Activist Investor Fivespan Pushes New York Times to Embrace AI for Growth
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Activist Investor Fivespan Takes Stake in New York Times
The financiers that led a high-profile activist campaign at the New York Times Co. three years ago have now taken a stake in the iconic newspaper company via their new investment firm. Fivespan Partners, the activist investment firm started last year by Dylan Haggart and Sarah Coyne, has built a position in the Times and is pushing it to use artificial intelligence to expand its subscription base, according to a letter to Fivespan investors reviewed by Bloomberg News. The pair led ValueAct Capital Management's investment at the Times before leaving to open Fivespan.
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Fivespan Partners wants New York Times to bet big on AI
Why it matters: The Times is no stranger to activist investors, but has typically succeeded in warding off threats. * ValueAct built a 6.7% stake in the Times in 2022 in an attempt to pressure the company on its subscription strategy. But the firm subsequently sold much of its stake following a strong rally in NYT shares in 2023. * Fivespan was launched by Dylan Haggart and Sarah Coyne, two people who led ValueAct's investment at the Times. Zoom in: Fivespan argues that AI could more than double the Times' long-term revenue and profit, according to Bloomberg citing a letter to Fivespan investors. * The firm suggestions include creating text and audio translations, deploying more dynamic paywalls and creating low-cost videos. * The Times declined to comment. Fivespan did not immediately respond to requests for comment. By the numbers: The Times' stock price, which is up 15% year-to-date, did not meaningfully move on the news. The big picture: The Times and Wall Street Journal parent News Corp. have taken a more cautious approach to striking AI deals than some of their publishing peers, but both firms continue to invest heavily in AI. * The Gray Lady recently struck a multi-year deal AI licensing deal with Amazon to bring its journalism to a number of Amazon-owned products and experiences. * It was early to hire AI experts for its newsroom, posting a job for a "newsroom generative AI lead" in September 2023 and hiring Quartz co-founder Zach Seward later that year. Yes, but: The Times was one of the first news organizations to sue a major AI company when it sued OpenAI and Microsoft in 2023. News Corp. has sued Perplexity. What to watch: The Times is still actively engaged in its lawsuit against OpenAI and Microsoft. The outcome of that case is expected to set a historic precedent around copyright for news publishers in the AI era.
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Fivespan Partners, a new activist investment firm, has taken a stake in the New York Times and is urging the company to leverage AI to expand its subscription base and boost revenue.
Fivespan Partners Takes Stake in New York Times
Fivespan Partners, a newly established activist investment firm, has acquired a stake in the New York Times Company (NYT) and is advocating for the iconic newspaper to leverage artificial intelligence (AI) to expand its subscription base and boost revenue
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. The move marks a significant development in the ongoing intersection of traditional media and emerging technologies.
Source: Bloomberg Business
The Investors Behind Fivespan
Fivespan Partners was founded last year by Dylan Haggart and Sarah Coyne, who previously led ValueAct Capital Management's investment in the Times
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. Their familiarity with the company stems from their prior involvement, where ValueAct built a 6.7% stake in the Times in 2022, attempting to influence the company's subscription strategy2
.AI-Driven Growth Strategy
According to a letter to Fivespan investors reviewed by Bloomberg News, the firm argues that AI could more than double the Times' long-term revenue and profit
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. Fivespan's suggestions for AI integration include:- Creating text and audio translations
- Deploying more dynamic paywalls
- Producing low-cost videos
These proposals aim to leverage AI technologies to enhance the Times' digital offerings and potentially reach a broader audience.
New York Times' Current AI Stance
While the Times has taken a more cautious approach to AI deals compared to some of its publishing peers, it has not been idle in the AI space
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. Recent developments include:- Striking a multi-year AI licensing deal with Amazon to bring its journalism to various Amazon-owned products and experiences
- Hiring AI experts for its newsroom, including a "newsroom generative AI lead" and Quartz co-founder Zach Seward
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Legal Challenges and Industry Impact
The New York Times has been at the forefront of legal challenges in the AI era, becoming one of the first news organizations to sue a major AI company when it filed a lawsuit against OpenAI and Microsoft in 2023
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. This ongoing legal battle is expected to set a significant precedent for copyright issues in the news publishing industry as it relates to AI.Market Response and Future Outlook
Source: Axios
Despite the news of Fivespan's stake, the Times' stock price, which has seen a 15% year-to-date increase, did not show significant movement
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. This muted response suggests that investors may be taking a wait-and-see approach to the potential impact of Fivespan's involvement.As the media landscape continues to evolve, the outcome of this activist campaign and the Times' approach to AI integration will likely have far-reaching implications for the publishing industry. The balance between leveraging AI for growth and protecting intellectual property rights remains a critical challenge for news organizations in the digital age.
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