Hedge fund Standard General unveils challenge to Tegna's board
(Reuters) - A large investor in Tegna Inc on Wednesday said it will nominate four directors to the U.S. regional TV station operator’s board, arguing the company’s stock has underperformed and changes are needed.
Hedge fund Standard General has nominated its founder Soohyung Kim to Tegna’s 11-member board, along with three other executives with media industry experience: Colleen Brown, Ellen McClain Haime and Deborah McDermott.
The fund, which owns 9.7% of Tegna shares, said it is mounting the proxy contest because shareholders would benefit from having its representatives on the board. It added that talks with Tegna for board representation have so far failed to produce a compromise.
“We did engage the company in an effort to reach a consensual solution, and are disappointed that members of management and the Tegna board refused our reasonable request for board representation,” the letter said.
Over the last five years, Tegna’s stock price has climbed 14%, compared with a 66% gain of the S&P500 index. Over the last year, however, the company’s stock price has surged 52%, compared with a 26% gain of the S&P.
The company said Kim “demanded a board seat for himself but offered no specific ideas to create value.”
The company also said it was concerned about Kim’s significant investments in other broadcasting companies “would create a conflict of interest as a Tegna director.”
One of the Standard General nominees, Deborah McDermott, is a former Media General chief operating officer and founded Standard Media with Kim to buy other TV stations. Standard General also owns another company, Mediaco Holding, which invests in broadcasting assets.
Standard General also cited press reports last year that private equity firm Apollo Global Management Inc was interested in buying Tegna. In its letter, the hedge fund wrote that Tegna appeared to have rebuffed “an acquisition proposal at a premium valuation from a credible buyer.”
However, there have been no talks between Apollo and Tegna since last summer, according to people familiar with the matter.
Apollo declined to comment.
Tegna, based in Tysons, Virginia, has a market capitalization of $3.7 billion and was created in 2015 when Gannett Company split into two publicly traded companies. It owns 62 stations in 51 markets and says that it reaches 39% of all television households nationwide.
Reporting by Svea Herbst-Bayliss and Greg Roumeliotis in New York; Editing by David Gregorio