David Geffen Thinks The New York Times Is a Charity Case. So What Does He Want to Do About It?

More fallout from this week’s Fortune story that disclosed David Geffen’s interest in the New York Times. We’re now seeing a series of stories that say that Hollywood billionaire thinks of the paper not as an investment but a charity case.

BusinessWeek’s Ron Grover says Geffen “doesn’t so much see this as a business venture, but rather as a civic investment.” Newsweek’s Johnnie L. Roberts goes further, suggesting that Geffen would literally turn the Times into a nonprofit if he bought it.

Both Grover and Roberts are longtime media reporting pros, so when they cite sources with knowledge of Geffen’s thinking, I believe them. What I still don’t understand, and what observers and investors I’ve talked to are still puzzled about: How does Geffen plan to do that?

To reiterate: Geffen has reportedly tried to buy the 20 percent stake in the Times now owned by Harbinger Capital, though the two sides couldn’t agree on price. But even if they did, the transaction would only bail out Harbinger, not the Times.

And because the Times has a dual-class stock structure that keeps control of the company in the hands of the Ochs-Sulzberger family, taking on Harbinger’s stake doesn’t give Geffen a foot in the door to the company. It gives him the right to appoint two representatives to the company’s 14-member board of directors, but nothing else. Just ask the Harbinger folks.

Again, there are two plausible ways to acquire the Times:

1. Buy the super-voting shares outright from the Ochs-Sulzbergers, who have said they have no intention of selling. But then again, that’s what the Bancroft family said about Dow Jones, which owns the Wall Street Journal and this Web site. And News Corp.’s (NWS) Rupert Murdoch was able to overcome their objections by offering a 60 percent premium to the company’s share price. Maybe Geffen could try that.
2. Establish a large debt position with the company and exercise the power that comes along with that in the event of a restructuring. The problem: Billionaire Carlos Slim has already done that.

So. Anyone close to David Geffen want to explain what he’s really thinking? I’m all ears.

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