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Harbinger gets three on MG Board

Discussion in 'Journalism topics only' started by Moderator1, Apr 24, 2008.

  1. Moderator1

    Moderator1 Moderator Staff Member

    Not at all sure what it all really means, that's way too "inside the business" for an old dumb ass like me. But it sounds like a big F You from shareholders to MG, which campaigned pretty hard to keep these people off the board.
    This went out today:

    April 24, 2008
    Dear Fellow Employees,
    Media General held its Annual Meeting of Stockholders this morning. Based on preliminary election results, it appears that the three individuals nominated by the Harbinger hedge fund were elected to the company's Board of Directors. Our press release has been posted to theMeganet.
    We are disappointed that three very capable directors, who have contributed significantly to the Board's deliberations, both through their ability and their experience, have been displaced.
    I want you to understand that Harbinger cannot, under any circumstances, forcibly gain control of Media General, and that the three new directors cannot gain control of our nine-member Board.
    We will listen with courtesy to the ideas of the new directors, but, frankly, I believe they are going to have to prove themselves worthy of their places on our Board before they will be able to earn the confidence of the remaining directors.
    I appreciate the many notes of support I received during the proxy contest. Throughout, you stayed focused and continued to make a difference to our audiences, our advertisers and the communities we serve.
    You deserve tremendous praise for the successes we have been achieving. Through your efforts, we are transforming the company into a new media enterprise. We know that our customers are in charge, and we are leading change to meet their needs. Employees across our company have created opportunities for us to:
    Foster a critical culture of innovation
    Adopt a successful Web-First strategy in all of our newsrooms to increase total audience and market share
    Create targeted new products to reach new audiences and attract new advertisers
    Expand our interactive advertising services to generate new revenue and cash flow streams
    Complete the transformation to digital broadcasting, launch high-definition local newscasts and use the expanded digital spectrum to offer secondary channels in many markets
    Deliver our content to mobile consumers via cell phones and other portable devices
    We will succeed because we have the right strategic focus, the right tools and you are the right employees. Thanks to the relationships we've built with consumers and the skills we've developed to address their needs, when people want information about their communities, they turn to the Media General brands in their markets. Consumers value our information and we intend to continue to be the leading provider of news, information and entertainment in all our markets.
    Your continued support of our mission, our values, and our strategy for success is the right way to build shareholder value for all of us.
    Thank you.
    Yours sincerely,

    Marshall N. Morton
    President and Chief Executive Officer
  2. Moderator1

    Moderator1 Moderator Staff Member

    Yeah, I'm talking to myself. You got a problem with that?!?

    My old friends have to attend a "State of Media General" meeting every year. This, one tells me, is what some heard yesterday:

    * We have 60 positions that are currently open and will remain so indefinitely.
    * We are narrowing the paper again, along with the aforementioned 16 pages a week we're losing. Yet, we're raising delivery rates again.
    * We are no longer delivering to neither the western part of the state nor D.C.
    * We closed one of our 10 distribution centers.

    One of the things we were told? "The future is web and digital first, but the present demands a dynamic paper."

    The future is bright.
  3. SportsGuyBCK

    SportsGuyBCK Active Member

    Yeah, I remember those "State of MG" meetings, and the videotape we were forced to watch ... what a waste of time and resources ...
  4. Moondoggy

    Moondoggy Member

    Harbinger apparently has little power other than to rouse the rabble, which doesn't take much these days. I can't imagine MG ignoring them completely, though. It could be a ploy by the hedge fund to get a big buyout and get out of town. One problem: where would the $$$ come for the payoff?

    This points out completely the merits of private ownership (assuming you have the right private owner, of course). The big boys hate to go private because stock fuels their ridiculous bonuses, but something like that might spur MG to at least think about it.
  5. derwood

    derwood Active Member

    This will give them access to a lot more company data.
  6. Armchair_QB

    Armchair_QB Well-Known Member

    The fact that these three guys work for a group called "Harbinger" is pretty fucking funny.
  7. Sam Mills 51

    Sam Mills 51 Active Member

    Word for Word ...

    Also, that Harbinger got those spots on the board is a big F you to Marshall Morton, who (rightfully) spoke out against Harbinger. I wonder how much heat he's now feeling as a result.
  8. Hustle

    Hustle Guest

    Is harbinger a company or just a fund? If the former, can i run for a seat on their board?
  9. PeteyPirate

    PeteyPirate Guest

    Harbinger is doing what's called activist investing. They buy in low, raise hell about the practices that are driving down stock value, get MG to make some changes (fire people) and then sell when the stock goes up to their satisfaction.
  10. Birdscribe

    Birdscribe Active Member

    For ready reference, see "Sherman, Bruce" and "Ridder, Knight" for what can happen here.

    Or Google the name "Nelson Peltz" and see what shenanigans come up there.
  11. Mighty_Wingman

    Mighty_Wingman Active Member

    Activist shareholders certainly don't have a great reputation, but doesn't Transitive Property of Shittiness apply here?

    If Marshall Morton doesn't like them -- and judging from the effort he spent lobbying to prevent the Harbinger guys' election to the board, he doesn't -- couldn't that imply good things?

    I'm only half-kidding: Morton and his ilk are, after all, the ones who continue to provide increasingly sclerotic and half-assed solutions to the problems facing the industry, and they're not doing a great job. Wouldn't a new approach -- even one that involves a great deal of pain -- be better than Morton's apparent plan of death by 1,000 cuts?
  12. Birdscribe

    Birdscribe Active Member

    "Transitive property of shittiness" -- that's outstanding.

    Excellent point, MW, but this argument is two sides of the same coin (to employ a bad pun).

    There's nothing wrong with buying a publishing stock, but these hedge-fund barons are doing so with the unrealistic expectations that all of a sudden these companies are going to turn into the next Google and start growing earnings 25% a year.

    Their only solutions are to slash-and-burn, thus devaluing the product they're ostensibly trying to improve. In otherwords, destroying the village in order to save it.

    When activist investors come in and impose their will on a company, they're doing so with the implicit intent of improving productivity, cutting costs and therefore, growing earnings. If all goes according to plan, the stock price should follow.

    Slashing and burning -- as we've seen ad infinitum -- a newspaper merely results in lost circulation, lost advertising and ... well, you know the rest of the story.

    Buying into a publishing company with the concept that this is a cash-cow business that will generate X amount of money a year is a realistic employment of assets. Buying in with the expectations that you're going to get a four-bagger out of it isn't.
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