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Media General 'Puzzled' By Hedge Fund's 'Hostile' Bid For Board Seats

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Bloomberg News

Published: January 26, 2008

Harbinger Capital Partners proposed three candidates to the board of Media General as part of a plan to seek changes at the owner of The Tampa Tribune and other media properties.

Harbinger, a hedge fund run by Philip Falcone, nominated Eugene Davis, chairman of Pirinate Consulting Group; Jack Liebau, president of Liebau Asset Management; and media investor Daniel Sullivan to the nine-person board, according to a regulatory filing Friday.

Marshall N. Morton, Media General president and chief executive officer, said in a statement: "We are frankly puzzled as to what Harbinger hopes to achieve by its hostile actions. The Harbinger hedge funds appear to have a high portfolio turnover rate, rotating out of numerous holdings every six to twelve months.

"A board member or members having such a short-term perspective would be disruptive to our company and, in our view, be adverse to the legitimate, long-term interests of all Media General stockholders."

In the statement, Morton said the hedge fund should cease its "ill-advised, hostile, and thoroughly unwarranted course of action." He also urged Harbinger to consider the steps Media General is taking to improve its operations.

Shares in Richmond, Va.-based Media General, which also owns Tampa-based TBO.com, Centro Grupo De Comunicación and WFLA, Channel 8, rose 9 cents to $19.06 on Friday on the New York Stock Exchange. The stock has tumbled more than 50 percent in the past 52 weeks.

Also Friday, The New York Times Co. said Harbinger plans to nominate four directors to its board. A board committee will review the Harbinger nominations and make a recommendation, New York Times chairman Arthur Sulzberger said in a statement.

Harbinger said Jan. 18 that it increased its stake in Media General to 18.4 percent, a month after saying it might push the company to take steps to boost the stock.

In a statement to company employees Friday, Morton said, "I want you to understand that Harbinger cannot, under any circumstances, forcibly gain control of Media General."

Media General's chairman is J. Stewart Bryan III. The company has a dual-stock structure in which 83.8 percent of its supervoting shares are held by a trust of the Bryan family. The supervoting shares elect six board directors.

Mario Gabelli, chairman of Gamco Investors, one of the largest shareholders in Media General with 20.87 percent, said Friday that he supports Jack Liebau, one of the three Harbinger nominees.

"He's an old-fashioned money manager," Gabelli said. "If a guy like that wants a seat on the board, I would support it. ... The business is going through some dramatic changes, and they Harbinger think some change is needed. I don't understand why Media General would object. You've got to listen to a new point of view from someone who owns a big piece of your stock."

Tribune reporter Richard Mullins contributed to this report.

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