Fisher board fires new volley at FrontFour


With a May 11th vote looming which will determine whether who controls Fisher Communications, the current board of directors (save one dissident) has sent off a new letter to shareholders that attacks the claims of FrontFour Capital, which is seeking to elect its own slate of director candidates. The board letter urges shareholders to reject the FrontFour candidates and support those nominated by the current board.

The letter accuses FrontFour of making inaccurate and misleading statements in its own pitch for support of the four candidates it has nominated. If all four are elected they would constitute a majority with the current FrontFour principal already on the Fisher board.

Here is the letter:

April 12, 2011

Dear Fellow Fisher Communications, Inc. (“Fisher”) Shareholder:

We are writing to ask for your support on an important matter regarding the future of your Company.  As you may know, David Lorber and FrontFour Capital Group (“FrontFour”), a Connecticut-based hedge fund, has submitted a slate of four nominees for election to Fisher’s Board of Directors.  If elected, FrontFour’s four nominees and Mr. Lorber would constitute a majority of the Board, thus, taking control of Fisher.   We are asking that you reject the FrontFour nominees and instead elect the highly qualified and experienced candidates being proposed by your Board of Directors.


Mr. Lorber is a sitting Fisher director who is also a member of the Board of Trustees of Huntingdon Real Estate Investment Trust (“Huntingdon”), a Canadian REIT that owns commercial real estate, including warehouses, industrial buildings and parking lots.  FrontFour is the largest shareholder of Huntingdon.  Huntingdon’s Chief Executive Officer and Trustee, Zachary George, is Mr. Lorber’s co-founding partner of FrontFour.  In December 2010, Huntingdon, a REIT with a market cap of approximately $100 million, made an unsolicited proposal to acquire Fisher at an implied offer price of only $23.99.  The Huntingdon proposal, which would have required that our shareholders exchange their Fisher stock for shares in Huntingdon, or a combination of cash and Huntingdon shares, was unanimously rejected by Fisher’s voting Board members.

Mr. Lorber has criticized the Board for its quick rejection of the Huntingdon proposal; however, the equity markets quickly confirmed the Board’s assessment.  Fisher’s most recent closing share price on April 11, 2011 was $29.86, approximately 25% higher than the value implied by the Huntingdon December 2010 proposal.  Furthermore, our Board, including Mr. Lorber, was very well informed about Fisher’s value at that time.  Last July, the Board received a non-public assessment from a financial advisor working for the Board concluding that valuations of broadcast assets were near all-time lows and as a result, the environment for transactions in the industry remained weak.  Several months later, just weeks before Huntingdon made its unsolicited proposal for Fisher, the Board received a very positive, non-public update on Fisher’s fourth quarter financial performance from management.

FrontFour’s ownership interest in Huntingdon, and the affiliation of Mr. George and Mr. Lorber with Huntingdon, create a direct conflict of interest between its (and Mr. Lorber’s) interests and the interests of our other shareholders.  Had our Board pursued the Huntingdon proposal, then all Fisher shareholders would have received a poor value for their Fisher stock.  However, as Huntingdon’s largest shareholder, FrontFour would have directly benefitted from the low value proposed for Fisher.  Mr. Lorber’s affiliation with Huntingdon, FrontFour and Fisher raises obvious questions about whether he is focused on serving the shareholders and investors of Huntingdon, FrontFour or Fisher.

You should also note that FrontFour has not been a long-term significant Fisher shareholder.  Instead, it is a hedge fund that is focused on reaping a significant short-term gain.  FrontFour currently owns approximately 2% of Fisher’s shares, over 90% of which have been purchased since May 4, 2010 at prices ranging from $14.21 to $18.81 per share, while Mr. Lorber has been a member of the Fisher Board and generally during periods in which Fisher stock traded at depressed levels. 

After Huntingdon’s unsuccessful and opportunistic attempt to buy the Company in December, Mr. Lorber and FrontFour are now trying to take control of your Company through a proxy contest.  Furthermore, FrontFour is seeking to gain control of Fisher without any control premium being offered to the rest of the shareholders.  If successful, FrontFour says it intends to initiate a sale process for the Company.  It would be doing so at a time when valuations of broadcasting stocks remain near the bottom of the market.  They have already made up their mind about the future of Fisher and have put forward no plan for how they would operate the business, either before, during or after the sales process or how they would honor their fiduciary duties to all shareholders.  Instead, their sole proposal for value creation is to allow four non-broadcasters to join with Mr. Lorber in attempting an ill-timed auction of the Company to potential buyers that may in fact include Huntingdon.

As a shareholder, you should ask yourself whether you want directors who are blindly committed to selling your Company, potentially to an affiliated entity, without knowledge of the industry.  Your Board encourages you not to allow your Company to be hijacked by Mr. Lorber with the aid of one of his hedge fund partners and handpicked designees, who appear to be focused only on providing FrontFour with a short-term gain.


Fisher’s 2010 Financial Results
FrontFour’s preliminary proxy statement, which was filed with the Securities and Exchange Commission on March 21, 2011, provided a misleading picture of Fisher’s performance.  FrontFour asserted that Fisher’s “poor operational and stock performance” was a concern, citing results and stock performance information through 2009.  FrontFour’s filing conveniently omitted more recent and publicly available 2010 results, which demonstrate greatly improved performance, in order to deceptively create a false impression of Fisher’s current condition. 
The reality is that in 2010, Fisher’s consolidated revenue increased 32% from 2009, EBITDA grew approximately 400%, and television revenue was up 40% – all of which were peer-leading results.  In addition, TV Broadcast Cash Flow margins expanded significantly.  Your Company now enjoys one of the strongest balance sheets in the broadcasting industry, with $52.9 million in cash and cash equivalents on hand as of December 31, 2010.  Moreover, during the past 24 months, the Company has used its strong cash position to reduce its total debt by about 34% – from $150 million to $98.8 million – which does not include a $20 million senior notes redemption currently underway.

The improved results have not gone unnoticed to the investment community.  On a trailing 12-month basis as of March 22, 2011 – prior to the Company’s disclosure that it would explore the possible sale or financing of Fisher Plaza – Fisher’s common stock outperformed its peer group and the S&P 500 by a significant margin.

Fisher’s Corporate Governance
The FrontFour preliminary proxy statement criticizes the Fisher Board for questionable corporate governance practices.  In particular, FrontFour and Mr. Lorber criticize the Board for not implementing a proposal to declassify the Company’s Board of Directors that passed a shareholder vote in 2009.  FrontFour’s proxy statement notes that “the Board ultimately decided not to enact the non-binding proposal.”  What FrontFour fails to mention; however, is that at a December 2009 meeting, Mr. Lorber joined all present directors in the Board’s unanimous decision not to implement the declassification of the Board of Directors.


Last year marked the fifth consecutive year in which Fisher stations increased their share of television market revenue and television advertising growth rates.  Fisher has grown share by improving ratings, strengthening performance in key advertising categories, and taking market share from competitors.  Our television and radio stations continue to deliver distinguished news and quality programming which is reflected in our strong operational performance company-wide.  The Company is well-positioned to continue delivering growth and creating shareholder value.  Now is not the time to disrupt our operational and financial momentum – that is why a vote for Fisher’s candidates is a vote for shareholder value. 


We recommend that you stop FrontFour’s attempt to seize control of your Company by supporting our four highly qualified nominees – Anthony B. Cassara, Richard L. Hawley, Roger L. Ogden and Michael D. Wortsman.  In contrast to the FrontFour nominees, our candidates have nearly 100 combined years of broadcast experience and have successfully created shareholder value at other companies in our industry.  Our slate also includes Richard Hawley, our audit committee chair and financial expert who has over 37 years of professional experience, including serving as a partner of an international public accounting firm and current service as the chief financial officer of a Fortune 1000 public company, as well as previous experience as chief financial officer of a Fortune 500 company.  You can read more about their qualifications in the attached definitive proxy statement.  While FrontFour’s actions demonstrate a preoccupation with their own short-term financial gain at the expense of other shareholders, Fisher’s nominees are committed to representing the interests of all shareholders. 

You can vote FOR Fisher’s nominees and AGAINST FrontFour’s candidates by simply signing, dating and returning the enclosed WHITE proxy card promptly in the postage-paid envelope provided, or by following the easy instructions to vote by telephone or Internet. 

We strongly urge you not to allow a hedge fund that has an obvious conflict of interest to halt Fisher’s progress.  You can do so by disregarding any materials you may receive from FrontFour and not sending in any green proxy cards.  

Thank you for your continued support.


Paul A. Bible
Richard L. Hawley
Colleen B. Brown
Brian P. McAndrews
Anthony B. Cassara
George F. Warren, Jr.
Donald G. Graham, III
William W. Warren, Jr.
Michael D. Wortsman