Activist investor Standard General blasted Tegna, claiming that the Tegna board has failed to hold management accountable and jeopardized opportunities to maximize shareholder value.
Tegna on Sunday said that it received four takeover proposals and provided due-diligence information about the company to two of the suitors, but that all of the bids have been withdrawn because of uncertainty surrounding how the Coronavirus crisis is affecting business conditions.
Standard General accused Tegna of creating a process that discouraged bidders and ended the possibility of a takeover that would benefit shareholders.
Tegna’s own letter to shareholders defended its financial record. “Tegna’s board has a proven track record of taking decisive action to maximize shareholder value," the company said. "We are confident that our strategy will continue to deliver sustainable shareholder value. At the same time, the Board is open to all potential transactions to generate value but we will only pursue a transaction if it is in the best interests of all of our shareholders.”
Tegna also noted that it had “previously approached [Standard General founder Soo] Kim to gauge his interest in a potential settlement that would not include him personally joining the Board. He ‘summarily’ rejected any settlement that does not include a Board seat for himself – making it clear to us that he is motivated by self-interest and not a desire for shareholder representation.”
In a definitive proxy statement to Tegna shareholders Tuesday, Standard General said “unfortunately Tegna shares have been a long-term underperformer” compared to other broadcasters, until reports of those takeover bids surfaced.
The letter criticized CEO Dave Lougee, saying that under his tenure, Tegna has failed to take advantage of many critical industry developments, including former profitable duopolies and optimizing its portfolio to take advantage of the UHF discount in the way the FCC calculated broadcast ownership caps.
Standard General, which owns near 10% of Tegna’s shares, said “we believe one of the key reasons for Tegna’s underperformance is the lack of relevant industry expertise on its board.” Standard General has proposed a slate of four directors it wants elected to the Tegna board. Standard General had also wanted to add former Tribune executive Larry Wert to the Tegna board, but it turned out a provision in Wert's prevented him from serving, so he withdrew.
Tegna has rebuffed Standard’s slate and recently added an investment banker to the board.
It also criticized the slow and difficult process Tegna employed as acquisition bids came in. “Had Tegna moved more quickly and shown the flexibility that is customary in ordinary times, we believe Tegna could have converted the strong interest in a premium-priced acquisition from multiple credible parties into a deal that would be great for shareholders,”
Standard General urged stockholders to vote for its slate of directors at the company’s shareholder meeting.
“We are now convinced that Tegna will not achieve its potential unless the Board is upgraded and consists of directors who have experience in local affiliate broadcasting and are committed to vigorous oversight of TEGNA’s operations, as well as its capital allocation and strategic alternatives,” the letter said.
Additionally, Standard General launched www.TomorrowsTEGNA.com.
Tegna said its board remains “concerned about Standard General’s significant conflicts of interest and the experience of shareholders at other companies where Mr. Kim and other Standard General representatives held board seats.”
CORRECTION: An earlier version of this story said Standard General was seeking five board seats. The story now reflects that Larry Wert has withdrawn as a candidate.
