Dissident investor Harbinger Capital Partners won a crucial victory in its struggle to bring change to Tampa Tribune parent Media General Inc. on Thursday, as three directors backed by the hedge fund won election to the company's nine-member board.
A spokesman for Media General noted this was a first for the company, echoing earlier public comments that the election would not bring instant change because the family of chairman J. Stewart Bryan III still controls the Class B stock, which elects six board seats.
But Thursday's balloting, in which Harbinger's nominees received between 57 and 68 percent of the vote from Class A stockholders, according to preliminary results cited by the hedge fund, also raised an important question, given Harbinger's aggressive criticism of losses at Media General's Florida outlets, such as the Tribune and Sunbelt Newspapers.
"We will listen with courtesy to the ideas of the new directors," Media General president and CEO Marshall Morton wrote in a memo circulated to employees Thursday. "But frankly, I believe they will have to prove themselves worthy of their places on our board before they will be able to earn the confidence of the remaining directors."
Harbinger, which owns about 18 percent of the Richmond, Va. company, revealed earlier this year it would nominate three candidates to Media General's board. "It is now in the interests of … all our fellow stockholders to move past this proxy contest and focus on rebuilding stockholder value," Joseph Cleverdon, a Harbinger vice president, said in a statement Thursday.
Media General backed its own slate of directors, saying that Harbinger didn't understand the company and that its nominees were not qualified. Officials also sent an e-mail to the company's 7,000 employees, urging staffers holding Class A stock to support their nominees.
A Media General spokesman would not speculate on whether the results were a no-confidence vote for the company's management. The New York Times Co. avoided a similar proxy fight in March by agreeing to seat two directors supported by Harbinger and expand its board by two seats.
Both the nominees supported by Harbinger and Media General attended a closed-door board meeting convened after the announcement of the preliminary voting results, according to a spokesman for the media company. Final results are expected in the next few days, after verification by an independent firm.
The change comes one week after Media General reported a $20-million loss in the first quarter of 2007, with revenue in Florida down nearly 30 percent. On April 14, the company offered a buyout to half the 1,326 employees of its Florida Communications Group, which includes the Tribune, WFLA-Ch. 8, TBO.com and a host of other outlets. The deadline for applications is Friday.
"Hopefully, by getting some fresh new voices on the board, you get some new ideas," said newspaper analyst Lauren Rich Fine. "There may be resentment … (but) if they have good, sound ideas, over time, my guess is their voice will be heard."
Eric Deggans can be reached at firstname.lastname@example.org or (727) 893-8521. See his blog at blogs.tampabay.com/media.