Media General urges shareholders to oppose hedge fund’s directors

Associated Press
Published: February 26, 2008

RICHMOND, Va. (AP) - Media General Inc., a newspaper publisher and television station operator, on Tuesday urged shareholders to oppose directors nominated to its board by a hedge fund seeking to improve profitability at the family-owned company.
    The note included in a filing with the U.S. Securities and Exchange Commission continues the ongoing proxy battle between the publisher of the Richmond Times-Dispatch, The Tampa Tribune and Winston-Salem Journal, and the New York investment group Harbinger Capital Partners.
    “The board does not believe this is in the company’s best interest and strongly urges you not to sign any proxy cards sent to you by Harbinger,“ the company wrote in its preliminary proxy statement for its annual meeting April 24.
    Media General also said shareholders can revoke any proxy cards already sent to Harbinger, the company’s second-largest shareholder with around 20 percent of the company’s Class A shares.
    The company is controlled by the family of its chairman, Stewart Bryan. He and his family own most of the company’s Class B supervoting shares, which elect 70 percent of Media General’s board. The other directors are elected by holders of the company’s Class A shares.
    In January, Harbinger disclosed plans to nominate three directors to the board, hoping to rehabilitate the struggling media company. It had said it is not looking to change the company’s dual-class stock structure.
    Harbinger and Media General have been at odds since then, exchanging letters in which Marshall N. Morton, the company’s president and chief executive characterized Harbinger’s action as hostile and ill-advised.
    In Tuesday’s filing, the Richmond-based company did not include any of Harbinger’s nominees among its list of nine nominees, all of whom currently serve on Media General’s board.
    The investment firm did not immediately return a phone message Tuesday seeking comment.
    Harbinger, along with the investment firm Firebrand Partners, also is seeking board seats at The New York Times Co.
    Shares of Media General fell 12 cents to close at $18.48 Tuesday.
    Media General in January said its fourth-quarter profit dropped 70 percent, hurt by a write-down, one less week in the period and less political revenue. The company reported net income for the period ended Dec. 30 fell to $9.6 million, or 43 cents per share, from $31.6 million, or $1.33 per share, in the prior year.
    On Monday, the company said it agreed to acquire DealTaker.com, a coupon and shopping Web site, from Plano, Texas-based NARAE Enterprises Inc., to expand its portfolio of interactive advertising and marketing solutions. The deal, expected to close in the second quarter, is expected to boost Media General’s 2008 earnings.
    Besides its three metropolitan newspapers, Media General owns 22 daily community newspapers in Virginia, North Carolina, Florida, Alabama and South Carolina, more than 150 weekly newspapers and other publications and 23 network-affiliated television stations.
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    On the Net:
    Media General: http://www.mediageneral.com
    Harbinger: http://www.harbert.net/distressed-event-special-situations/