MG's boardroom is a battlefield


Investor Harbinger Capital Partners has a slate of its own it would like to install, and large investor Mario Gabelli has indicated he would support it. The results could determine how the company deals with challenging times in the near future.

A third party, RiskMetrics, recommended the election of two of Harbinger’s candidates: Daniel Sullivan and Jack Liebau Jr., while suggesting that the third, Eugene I. Davis, was not a good pick. MG said that RiskMetrics "…failed to recognize the clear superiority of the Media General directors up for reelection this year — Charles A. Davis, Rodney A. Smolla and Walter E. Williams." The problem with the Harbinger candidates is their hedge-fund background, combined with inexperience in running a media company.

"As we pointed out yesterday in our most recent letter to all Media General stockholders, Harbinger’s ‘prescription’ for Media General in our view betrays a trader mentality that is antithetical to long-term value creation. Among the actions Harbinger wants us to consider, and that its Board candidates would presumably seek to carry out, are the following: *  exiting the Tampa market, even though it has historically been our largest source of revenues and profits; * cutting our dividend; and * selling two promising online assets, Blockdot and DealTaker."

Media General blames a general recession in Tampa-St. Pete for much of the company’s current woes, not the actions or inactions of current MG management. Seeking votes for the company backed slate, MG said, To punish three outstanding and valuable directors for that under-performance seems to us inappropriate and counterproductive. Accordingly, we strongly urge Media General stockholders to vote the WHITE proxy card in support of all three of the company’s Director nominees."

RBR/TVBR observation: Before you invite investor money into your company, it is important to remember that you are also inviting the investors themselves. Many broadcasters have come to regret yoking themselves to the Street’s three-month merry-go-round. And the longer the broadcast business slump continues, the more frequently the newcomers are going to try to hop on the best horses and head them off in a direction the true broadcasters won’t want to go.