Grim Quagmire

Looks like the New York Times ("we print all the news that fits our agenda") is headed to a proxy fight in the board room.

Harbinger Capital Partners and Firebrand Partners will announce that they have purchased more New York Times Co. shares as they prepare for a proxy battle with the venerable newspaper publisher, according to a published report.

The investment group is expected to report a bigger stake in the company in a regulatory filing later Monday, The Wall Street Journal reported.

So what does this mean? A bit of a battle over direction and control of the paper, that's what.

The two companies said last month that they want to name a slate of four directors to New York Times Co.'s board, setting up a possible proxy struggle when the company holds its annual meeting in April.

As of Feb. 19, Harbinger owned a nearly 16% stake in New York Times Co.'s Class A shares.

The funds' efforts may be moot. The Class A stock is the publicly traded issue, entitling shareholders to vote for four board directors. The company's super-voting Class B stock is held primarily by the Ochs-Sulzberger family, which is entitled to vote for the remaining nine directors.

The Sulzberger family should be able to hold control, but the fight will likely damage the stock price. At least one significant analyst has switched to a "sell" rating on the Old Grey Hag.

Meanwhile, Deutsche Bank analyst Paul Ginocchio downgraded his rating on New York Times Co. to sell from hold, saying that the recent advance in the media company's stock -- up 50% since late January, coinciding with the Harbinger-Firebrand announcement -- "discounts any operational benefits" that might result if the investment group succeeds in changing the company's board.

In other words, some of the smart money has decided to head for the door.

Related: A McCain Coincidence? NYT Stock Nosedived Thursday and Friday.