NEW YORK -- The New York Times Co. defused a standoff yesterday with its largest outside shareholder, Harbinger Capital Partners, by agreeing to support two people nominated by the hedge fund as directors at its annual meeting next month.

Harbinger has accumulated a 19 percent stake in the company in recent weeks, rivaling the amount held by the Sulzberger family. But the Sulzbergers still control the company through a special class of shares which allow them to name 70 percent of the board.

The Times will expand its board from 13 to 15 to accommodate the two new nominees -- Scott Galloway, a New York University marketing professor and shareholder activist who has been advising Harbinger; and James Kohlberg, co-founder of the investment firm Kohlberg & Co.

The agreement calls for Harbinger to halt its campaign to have its own slate of four directors elected at the shareholder meeting.

Harbinger also has agreed to support the entire five-person slate of Class A proposed by the Times. The other 10 directors will be elected by the Sulzbergers, who control the company's supervoting Class B shares.

Harbinger and Galloway have argued that the Times needs to take drastic action to shed assets outside of its core newspaper and invest aggressively in building up its online businesses.

Times executives told investors at a recent conference that the company was always re-evaluating its portfolio of assets and moving quickly to expand readership and revenues on the Internet.

In addition to its main newspaper, the Times company also owns The Boston Globe, a stake in the Boston Red Sox, its headquarters building in Manhattan, a group of smaller newspapers and the International Herald Tribune. It also owns About.com, an online consumer information business.

Harbinger also has nominated three people for the board of Richmond-based Media General Inc. The company, which owns the Richmond Times-Dispatch and other newspapers and television stations, primarily in the Southeast, is opposing Harbinger's nominees.

"We do not see any parallel with the New York Times situation," Media General spokesman Ray Kozakewicz said yesterday in response to the Times' agreement with Harbinger.

Like the Times, Media General has a dual-class stock structure that gives its founding family control of the company.

Harbinger is Media General's second-largest stockholder, with an interest in about 21 percent of its Class A shares. Its nominees are for the three seats on the Media General board elected by Class A stockholders.

Six directors are elected by Class B shares, which are controlled by company Chairman J. Stewart Bryan III and his family.

On April 1, Marshall N. Morton, Media General's president and chief executive, will join a representative of Harbinger in a forum to present their views on Harbinger's proposal to replace board members. Mario J. Gabelli, chief investment officer of Gabelli & Co. and Media General's largest shareholder, will moderate the event in New York.

Media General's Class A shares rose 1 cent to $14.77 trading in New York Stock Exchange composite trading. The Times shares were up 24 cents, or 1.3 percent, to $18.74, on the NYSE.
Staff writer John Reid Blackwell contributed to this report.