Dissident for Media General board gets support

By JOHN REID BLACKWELL
RICHMOND TIMES-DISPATCH
Published: April 15, 2008

One of three candidates nominated by a dissident investor to the board of directors of Media General Inc. won the support of a proxy adviser firm, according to a regulatory filing by the investor.

Also yesterday, Media General continued to reject dissident nominees to its slate of board nominees.

Harbinger Capital Partners, a hedge fund waging a proxy battle with Richmond-based Media General, said yesterday that proxy adviser Glass Lewis & Co. recommended that investors vote for Harbinger nominee J. Daniel Sullivan at the April 24 shareholder meeting and reject Media General’s own choices for the board. Sullivan is a private consultant and former broadcasting industry executive.

Media General owns the Richmond Times-Dispatch, WSLS, and other daily and weekly newspapers, televisions stations and affiliated Web sites, primarily in the Southeast.

A Media General spokesman declined to comment on the Harbinger filing, referring instead to the company’s own filing yesterday, which again urged shareholders to reject Harbinger’s nominees and vote for the company’s incumbent directors.

According to Harbinger’s filing with the Securities and Exchange Commission, Glass Lewis cited the “extended underperformance of Media General’s shares” and said the company “may benefit from the participation from an experienced and independent voice on the board.”

A call to Glass Lewis was not returned yesterday afternoon.

Proxy advisers such as Glass Lewis conduct research and provide advice to some investors on shareholder voting matters. Their advice can sway investors who may not have the time or resources to conduct research of their own.

In a letter to stockholders, Media General President and CEO Marshall N. Morton said “recent events have confirmed Harbinger’s short-sighted and, we believe, harmful so-called ‘prescription’ for Media General.”

Harbinger has recommended, among other things, that the company cut its dividend and consider exiting the Tampa, Fla., market “although it has historically been our largest source of revenues and profits,” Morton wrote.

Because of the economic downturn in the state, Media General’s Florida Communications Group announced yesterday that it is offering voluntary separations to about half of its 1,326 employees at The Tampa Tribune, WFLA television station, Web site TBO.com and other newspapers, including Hernando Today and Highlands Today.

John R. Schueler, the Florida Group’s president, said the business group has not set a specific target for headcount reductions, though layoffs are possible if not enough employees accept the severance offers.

Overall newspaper advertising fell 7.9 percent last year, including a 9.4 percent drop in print advertising, according to the Newspaper Association of America, an industry group. The decline in print advertising was offset somewhat by an 18.8 percent increase in online advertising.

Media General has a nine-member board of directors. Six of the board members are elected by holders of Class B shares, which are controlled by company Chairman J. Stewart Bryan III and his family. The proxy battle is over the three board seats elected by Class A stockholders.

Harbinger also has nominated F. Jack Liebau Jr., president of Liebau Asset Management, and Eugene I. Davis, chairman of Pirinate Consulting Group, a private consulting firm.

Media General’s incumbent nominees are Rodney A. Smolla, dean of the Washington and Lee University School of Law; Walter E. Williams, an author, commentator and economics professor and former chairman of George Mason University’s economics department; and Charles A. Davis, chief executive officer of Stone Point Capital LLC, a private equity firm based in Greenwich, Conn.

Media General shares closed yesterday at $14.48, down 25 cents, on the New York Stock Exchange.
Contact John Reid Blackwell at (804) 775-8123 or .