Media General dismisses shareholder strategy
NEW YORK (Reuters) - Media General Inc's chief executive dismissed on Tuesday a dissident shareholder's strategy for the company to weather tough economic times, setting the stage for a proxy battle at its annual meeting.
In presentations at a forum held by fund manager and Media General investor Mario Gabelli, both sides presented sharply different accounts of the company's performance and plans for its future. They agreed that Media General should pay off more debt, but offered little other common ground.
"Their ideas were not workable or usable," Chief Executive Marshall Morton told Reuters in an interview. "It was mostly formulas and platitudes that would work well in a management textbook, but didn't tie well to Media General."
Morton also repeated his admonition that shareholders should reject three board nominees sponsored by hedge fund Harbinger Capital Partners.
Harbinger, which owns 18.2 percent of Media General's publicly traded shares, said the company has pursued a flawed strategy and argued that it should cut publishing costs more aggressively and think about lowering its dividend and using the money to pay down more debt.
In its first public airing of its strategy for the company, the fund also said Media General should consider alternatives for its properties in Florida, which include the Tampa Tribune, although it did not specifically urge a sale.
Morton said he has no plans to meet Harbinger again. The shareholder meeting is planned for April 24 in Mechanicsville, Virginia.
Harbinger Vice President Joseph Cleverdon, who presented his side's case, told Reuters the fund was still open to discussions with the company, but has no meeting planned. "I don't think we've failed to reach an agreement until we actually get to the day of the meeting," he said.
Morton said the company has the right strategic focus. He said it plans to sell TV stations and other properties that should bring in $100 million to pay down debt 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," Morton said.
He acknowledged that the poor housing market and wider economic problems have hurt the company in Florida, but said the market has been "terrific" before and will be again.
Media General, which publishes the Richmond Times-Dispatch and owns newspapers and television stations in the southeastern United States, has seen its share price fall in response to a prolonged advertising slump at U.S. newspapers. Its shares have fallen more than 70 percent in the past three years.
In urging shareholders to reject Harbinger's nominees, Media General is taking a different approach than that of the New York Times Co, which said this month it would endorse two candidates that Harbinger put forth for its board.
Like the Times, Media General has a separate class of shares, which are held mainly by the Bryan family and give them more control over the company than other shareholders. That makes it uncertain what changes Harbinger's nominees could make if they were elected.
Harbinger's Cleverdon, who delivered the hedge fund's presentation, hammered at the dual-class structure, saying it has contributed to Media General's recent poor performance.
Among decisions it characterized as poor were acquisitions of game developer BlockDot Inc and online shopping site DealTaker.com. Harbinger said Media General should have added such features to its site instead of buying whole companies.
Morton, in his remarks, said such acquisitions build a valuable sense of community on the Internet, and that Media General has "done a better job than most" in recognizing early that the publishing business needs to move to the Web.
Media General shares rose 14 percent to close at $15.98 on the New York Stock Exchange, before falling back to $15.87 in extended trading.
(Additional reporting by Kenneth Li; Editing by Tim Dobbyn and Braden Reddall)