Media General Urges Employee Stockholders to Vote Against Harbinger as Proxy Fight Escalates
The war Media General is waging to keep directors selected by investment firm Harbinger Capital Partners off its board reached a new level this week -- as sluggish performance by media properties the company owns in Tampa stood centerstage.
In a letter to employees participating in their 401(K) program dated Thursday, Media General CEO Marshall Morton urged them to "simply throw out everything that Harbinger has sent you" regarding the vote on directors (after reading the material, of course). The company's matching contribution to Media General's 401(k) program comes in company stock.
The letter urges employees to vote for Media General's directors, noting that Harbinger has proposed Media General "consider exiting entire markets, including Tampa." Once upon a time, WFLA-Ch. 8 and the Tampa Tribune were cash cows for the company, but the worsening real estate market and other factors have turned that around. This struggle over directors will be decided during Media General's annual stockholders' meeting April 24.
Harbinger and Media General sparred over this issue publicly during a forum April 1 organized by investor Mario Gabelli. Harbinger comes to the Media General fight fresh from winning two seats on an expanded, 15-member board running the New York Times Co. after advocating that company consider more aggressive moves such as selling the Boston Globe newspaper.
Harbinger's approach also challenges core philosophies of Media General's corporate culture; that its current management is highly effective, the and the strategy of uniting platforms such as WFLA and the Tribune through convergence will eventually pay off financially.
Also on Thursday, Harbinger released a statement about a recent public filing by Mdia General which was supposed to address their criticisms about the company. Harbinger's release, in part, said: ""We are disappointed with the cavalier attitude Media General has taken toward creating stockholder value, as evidenced by their presentation filed with the SEC on April 8, 2008. We believe their presentation demonstrates the disregard Media General has for its relationship with its stockholders. In contrast to the presentation we filed with the SEC on April 1, 2008, Media General's filing failed to address the detailed analyses and critique we made public that demonstrate Media General's consistent poor performance and strategic missteps. Instead of providing a financial and operational analysis and a clear strategic plan to rebuild shareholder value, the company chose to defend its failures by offering stockholders a collection of scattered, unsubstantiated points and unwarranted attacks on our experienced nominees that serve only to distract from the core issues."
Here's the text of Morton's letter. Looks like Florida -- and specifically, Tampa --are going to be at the center of this nasty battle over Media General's future leadership and direction.
As you know, Harbinger is attempting to displace three of our Directors and
force three of its nominees onto our Board of Directors. And, as you also
know, Harbinger cannot gain control of our Board under any circumstances.
Thanks to an investor forum held last week by our largest public
stockholder, Mario Gabelli, we now understand a little more about what
Harbinger thinks it’s doing. What is most evident, however, is how
misguided it was for Harbinger to refuse to talk to us before they invested
in Media General last June—or in the seven months that followed. Based on
what we have heard, they would have benefited, and learned a lot about both
the Company and our industry, from a meaningful conversation with us.
Harbinger clearly hasn’t taken the time to understand Media General,
including our many strengths, our economic and industry challenges, and our
strategies to leverage those strengths and meet those challenges. Instead,
it’s proven that it has a very short-term focus. It proposes that we
consider exiting entire markets, including Tampa—long one of our
crown-jewel assets—and react in other knee-jerk ways, such as possibly
cutting our dividend. This is a short-term mentality that, frankly, does
affect much of corporate America. But, as you know, it is not the way we
run Media General. We are indeed fortunate to have a dual-class stock
ownership structure, so that such a short-term and misguided agenda can be
seen for what it is, and can be thoughtfully compared to our carefully
developed, long-term focus on building long-term value for all
Still, I know that all of this is distracting and perhaps even somewhat
disturbing for you, and I regret that. It also sometimes generates
questions. Some inquiries we’ve received over the last several days involve
what employees should do when they receive Harbinger’s proxy materials. As
a reminder, the Harbinger proxy materials are being mailed by Harbinger to
our401(k) participants with a green proxy voting card; the Media General
materials always are mailed with a plain, white card.
You may well find it instructive to read the Harbinger proxy statement, and
I encourage you to do so. But after that, I would strongly suggest you
simply throw out everything that Harbinger has sent to you. Voting to
“withhold” for the Harbinger nominees, for example, only cancels any
earlier vote you may have made FOR the Company’s nominees.
If you’ve already marked and returned a green Harbinger proxy card, or if
you’ve otherwise voted even to “withhold” on the Harbinger nominees, there
is an easy way to change your vote. We’ll soon be mailing more white proxy
cards to all Media General stockholders. As soon as you receive those new
voting instructions, please send back the white card, marked FOR all of the
Company’s nominees, or simply call the toll-free number that’s listed on
the card, or take advantage of the Internet voting procedures that you’ll
also find described there.
Your vote FOR the Company’s Directors is important.
The Board of Directors and I thank you for your careful attention. We also
thank you for making a difference every day and for providing outstanding
service to our readers, viewers, users and advertisers. That is the right
way to build shareholder value for all of us, and we are grateful for all
you are doing to stay focused and make Media General a better, stronger
Marshall N. Morton
President and Chief Executive Officer