The Political Whore

In the proxy fight that Media General (owner of the Tampa Tribune and Newschannel 8) finds itself in with activist hedge fund Harbinger Capital Partners, two more pieces of bad news for the Richmond, Va.-based company.

First came news yesterday that a second proxy advisory service, ISS Governance Services, is recommending MG shareholders vote for 2 of Harbinger’s 3 outside directors in balloting at the company’s annual meeting on April 24. Harbinger owns a reported 18.2 percent of MG’s Class A stock. (The company is closely held, however, by the Bryan family through Class B stock, so no matter what happens in the election don’t expect changes any time soon.)

Harbinger is the second-largest outside shareholder. The largest outside shareholder in MG, investor Mario Gabelli with a 22 percent stake, today threw his support behind Harbinger. In a letter to MG, Gabelli wrote:

“In light of the ownership position of Harbinger, the need to launch a zero based budgeting approach to your decision-making process, and the clear lack of explanation as to the thought process behind the ill-fated and ill-timed NBC acquisition, particularly since our firm’s observation that the company should not make any acquisitions and reduce debt to maintain financial flexibility, was ignored. These factors tilt our decision to vote at the annual meeting for the Harbinger slate. This decision will be reviewed on an ongoing basis for future elections.”

He’s referring to MG’s $600 million purchase of four NBC affiliates in markets that some Wall Street observers have said make little sense.

So what does this mean for Tampa Bay? Clearly, the Tribune will continue to be published (in some form) if MG has its way, since the company called its Tampa properties the “Crown Jewel” of its mediocre empire in a recent SEC filing. But expect further, as George Costanza would say, “shrinkage.” Already, the movie critic is history and the Monday business tab is gone. Other sections have been shrunken or eliminated. More with less, that is the US news mantra these days.

But it could be even worse than that, with pressure from dissident shareholders and a deepening recession pointing to drastic cuts and even, at Harbinger’s veiled suggestion, the dumping of the newspaper. It would seem to make no sense, though, since we wonder, who would buy a lone newspaper these days? No Wall Street company would touch it with a 10-foot pole; perhaps citizen activists could come up with some local ownership group? Or let’s face it, the best potential buyer right here in our own backyard: the St. Petersburg Times. It could then put its Tampa Bay Times trademark to full use immediately and consolidate its reach and audience in the Bay area.

The other problem with a sale, from the standpoint of continuing to operate the Trib, is how would you untangle the newspaper from its converged status with Newschannel 8, which clearly would not be for sale and is profitable? The two share a common assignment desk and office space. Conventional wisdom has always been that a Times purchase of the Trib would be for the name only and would result in the end of the Tampa Tribune as a real operating newspaper.

(Ahhh, MG should have taken that Bert Sugarman deal for $1.7 billion back in the 1980s.)

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