut from newsrooms across the country, these - in recent months.

CHADWICK: Pain, pain. Sam Eaton, thank you. Sam Eaton of public radio's daily business show MARKETPLACE.

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