(Reuters) – Ariel Investments LLC, the 11th-largest shareholder of U.S. regional TV station operator Tegna Inc (TGNA.N), said on Monday it was backing the company’s board in its proxy contest with hedge fund Standard General LP.
“We have been very happy with (Tegna’s) performance. They have delivered solid results. They have made the right moves by making accretive acquisitions,” Ariel portfolio fund manager John Miller said in an interview.
Ariel, which was founded by John W. Rogers Jr. in 1983, owns more than 5 million shares in Tegna, equivalent to more than a 2.3% stake, according to Miller.
Standard General, Tegna’s largest shareholder with an approximately 12% stake, is asking the company’s shareholders to elect its four nominees, including founding partner Soohyung Kim, to Tegna’s 12-member board in a vote on April 30.
Standard General has criticized Tegna’s stock performance and has said its management has been slow to explore consolidation in the industry, either by acquiring stations in key markets or by putting the company up for sale.
Tegna has responded that it has outperformed its peers after becoming a pure-play broadcaster by separating from digital businesses Cars.com and CareerBuilder in 2017. It says it has actively participated in dealmaking, engaging with potential acquirers before the COVID-19 outbreak upended negotiations.
“Tegna provided the information that bidders needed, and we know that the coronavirus crisis has brought M&A activity to a halt. The board has always acted in the best interest of shareholders,” Miller said.
Fairpointe Capital LLC, a smaller Tegna shareholder, also came out in support of Tegna’s board and management on Monday.
“We intend to vote for the current Tegna board directors. Standard General appears to be interested in an immediate payoff. There is nothing in their letter to indicate to me that Soohyung Kim is interested in Tegna’s long-term growth and business opportunities,” Fairpointe CEO Thyra Zerhusen said in a statement. Fairpointe owns close to 1.8 million Tegna shares, according to Zerhusen.
Standard General did not immediately respond to a requests for comment.
Tegna, a spinoff of Gannett Co Inc’s (GCI.N) broadcasting and digital arm, runs 62 television stations in 51 U.S. markets, and reaches 39% of television households in the United States.
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