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Media Firms' Down Years Add Grist to Proxy Bids
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At Media General, fourth-quarter earnings were down nearly 70 percent (43 cents) compared with the same period in 2006 ($1.33). The company's Florida papers have been hit hard by the state's housing crash, and the company has significant tax and insurance costs, as well.
At the Times Co., director nominees must be approved by the board's nominating and governance committee before they can be put before the shareholders in April. The Times Co. said it would consider the Firebrand-Harbinger bid.
But in a research note on Tuesday, Lehman Brothers analyst Craig Huber wrote that he expects the committee to recommend against the Firebrand-Harbinger nominees. Times stock closed up 9 cents per share yesterday at $16.74.
Media General has a similar committee, and it would not include the Harbinger nominees for election to its nine-member board on the shareholders proxy form, Morton said. Harbinger would have to mount its own, independent campaign to pitch its director nominees to other Media General shareholders, Morton said. Six of the nine directors are appointed by stockholders who hold controlling shares, mostly members of the founding Bryan family. Shares of Media General closed down 45 cents at $19.12 yesterday.
Morton said he noticed last summer that Harbinger owned 9 percent of Media General stock. He called the company, as he said he would any major shareholder, but Harbinger never called back. Finally, on Wednesday, Morton said his company got a letter from Harbinger Senior Managing Director Philip Falcone saying he wanted to talk. In the letter, Falcone proposed changes to Media General's corporate governance and strategy.
"We're puzzled" by Harbinger's gambit, Morton said. "They didn't have to buy the stock to give us good ideas."
Morton said that even if Harbinger succeeds in seating its three directors on Media General's board, "I don't think their new directors would magically convert the six other directors."
