UPDATED with Tenga comments:
A large shareholder of broadcaster Tegna, fund managers Standard General, has proposed an alternative slate of five new directors to counter what it calls “a continuing pattern of passivity” in financial performance, and to ensure the board considers multiple acquisitions offers.
Gray Television, Apollo Global and Allen Media have recently made offers to buy Tegna. The bids are comparable in terms of price – about $20 a share, or $8.5 billion. Gray’s offer is a combination of cash and stock, Apollo and Allen are offering all cash, according to sources.
“We are seeking to change a significant minority of the Company’s Board of Directors,” said Standard General in a proxy document sent to other shareholders of Tenga. It said its nominees, including founding partner Soohyng Kim, “are committed to rigorous oversight of Tegna’s management, operations and business strategy, and to ensuring that Tegna conducts a full and fair evaluation of its strategic alternatives.” It said it had tried to work privately with Tegna management to achieve greater board representation but was rebuffed.
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Tegna, for its part, has said that in meetings with Standard General’s Soohyng Kim, “Mr. Kim demanded a board seat for himself, but offered no concrete ideas to create shareholder value.”
“Tegna’s board thoroughly evaluated Mr. Kim as a potential director,” the company said, and “has serious concerns about Mr. Kim’s prior board service. Many who know him well commented on his track record of endorsing and executing corporate actions in favor of his own interests to the detriment of other shareholders, as well as a dismissive attitude toward the perspectives of other directors.”
Tegna also said it “is also concerned that Mr. Kim’s significant investments in and influence over other broadcasting companies would create a conflict of interest as a Tegna director, including with respect to potential investment opportunities in the sector. We believe that it is highly inappropriate for another industry operator to have access to Tegna’ proprietary information, including our M&A pipeline, product development plans, R&D efforts, and partnership and affiliation strategies. Accordingly, the Board has unanimously determined that adding Mr. Kim to the board is not in the best interests of Tegna and its shareholders.”
The board said it remains open to hearing Kim’s perspectives as a shareholder will evaluate the other Standard General nominees.
Standard General said it believes its experience in broadcasting would only help Tegna, And that, “Our highly qualified nominees are committed to taking all actions necessary to maximize value for Tegna shareholders.”
“We invested in Tegna because of our conviction that Tegna should be the premier pure play local affiliate broadcasting company. Tegna has a leading portfolio of local affiliate television broadcasting stations and is the largest owner of Big 4 affiliates in the top 30 markets. Given the quality of its assets, TE should be delivering best-in-class performance, and commensurate shareholder returns,” it said. But it said Tenga stock has underperformed “its closest pure-play local affiliate broadcasting peers as well as the broader market. From the time TEGNA became a pure-play broadcaster (spin from Gannett in June 2015) until Standard General disclosed its ownership stake on August 14, 2019, TEGNA’s total shareholder return was -28% vs. +33% for its peer group – this represents underperformance of 60%.”
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