By: Mark Fitzgerald
Continuing its hard line in a proxy challenge by Harbinger Capital Partners, Media General Wednesday called the dissident nominees to the board unqualified candidates who have no newspaper or Internet experience — and no plan to reverse the company’s slumping stock price.
Media General even accused one Harbinger nominee of padding his resume.
In a letter to stockholders filed with the Securities and Exchange Commission, President and Chief Executive Marshall N. Morton said the Harbinger challenge had been a “distraction” to the Richmond, Va.-based publisher of The Tampa Tribune that threatened to undermine management attempts to get the stock rising again.
“We completely understand — and share — the frustration over our current stock price,” Morton wrote. “In response, we have announced the sale of our interest in SP Newsprint and as many as five of our television stations to pay down debt. We also have diversified the Company with our acquisition of high-margin Internet businesses such as Blockdot and, most recently, DealTaker (a transaction we expect to complete next month).”
Harbinger has amassed 18% of Media General (NYSE: MEG), and has nominated three candidates for the board: J. Daniel Sullivan, Eugene I. Davis, and F. Jack Liebau Jr.
Morton’s letter contains unusually sharp attacks on the nominees. He wrote that Sullivan, for instance, “has a ‘resume problem.'”
“In spite of Harbinger’s representation to the contrary in its January 24, 2008, letter to us (and filed with the SEC), Mr. Sullivan did not receive a degree from the University of Tennessee,” Morton wrote, with the parentheses in the original.
Davis, he added, is a “professional director” who is a “regular Harbinger nominee” to other company’s boards.
“Research indicates that Mr. Davis currently serves on the boards of 12 public companies,” Morton wrote. “In corporate governance parlance, Mr. Davis is already vastly ‘overboarded.'”
Morton reiterated Media General’s charge that Harbinger had not been in communication with the company, and was not sharing its plans.
“Harbinger has not provided any strategic plans (it says it’s “not ready”), nor has it said specifically what it would do differently from our current strategy,” Morton wrote. “And, to be clear, we have asked Harbinger for those specifics. Far from being responsive and constructive, Harbinger initially failed even to respond to our repeated attempts to communicate for more than seven months. After being publicly embarrassed by that inexplicable behavior, a Harbinger employee now sporadically returns our telephone calls and has promised, in response to a long-standing invitation, to visit us in Richmond to learn about the company.”
The Harbinger nominees could not be reached.
Media General’s response stands in contrast to The New York Times Co., which also faced a proxy war with Harbinger. Earlier this week, the Times Co. settled the fight by agreeing to expand its board by two and seat two of the four nominees Harbinger had put up for the director election.
Like the Times Co., Media General has a dual-class ownership structure that ensures family control. Media General’s annual shareholder meeting is scheduled for April 24.
Media General’s board nominees are Charles A. Davis, an investment banker who’s been a director since 1989; Rodney A. Smolla, dean of the Washington & Lee University School of Law; and economics professor Walter E. Williams
With an hour left until the 4 p.m. EDT close of trading, shares of Media General were at $15.49, down 7 cents, or 4.5%.