FrontFour fires back in Fisher proxy fight


Now that May 11 has been set as the date for the vote which will decide control of the board of directors at Fisher Communications, dissident shareholder FrontFour Capital is preparing to mail out its own proxy urging election of its four candidates. If elected they would join with FrontFour’s David Lorber to form a majority of the nine-member board.

“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.  We believe the current Board and management have been given more than sufficient time to improve the value of the operations at Fisher, including BCF margins,” said FrontFour in its solicitation of votes for its board candidates.

But while calling for better management, FrontFour is not hiding its desire to sell off the company’s assets so it can cash out along with other investors.

“We believe the current Board has let a number of potential opportunities to maximize stockholder 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, by way of example, the Board rebuffed a private acquisition proposal by Huntingdon just four days after it was made that valued Fisher at an 18% premium over the Company’s closing stock price on that day.  We believe this raises serious questions as to whether the Board fully and properly evaluated the proposed transaction and whether the Board’s interests as directors are aligned with the best interests of the Company’s stockholders,” the proxy argues. And while it is a major investor in Huntingdon REIT, which had made a takeover bid for Fisher, FrontFour assured fellow shareholders that its board nominees would seek to maximize the return from any sale.

Fisher Communications allows for cumulative voting, which makes the May 11 election more complicated. In essence, each share gets four votes, which could be used to vote one time for four candidates, four times for one candidate, or any other combination utilizing four votes. To that end, FrontFour and Fisher’s board have come to an agreement on how to deal with cumulative voting: “Pursuant to the arrangement, after giving effect to cumulative voting, the three highest vote-getters would be elected as Class III directors to each serve a three-year term, and the candidate getting the fourth highest vote total would be elected as a Class I director for a one-year term.  However, if the lowest vote-getter to be elected as a director at the Annual Meeting is one of the Company’s nominees, then the Class I director will be Anthony B. Cassara if he is elected, regardless of whether or not he receives the fewest votes.  If Mr. Cassara is not among the four elected nominees, then the elected Fisher nominee receiving the fewest votes will be the Class I director.” Cassara was recently elected by the board to fill a vacant seat. Under the company’s bylaws, any director filling an unexpired term is subject to election at the next shareholders meeting, which explains why four seats are up for election in May.

RBR-TVBR observation: It is White vs. Green in this showdown. Unlike a government election where you get a ballot with all of the candidates listed, the parties in a proxy fight each provide voters with their own ballots – listing only their candidates. So the Fisher board majority and management are sending out White proxy cards with their four candidates listed and FrontFour is sending out Green proxy cards with its four candidates listed.

An RBR-TVBR reader send us an email inquiring as to whether Mario Gabelli, whose funds hold the largest stake in Fisher, was responsible for putting FrontFour’s David Lorber on the board. Yes, Lorber was elected to the board two years ago in a settlement which headed off a proxy fight by Gabelli. However, attorney Paul A. Bible, senior partner in Lewis & Roca LLP, was also added as a Gabelli-backed candidate and Bible is now united with all board members except Lorber in backing the management slate.