| NEW YORK
NEW YORK 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,
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,"
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
(Additional reporting by Kenneth Li; Editing by Tim Dobbyn
and Braden Reddall)