Dissident Investors Win Three Seats on Media General's Board
Harbinger Capital Partners, a hedge fund which has been critical of losses at Media General's Florida news outlets, have succeeded in getting three directors they supported elected to the family-owned company's board during a stockholders meeting held today.
A release from Harbinger indicates their directors received between 57 and 68 percent of the total votes. Media General's Florida companies include the Tampa Tribune, WFLA-Ch. 8, TBO.com, the Spanish-language newspaper CENTRO and a host of other, smaller newspapers.
This is a significant move, because the family-owned company advocated a different slate of directors, telling investors that Harbinger didn't understand the media business and didn't understand the company. Media General also sent letters to employees who receive stock through their 401K program asking them to vote for the family's slate and announced buyout offers at its Florida properties -- outlets Harbinger has accused of dragging down the company's stock price.
But holders of the company's Class A stock -- including the largest single holder, Mario Gabelli -- apparently responded more to Harbinger's contention that the current management team needed an outside perspective and pressure to improve the falling stock price. This result also suggests that the New York Times strategy in dealing with a challenge from Harbinger -- in which they negotiated a settlement whch placed one director supported by the hedge fund on their board -- may have been more effective than Media General's attempted freezeout.
Because the Bryan family controls the Class B stock which chooses six of the board's nine directors, there is little chance this new group can take control of the company. But they may be a significant voice in the organization's future direction, and may have a high-profile spot on committees which traditionally feature outside directors, such as compensation.
Media General owns several Tampa Bay area properties Harbinger accused of dragging down the company's stock price, including the Tampa Tribune, WFLA-Ch. 8 and TBO.com. It will be interesting to see what actions the new directors advocate in dealing with revenue challenges here.
The results are considered a preliminary outcome until an outside firm can verify the votes, which should take a couple of days, according to a Media General spokesman. A Media General release notes Harbinger Capital Partners nominated three individuals for election by the holders of the Class A shares: Eugene I. Davis, J. Daniel Sullivan and F. Jack Liebau, Jr.
Media General spokesman Ray Kozakewicz just told me that the meeting held at Media General's newspaper plant in Virginia, drew about 275 people and lasted about 30 minutes. The results of the vote were announced and the directors -- including the three pushed by Harbinger AND the three selected by Media General -- went into a board meeting already scheduled for today.
More to come as my reporting expands....
Click the link below to see dueling press releases from Harbinger and Media General:
Media General Holds Annual Meeting of Stockholders
RICHMOND, Va. – Media General, Inc. (NYSE: MEG) today held its Annual Meeting of Stockholders. The principal business of the meeting was to elect three Class A directors and six Class B directors.
The company announced final results on the re-election of the six Class B directors - J. Stewart Bryan III, chairman; O. Reid Ashe, Jr., Diana F. Cantor, Marshall N. Morton, Thompson L. Rankin, and Coleman Wortham III.
As previously noted, the Class A election was contested. Harbinger Capital Partners nominated three individuals for election by the holders of the Class A shares: Eugene I. Davis, J. Daniel Sullivan and F. Jack Liebau, Jr. Independent inspectors of election provided preliminary results that the three Harbinger candidates were elected to the board. The results of the Class A election will be finalized over the next several days by the inspectors. If the final certification of results differs from the preliminary report, Media General will issue a news release.
The company’s Class B stockholders ratified the appointment of Ernst & Young LLP as the company’s independent registered public accountants for fiscal 2008.
At the meeting, Marshall N. Morton, president and chief executive officer, provided a report on the company’s strategic, operational and financial initiatives.
“Media General is progressing on multiple fronts as we continue to transform our company into a new media enterprise. In addition to longer term initiatives, we have a number of opportunities to further boost our bottom line in 2008. This fall we expect significant Political advertising revenues, and we expect to generate approximately $40 million for the year as a whole. Ohio, Florida and Virginia are expected to be particularly strong states for Presidential campaign spending. We look forward to the return of the Summer Olympics on our NBC stations and expect related advertising revenues to be $13 million to 14 million,” Mr. Morton said.
“We signed new cable retransmission agreements in the first quarter that provide compensation for our stations. In past negotiations, we were successful in obtaining full carriage of our secondary channels as well as some lucrative promotional trades. Many of our cable contracts expire on December 31st of this year and others expire in 2009, while a few run into 2011. We will begin negotiations with some of these systems later this year,” he said.
“We are implementing a number of actions that are designed to reduce expenses across the company by $25 million to $28 million. In addition to redeploying approximately $100 million in proceeds from asset sales, we are using operating cash to repay debt and using less for capital spending this year, compared to the past few years. Debt at the end of 2008 is expected to be approximately $770 million, compared with $898 million at the end of 2007. Beyond all this, a modest improvement in Florida and any rebound in the U.S. economy would be significant,” he said.
“We are making very good progress addressing the impact of structural changes in industries that have been major purchasers of newspaper and television advertising, such as the retail and automotive businesses. We are accomplishing this by creating new products and services that attract new audiences and provide new opportunities for advertisers to reach specific targeted customer groups,” he said.
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Mr. Morton outlined some of the new capabilities that Media General has developed and is developing to operate in the world of new media on all its newspaper and television Web sites, which include:
? Adoption of a successful “Web-First” approach in all newsrooms. In Tampa, for instance, page views for local news are running consistently more than 50 percent ahead of a year ago.
? The use of more video online, user-generated content such as photographs, and blogs.
? Enhanced Web-based information through e-mail and cell phone text messages. More than thirty Web sites offer this service, and an average of 800 new subscribers are being added every month.
? A multitude of Web site features to allow ads to be searchable, links to advertisers’ Web sites and other searchable data to assist users with buying decisions.
“We have been very successful increasing our online audience and revenues because our online offerings are meeting customer needs. Since we launched our Interactive Media Division in 2001, the compound annual growth rate for page views and revenues has been 24 percent and 49 percent, respectively,” Mr. Morton said. “We’ve seen solid successes from our employment sites being co-branded with and hosted by Yahoo! HotJobs. In the first quarter, we sold $1.6 million in advertising through Yahoo!HotJobs. Job searches on our sites have increased dramatically.
Mr. Morton concluded his remarks by saying, “Media General is acting aggressively to transform our business to the new consumer reality as quickly as humanly possible. Being an industry in transition mostly sounds like a negative; however, it can be very energizing. It causes us to question all of those things we thought we understood. It generates all sorts of new ideas. I could not be more proud of the nearly 7,000 employees who work for Media General and who come in each day full of enthusiasm and optimism for the future, and who are working very hard to innovate and lead change.
“Yes, the current economic headwinds are slowing our progress to a certain extent. Yes, we will be challenged by those who may not seek to act in the long-term best interest of Media General. But we are going to continue to make progress, and we are going to continue to be the leading provider of news, information and entertainment in our markets using whatever platforms our audience and advertisers want,” he said.
The full text of Mr. Morton’s presentation is available on Media General’s Web site at www.mediageneral.com.
Harbinger Capital Partners Notes Preliminary Media General Stockholder Voting Results
Preliminary results indicate all of Harbinger Capital Partners’ nominees elected to Media General board of directors by significant margins
New York, April 24, 2008 – Harbinger Capital Partners Master Fund I, Ltd. and Harbinger Capital Partners Special Situations Fund, L.P. (together, “Harbinger Capital Partners”) today announced that preliminary, on-site results provided by Corporate Election Services indicate that all three of Harbinger Capital Partners’ nominees have been elected to the Media General (NYSE: MEG) board of directors by significant margins.
“We are pleased that the preliminary results indicate that Media General stockholders have elected all three of our highly qualified nominees,” said Joseph Cleverdon, Vice President and Director of Investments at Harbinger Capital Partners. “We believe these individuals will bring experience, judgment, independence and accountability to the board. It is now in the interests of Media General and all of our fellow stockholders to move past this proxy contest and focus on rebuilding stockholder value.”
According to preliminary tabulations at the meeting, Harbinger Capital Partners’ candidates received between approximately 57 percent and 68 percent of the total votes cast.
Harbinger Capital Partners expects that the final certified inspector’s report will be available within the next 24 to 48 hours