Media General showdown


Harbinger hedge fund VP Joseph Cleverdon tried to persuade other institutional investors to back his firm’s nominees for three seats on the Media General board of directors by depicting the company as a sleepy fiefdom run for the benefit of the Bryan family, with no attention to the outside shareholders who own 98% of the company’s equity. But in a face-off put together by Mario Gabelli, Media General CEO Marshall Morton dismissed the Harbinger proposals and nominees while detailing how his team is cutting expenses and reducing debt as it focuses on being “a local content company.”

Reporters weren’t allowed inside the closed door gathering April 1st organized by Gabelli, whose investment funds are Media General’s largest shareholder, just ahead of Harbinger, but both sides filed copies of their presentations with the SEC.

“What we are is a content company – and, more specifically – a local content company,” Morton said as he sought to persuade the big holders of Media General’s public Class A stock that he and his team know what they are doing – and that the three incumbent directors to face balloting by the Class A shareholders should be re-elected over the three Harbinger nominees who, he said, “cannot hold a candle to the current Board.”

Morton disputed the notion that Media General had overpaid for the four stations in bought from NBC, noting that 24% of political revenues thus far this year have come from those fours stations.

But he also promised to de-lever the company as Media General deals with the tough economy, especially for its vital Tampa market. He noted that the sale of Media General’s stake in a newsprint company along with divesting five smaller TV stations, with three deals already announced, will produce about 100 million for debt reduction this year. “By the end of the year, with all deals complete and taxes paid, we should be at about $770 million in debt outstanding.

“We’re here today, nearly a year after we first became a shareholder, because we believe the time is appropriate to enhance the composition of the board in order to rebuild value for all shareholders,” said Cleverdon. He focused on how Media General’s stock had fallen even more than its peers in the newspaper and television industries and repeated charges that the company has lost its focus. In particular, he charged that the company had failed to seek out duopoly opportunities and retransmission consent payments.

“We have nominated three outstanding individuals who will work with the other directors and help re-focus the board and management on the company’s core mission of maximizing value for all shareholders,” the hedge fund representative insisted.

Among the changes that Harbinger is pressing for are sales of the Columbus, OH and Providence, RI stations acquired from NBC and three Internet-based businesses, which the hedge-fund claims are non-core assets.

RBR/TVBR observation:
Shareholders won’t vote until April 24th, but Wall Street gave Marshall Morton a vote of confidence for his 100 million bucks debt pay-down pledge. Media General’s stock bumped up on that news. Will they also vote to keep his current board members? Regardless of the vote outcome at the annual meeting, the nine directors elected by the Bryan family with its Class B stock will have voting control of the board. As Morton, himself a Class B director, noted, no matter how the vote for Class A directors comes out “we’re not going to suddenly change course and become a different company.”