Family Business Magazine E-Newsletter
March 4, 2008





Contents
1.  Comcast reverses stand on dividends, founder's pay.
2.  South Korea's Samsung empire includes Italian fashion label.
3.  New York Times, large investor to battle on board nominees.
4.  How family firms can enhance team performance.
5.  A third-generation leader's success strategies.







1.  Comcast reverses stand on dividends, founder's pay.  In a change of course in response to harsh criticism by major shareholders, Comcast Corp. announced that it would pay an annual 25-cent dividend and accelerate a $7 billion share-repurchase plan, the Philadelphia Inquirer reported. "Investors feared that Comcast would spend an anticipated surge in cash flow on business ventures or big acquisitions, instead of on them," the article said. Comcast also said it would scrap plans to pay the estate of 87-year-old company cofounder Ralph Roberts for five years after his death. Instead, Ralph Roberts, the father of Comcast chairman and CEO Brian Roberts, will receive a salary of just $1 per year, the Inquirer noted. In an e-mail to the Inquirer, Comcast critic Glenn Greenberg of Chieftain Capital Management called the decision to pay dividends "a good start" and added, "Time will tell whether management needs to be changed or this one will be able to make the necessary, significant adjustments to earn a high return for us."  (Source: Philadelphia Inquirer, Feb. 15, 2008.)

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2.  South Korea's Samsung empire includes Italian fashion label.  Derercuny, an Italian fashion label that was well received at the Milan fashion shows, is part of South Korea's Samsung Group, best known for its giant Samsung Electronics Co., the Wall Street Journal reported. Derercuny is owned by Cheil Industries Co., a $3.1 billion textile and chemicals company within Samsung Group and a key player in the Korean textile industry. According to the Journal article, Cheil entered the high-fashion business as "part of a new strategy to diversify away from its entrenched bulk textiles business, where China and India have a competitive advantage.... Cheil hopes to gain international cachet and realize higher profit margins by developing luxury brands." But, the report noted, the Samsung connection has caused some confusion. Derercuny designer Mina Lee told the Journal that "she finds it 'slightly annoying' having to always explain that her label manufactures everything in Italy, using European fabrics.... Cheil contributes to the confusion by invoking the Samsung name outside South Korea to boost its own stature." The article said that Cheil, founded in 1954, "was one of the first companies started by industrialist Lee Byung-chul, whose success building the Samsung Group of companies made him one of the richest men in Asia. Today, his son leads the Samsung Group, which contains 59 businesses with combined revenue of $160 billion."  (Source: Wall Street Journal, Feb. 21, 2008.)

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3.  New York Times, large investor to battle on board seats.  New York Times Co. chairman Arthur Sulzberger announced two board nominees one day after two investors announced their four nominees. The Times said Brenda Barnes, chairman of Sara Lee, and James Kilts, a former vice chairman of Procter & Gamble, would leave the board. The Times' new nominees are Robert Denham, a partner in the law firm of Munger, Tolles & Olson LLP and the former chairman and CEO of investment bank Salomon Inc.; and Dawn Lepore, chairman and CEO of Drugstore.com and the former vice chairman, technology, operations and administration, of the Charles Schwab Corporation. Earlier, hedge fund Harbinger Capital Partners, working with Scott Galloway, a marketing professor at New York University's Stern School of Business and founder of RedEnvelope.com and Firebrand Partners, nominated Galloway; Gregory Shove, a former head of AOL's e-commerce business; James Kohlberg, co-founder of private equity firm Kohlberg & Co.; and Allen Morgan of the Mayfield Fund. Galloway reportedly has hired D.F. King, a proxy solicitation firm, "to press its case with New York Times shareholders in the lead-up to the company's annual meeting on April 22," according to TheStreet.com. Portfolio.com noted, "It's clear that Sulzberger is sending a message to shareholders of the embattled media company: if you want more digital expertise and financial prowess around our board table, vote for my nominees." However, according to TheStreet.com, "a consortium of investors including Harbinger -- already the company's largest nonfamily shareholder -- have been adding to its stake. The firm disclosed in a regulatory finding [Feb. 25] that it has lifted its ownership in New York Times to 19% of shares outstanding from 16% -- giving it a stake on par with that of the Ochs-Sulzbergers." Their stake in the company "is growing, suggesting that Galloway and his partners smell blood," TheStreet.com said. This is "the first time a non-Ochs-Sulzberger family shareholder has proposed a slate of directors," the Washington Post noted. TheStreet.com's article said that while Galloway is "not supporting an end to the [Times'] dual-class share structure, he is proposing dramatic changes in the company's strategic direction that likely would include a sale of what he considers noncore assets, like The Boston Globe."  (Sources: Associated Press, Feb. 11, 2008; Portfolio.com, Feb. 12, 2008; Washington Post, Feb. 22, 2008; TheStreet.com, Feb. 26, 2008.)

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4.  How family firms can enhance team performance.  "The one prerequisite for a family wishing to enhance its team performance is good communication," writes consultant Cynthia L. Adams in Building Strong Family Teams. "Families that want to enhance their team performance have to share information, and therefore must assess their level of comfort with doing so. In order for family members -- and key employees -- to function as effective team members, they must have access to information, and be willing to share it.... If family members can agree on what information they are willing to share, then they can move forward." Adams suggests four steps to lay the groundwork for strong team performance:


For more advice on creating and sustaining effective sibling, cousin, spousal, and executive and employee teams, see Building Strong Family Teams. Learn more about the book and see the table of contents here.

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5.  A third-generation leader's success strategies.  Maria Luisa Ferre Rangel, president of Grupo Ferre Rangel, a third-generation Puerto Rican communications and real estate company that publishes El Nuevo Dia, the largest-circulation Spanish newspaper in the U.S., recently shared the story of her family firm's success with the U.S. Hispanic Chamber of Commerce. Here are a few of her tips, as reported in the Winter 2008 edition of Family Business Magazine:



For more family business news, tips and success stories, see the Winter 2008 edition of Family Business Magazine. Visit our website for subscription information.

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Coming in Summer 2008: An updated list of America's oldest family companies.  Family Business Magazine's acclaimed list of America's oldest family companies is among the most popular features of our website, www.familybusinessmagazine.com. Since our list was last published in 2003, we've learned of some companies we had inadvertently overlooked; other firms were closed or acquired and thus have dropped off the list. Our Summer 2008 issue will feature our newly updated list. After publication, the complete list, along with extra features, will be available online. Look for our updated list of the oldest family companies in the world in Autumn 2008.

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