Battle underway for control of Fisher Communications


Having been rebuffed in its attempt to buy out other shareholders of Fisher Communications, the hedge fund behind Huntingdon REIT – FrontFour Capital – is trying to elect more of its nominees to the Fisher board of directors. They would join FrontFour’s David Lorber, who is already a Fisher director.

FrontFour has informed Fisher that it will nominate four candidates for election to the Fisher board at the annual shareholders meeting, which has not yet been scheduled. (Last year’s was in May.) The candidates are: John F. Powers, Chairman for the New York Tri-State Region of CB Richard Ellis, Inc., an indirect wholly-owned subsidiary of CB Richard Ellis Group, Inc., the world’s largest commercial real estate services firm; Joseph J. Troy, Executive Vice President and Chief Financial Officer of Quality Distribution, Inc., a publicly traded operator of the largest dedicated bulk tank truck network in North America; Matthew Goldfarb, a Portfolio Manager at Fourth Street Holdings, L.L.C.; and Stephen Loukas, a Partner and Portfolio Manager at FrontFour.

Criticizing the board for its “poorly conceived strategic direction,” FrontFour insists that the best way to maximize shareholder value is to put Fisher up for sale to the highest bidder. The hedge fund has been pressing for a sale since 2008. It has stepped up the pressure recently with the takeover bid by Huntingdon REIT and now the battle for seats on the board.

In its own statement, Fisher acknowledged receipt of the letter from FrontFour. “While Fisher strongly disagrees with the assertions contained in the FrontFour letter, Fisher values input from all its shareholders, and the Board will evaluate the nominees and make a recommendation in the best interests of Fisher’s shareholders. Fisher’s Board and management team remain committed to enhancing shareholder value,” the company said.

Fisher has a staggered election system for its directors, with one seat currently vacant on the 10-member board. The four directors whose terms expire this year are Michael D. Wortsman, currently the Chairman and a former executive of Univision, ABC, Fox and NBC; Richard L. Hawley, an energy company executive; and two cousins from the founding Fisher family, George F. Warren Jr. and William W. Warren Jr.

If successful, the four FrontFour candidates would join Lorber, whose term runs until next year, to control exactly 50% of the board. That puts an added emphasis on the board’s selection of a successor for Deborah Bevier, who resigned from the board at the end of 2010. Her unexpired term runs to the 2012 annual meeting.

RBR-TVBR observation: A lot of hedge fund, trucking and real estate experience listed for these four candidates, but not one has any experience in broadcasting, which is Fisher’s main business. But then, FrontFour has no intention of actually running the media business – it just wants to sell the company, take the money and run.

What’s Fisher really worth? Click here for RBR-TVBR’s exclusive analysis.

Here is the letter from FrontFour to the Fisher board:

January 27, 2011

Fisher Communications, Inc.
140 Fourth Avenue North
Suite 500
Seattle, Washington 98109

Attn: Michael Wortsman, Chairman of the Board of Directors
cc: Board of Directors

Dear Mr. Wortsman,

As you know, FrontFour Capital Group LLC, together with its affiliates (“FrontFour”), is a long-standing shareholder of Fisher Communications, Inc. (“Fisher” or “the Company”).  We have serious concerns with the continued underperformance of the Company under this Board and management team.  In short, we have lost all confidence in the ability of management to take the necessary steps to enhance value at Fisher and in the Board’s ability to hold management accountable for its poor performance. We believe that a significant change to the composition of the Board is required to protect and grow shareholder investment in the Company.  To this end, FrontFour has nominated a slate of leading executives, who are independent of management and who have a strong track record of creating value in their respective professions.  

For the reasons detailed below, we strongly believe that the best means available to maximize shareholder value is by conducting a strategic review process aimed at selling the Company to the highest bidder.  Our director nominees, if elected, are committed to such a process for pursuing a value-maximizing transaction that would provide a substantial premium to shareholders and a certain means for monetizing their investment.  We believe the vast majority of the Company’s shareholders would support this course of action, as opposed to the uncertainty and inherent risks offered by the current Board’s poorly conceived strategic direction.  

The current Board has consistently let opportunities to maximize shareholder value slip by without proper consideration.  In the past three years alone, the Board has turned down two acquisition offers at significant premiums to market without, seemingly, having as much as formed an independent special committee to evaluate such proposals.  Most recently, on December 6, 2010, Huntingdon Real Estate Investment Trust (“Huntingdon”)  offered to acquire Fisher in a transaction valued at an 18% premium over Fisher’s closing stock price on that day, and a 10% premium over Fisher’s closing price on December 31, 2010, the last day of trading prior to the proposal being made public by Huntingdon.  That you rebuffed this bona fide offer to acquire the Company at a premium to the unaffected stock price just four days after it was made causes us to question whether the Board fully and properly evaluated the proposed transaction and whether your interests as directors are aligned with the best interests of your shareholders.  

We acknowledge that FrontFour is a shareholder of both Huntingdon and Fisher and that FrontFour representatives currently serve as members of Huntingdon’s Board of Trustees and as President and CEO of Huntingdon.  Make no mistake, to be clear, our sole interest at Fisher is in pursuing a value-maximizing transaction for Fisher that benefits all shareholders, and we have taken the necessary steps to eliminate conflicts of interest that could arise as a result of Huntingdon’s interest in acquiring Fisher.  Also, as you know, David Lorber is not participating in any Fisher Board deliberations and reports in connection with the Huntingdon offer, and has also recused himself from any deliberations at Huntingdon that involve Fisher.  If elected, Stephen Loukas would also recuse himself from any Fisher Board deliberations and reports relating to the Huntingdon offer.

It is unacceptable for the Board to reject acquisition proposals for the Company when shareholder value continues to deteriorate under this Board’s watch.  Fisher has continuously underperformed despite its ownership of valuable television broadcast assets in Seattle and Portland (top 25 DMAs), leading radio stations, and Fisher Plaza, a 300,000 square foot mixed use building in Seattle. Over five years ago a new CEO was put in place with the promise of implementing an operational turnaround.  Today, Fisher’s broadcast cash flow (“BCF”) margins continue to trail the BCF margins of its competitors.  The current Board and management have been given more than sufficient time to improve the value and operations of Fisher.  

We share the serious concerns of other shareholders regarding this Board’s poor track record for allocating capital.  Several shareholders have attempted to limit the Board’s ability to allocate their capital without shareholder approval.  By way of example, we question whether the Company overpaid for the acquisition of the Bakersfield assets.  In fact, we believe the market price for Fisher shares now discounts the potential for further dilutive acquisitions.  We are also deeply disappointed by the perceived conflicts of interest at the Board level and management’s inability to articulate a strategic direction for the Company against the backdrop of a rapidly changing industry environment.  

It is our belief that the shareholders’ interests are best served by conducting a robust and impartial auction process for the sale of the Company, including retaining a financial advisor with a clear mandate to engage all strategic and financial buyers in a transaction that maximizes value.  Our director nominees, if elected, would seek to establish an independent committee to fairly evaluate all proposals and to rid the review process of any potential conflicts of interest. We remind the Board of its fiduciary duties to shareholders, and urge the Board to give shareholders the opportunity to decide for themselves whether or not any third party proposal or offer at a reasonable premium to the current stock price is the best way to maximize stockholder value.  We reserve all rights to take any action we deem necessary to ensure the best interests of all shareholders are represented.


David A. Lorber, Managing Member
Stephen E. Loukas, Managing Member