Harbinger Capital has submitted its preliminary proxy statement in its attempt to get three nominees on the board of Media General (NYSE: MEG). The filing comes over a week after the company’s own proxy was filed, which urged shareholders to disregard Harbinger’s names. Of course, the back and forth is mirrored in Harbinger’s other, higher-profile actions against the NYTCo (NYSE: NYT). But as this filing demonstrates, the two situations aren’t perfectly analogous.
— Harbinger’s investment in Media General started off as a series of passive share buys last June and July, and was first disclosed in a 13G on July 2. These purchases were made when the stock was around $33 per share. In December it reclassified its investments in a 13D filing, signaling its desire to take a more active role in management. Note that after July 3, the group did not make a single purchase until a huge buy on January 16, by which point the stock had slipped to below $18. Note that the stock is now around $15, so the group is deeply under water on its investments. This whole chronology is completely different than what it did at NYTCo, where it started buying last December with the intent of shaking things up, and then never took a break from buying.
— The bill of complaints against Media General brings up some specific issues. It notes, for example, the company’s purchase of four NBC affiliate stations in 2006, which it claims were both financially and geographically dilutive (taking the company beyond its core Southeastern focus). The firm also takes management to task for what it believes are misguided forays into digital. Specifically, it notes that the company’s investment in NTN Buzztime has been a 67 percent loser. And the group argues that efforts in advergaming and online social shopping have distracted management with little to show for it.
— As for its own nominees, Harbinger’s main pitch is that they’ll have both independence and media experience, which is something that Harbinger’s sitting directors are accused of lacking. Once again, the group reiterated a point it made in an earlier letter, that it’s not looking to take control of the company or prompt a sale (at least not officially). Its stated goal is to put in place a slate of nominees who can work constructively with the rest of the board to create value… or at least start to erase some of the money they’ve lost on this company.