Offense and Defense : Media General Claims It Beat Back Sugarman
Producer Burt Sugarman took his proxy fight for three seats on the Media General board to the company’s annual meeting Friday, but management claimed victory late in the day. Officially, the results of the contest remained uncertain after the newspaper and television firm’s exceedingly polite gathering of shareholders.
Before the company issued its claim of victory, Sugarman had departed for a trip back to California, sticking by his statement that the election looked “very close.”
Independent vote counters are expected to take another week to determine the official outcome of the fierce contest, which was dominated by an intense campaign for the allegiance of major institutional shareholders.
Equal Voting Rights
About an hour after the meeting, the company said that, “based on the proxies that we have received, we believe the incumbent Class A directors have defeated Sugarman and his dissident slate.”
During the nearly two-hour-long stockholder meeting, the Beverly Hills producer advocated for the first time in public that Media General be split into two or three separate entities, one having a single class of stock.
Sugarman, who did not particularly sound like a person who sensed victory, said such a move would satisfy the “many, many” stockholders who want equal voting rights. Presently, Media General has Class A and B shares, with the small number of Class B shares electing 70% of the board.
The family of Chairman D. Tennant Bryan had set up the two-tier system to protect their generations of control. A number of major media firms have similar dual-class structures, including publicly traded companies that publish the Los Angeles Times, the Washington Post, the New York Times and the Wall Street Journal.
Media General President James S. Evans, answering a question from the floor, said management is opposed to splitting up the company. He added that “we think we are building value and maximizing shareholder value just the way we are.”
Sugarman, 49, who has invested more than $100 million in a 10.1% stake in the firm, told the meeting that he still stands by his proposal to pay $70 a share in a $2-billion merger of Media General with Barris Industries and Giant Group, two Beverly Hills firms that he controls.
Media General’s stockholder meeting was an event for this city, where the company owns the daily newspapers, the Times-Dispatch and the News Leader. There were good-natured jests by the crowd about “carpetbaggers” and “when Hollywood meets Richmond.”
The session--on Media General’s home turf in Richmond at the Virginia Museum of Art--was a bit tense at the outset. There was dead silence when Sugarman was introduced as one of the candidates for the board.
But the 81-year-old chairman quickly established a tone suitable for the Virginia gentility, adding touches of wry humor that kept the audience--including the Sugarman group--chuckling frequently.
Bryan said he would be glad to waive a reading of the last year’s meeting if someone would only make the motion. That done, the chairman said it was “moved and rapidly seconded.” A moment later, he reported (with apparent unintentional irony) that one of Sugarman’s slate, Harold C. Simmons, a Dallas businessman with a reputation as a corporate raider, “unhappily” was traveling and couldn’t be there. Many chuckled.
When, under an arrangement between the parties, Sugarman was invited to the podium and given 15 minutes to talk, the producer asked Bryan how to get there. Sugarman evoked some laughter himself when he expressed hope that the chairman was not going to “send me out of the building.”
In his talk, Sugarman said that “the rhetoric is over; it is now time to get down to business.”
He promptly suggested a split-up of the company and said it seemed likely that the firm’s newspapers would stay in a company that would have both Class A and B stock. He added that he did not intend to take the newspapers away from Chairman Bryan or his son, Vice Chairman J. Stewart Bryan III.
“The point is,” said Sugarman, that talk is needed and he would call on the Bryans and the Media General board to “work with me on this. Media General is committed not to give greenmail. I am committed not to take greenmail.” (Greenmail is the repurchase of an unwelcome suitor’s stock for more than the market price.)
The producer said he and his group intended to participate on the board “in a very constructive way,” adding that he would “do my best to deal fairly” with the Bryan family.
However, Sugarman emphasized that he is “working in Washington” for legislation “to get rid of A-B stock.” He said that he was committed to such a law but that his fight would “not be taken in a vindictive way all the way to the (Media General) board room.”
Urging consideration of both his merger offer and a split into two or three companies, he said: “There is no face-saving on either side. . . . Let’s visit together as businessmen (and) work this out.”
Except for Evans’ reply to a question from the floor, none of the company’s management discussed Sugarman’s proposals. The bulk of the time was taken up with detailed reports from various officers about the state of the company’s operations and the economies of the cities in which they are located.
Besides the Richmond newspapers, the company owns two other dailies, the Tampa (Fla.) Tribune and the Winston-Salem (N.C.) Journal, as well as three television stations in the Southeast and 33 weekly Highlander and Golden West newspapers in Los Angeles and Orange counties. It also owns cable television systems in northern Virginia and the nation’s largest maker of recycled newsprint.
Although Simmons was not present, Sugarman’s other candidate for the board, New York accountant David Gotterer, accompanied him. Others in the Sugarman entourage included Harvey Sandler, a New York money manager and major Media General shareholder.
In a press conference after the stockholder meeting, Sugarman said that, no matter who won, the closeness of the vote would stress that changes were needed at the company. Some observers noted that he did not sound like a winning candidate.