The New York Times contacted Bank of America due to the threat posed by ValueAct

Bank of America Corp (NYSE:BAC) and Sidley Austin LLP are consulting The New York Times Co on how to respond to a potential board challenge from ValueAct Capital Management LP, according to sources with knowledge of the matter.

ValueAct, a San Francisco-based hedge fund, said on Thursday that it had a roughly 7% stake in the New York Times and indicated that the newspaper may grow more rapidly by aggressively marketing its all-access digital bundle, which offers subscribers more than just basic news.

The New York Times is owned by the Ochs-Sulzberger family through dual-class shares that allow them to choose nine of the company's thirteen directors.

Depending on the board's composition, ValueAct could challenge the company for one of the remaining four board seats in a shareholder vote. Insiders claim that The New York Times is working with bankers and attorneys to prepare for this situation.

The New York Times is also advised by proxy solicitor Okapi Partners LLC, which assists firms in counting votes at shareholder meetings, according to individuals who requested anonymity because the matter is classified.

The New York Times, ValueAct, Sidley, Okapi, and Bank of America declined to respond or were unavailable for comment. The New York Times said in a statement on Thursday that its management had met with ValueAct to exchange opinions.

In a statement filed with the Securities and Exchange Commission on Thursday, the hedge fund disclosed its interest and stated that it will undertake discussions with The New York Times to assess "if it makes sense for a ValueAct Capital employee to serve on the issuer's board of directors."

In recent years, The New York Times has added the sports website The Athletic, the product review website Wirecutter, a cuisine app, and games to its portfolio. Despite a rise in digital subscriptions, the company's stock is around 30% less valuable than it was a year ago, as advertisers have cut spending out of fear of a recession.

ValueAct, which was founded by Jeffrey Ubben twenty years ago and is today directed by Mason Morfit, frequently obtains board membership with the cooperation of the companies in which it invests.

Microsoft Corporation (NASDAQ:MSFT), where Morfit served on the board, Adobe Corporation (NASDAQ:ADBE), where former ValueAct partner Kelly Barlow sat, and Citigroup Inc. were among ValueAct's investments (NYSE:C).