29 January 2008

kalb parent media general inc ceo is 'puzzled'

with this news article (see link) we see that at media general, inc. managerial 'puzzlement' starts at the very top of this company and extends downward into the management at its local properties such as kalb-tv.

media general's stock has been in a virtual free-fall for the past year declining according to the news article almost 50%. as recently as 09 january 2008, media general's stock hit a 52 week low of $15.75.

nine days later, on the 18th january 2008, it was reported that harbert management corp. through its hedge fund, harbinger capital partners, had increased their holdings in media general from 9.9% to 18.4%.

harbart/harbinger didnt waste any time because on the 21st, it was reported that they wanted to "share ideas on value" with media general.

Harbert Management Corp., the second-largest shareholder of Media General Inc., may seek a transaction that would boost the stock price of the Richmond-based newspaper and television company.

Harbert, an Alabama-based investment management company, said Monday in a Securities and Exchange Commission filing that it may contact management, directors and shareholders about steps Media General can take to "maximize shareholder value." The firm also said it may nominate candidates for election to the board. ~ source
sure enough, on the 25th january 2008 reuters carried an item by michele gershberg, about how harbinger capital partners had formally filed regulatory papers in which they disclosed that they were seeking "to elect three members to the board of u.s. newspaper and broadcast company media general inc." the names of the men harbinger plans to nominate to media general's board to replace board members whose term expires at the company's 2008 annual meeting are, eugene davis, jack liebau and daniel sullivan.
according to the winston-salem journal, eugene davis is the chairman of pirinate consulting group; jack liebau is the president of liebau asset management and j.daniel sullivan is a media investor. ~ source

see also harbinger capital partners master fund i ltd./ harbinger capital partners special situations fund lp:
notice of nomination
that same day media general released a statement:
Marshall N. Morton, president and chief executive officer, said: "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.

"Since Harbinger first disclosed this past summer that it had acquired a 9.1 percent stake in Media General's public, Class A stock, including last week, when Harbinger disclosed through an amended filing that it had increased its economic interest in that stock to more than 21 percent, we have sought repeatedly to talk with Harbinger and learn what is on their mind. Harbinger, however, has persistently refused to return our calls.
on the 26th the winston-salem journal reported that:
Mario Gabelli, the biggest investor in Media General Inc., backed calls for changes to the newspaper publisher’s board after shareholder Harbinger Capital Partners proposed replacing three directors.

Gabelli hasn’t decided whether to back Harbinger’s entire slate of nominees to replace directors elected by common shareholders, he said yesterday in an interview. He did say he supports Jack Liebau, one candidate for the nine-person board.

“I do think it’s time for a change for this board,” said Gabelli, whose Gamco Investors Inc. owned a 20.9 percent stake in Media General in November. “We’re not sure how we’ll vote on this proposal - we might abstain. But we do think change would be good here.” ~ source
in that article we found media general's ceo marshall morton's remarks especially humorous:
Harbinger should cease its “ill-advised, hostile and thoroughly unwarranted course of action.” Harbinger has a “short-term perspective” on Media General and hasn’t considered the steps the company is taking to improve its operations, Morton said.
a blogger named jim bacon whose apparently a media professional and writes for a blog called bacon's rebellion wrote a post "hedge fund stalks media general." a commenter at that post offers us some insight:
In the past several years MEG's stock has plummeted from about $70 a share to $15 a share, although it's up to $19 or so last time I checked. It is true that plenty of media companies have trouble but I don't believe they have seen so much market cap disappear at once as MEG's has.

MEG's problem is that it is based on cost-cutting, not growth. The leadership has no ideas. They pushed "Convergence" and "Clustering" about 10 years ago, but they haven't worked. These involved trying to trade content across print/tv/Web but instead of creating new and valuable content, they were just dicing up stale content again and again. Clustering involved buying up dinky papers in the Southern exburbia. Neither strategy has worked, as the stock price shows.

Morton, let's not forget, is from the textile industry, which is not exactly known for successful growth strategies. He complained last week that the hedge fund didn't appreciate "a research-driven understanding of our local markets" or the "heightened focus on customers" or the "continually growing number of new products and new sources of revenue, or the "successful "Web-First" approach to local news reporting that is generating increased page views and visitors" and the "new partnerships, diversification and regulatory gains that have strengthened and validated our convergence strategy."

What a pile of nonesense. Take their Web pages. They are horrible! Just about any regional media firm is far ahead. MEG is where The Virginian-Pilot was 10 years ago and that might insult the Pilot!

Look at the Times-Dispatch. There is a massive rush for the exits as experienced reporters flee from the hare-brained news policies of Thomas A. Silvestri and his new management crew. Just look at Sunday's front-page. Obama's win in S. Carolina was huge. Yet, the TD editors gave 75 percent of the front page to the mock convention held at Washington & Lee in which they nominated Hillary. Huh? Let's have Frazier Millner, their marketing expert, explain that one. Also don't know if you've noticed but there's one heck of a lot less content in the TD than ever. The "2-Minute TD" is more like the "30-second TD."

MEG has been in a tailspin for several years now. Nevertheless, Marshall Morton tried to get his corporate officers a bonus a couple of years ago, until Mario Gabelli, another rogue investor, put a stop to it.

Best thing that can happen is if the Gabelli's and hedge fund folk get rid of the current management. Let's wish them well. Maybe they can put a stop to the arrogance and the incompetence.
many people around cenla, ourselves included, thought that it was just kalb's management that was arrogant and incompetent in their outright refusal to report news and instead choosing to ply us with fluff. however, its somewhat bittersweet to learn that the whole of media general's management is made up of buffoons. lets hope that harbinger does succeed in their takeover, they cant be any worse than what is there now.
see also
eric hufschmid
the media criminals
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