A special committee of Hearst-Argyle’s board of directors, appointed specifically to evaluate a $600 million tender offer made by Hearst Corp. for the 27% of the company it does not own, has recommended that shareholders reject the deal.
Hearst, which already owns 73% of Hearst-Argyle, made the $23.50 per share offer for the television station group on Aug. 24. The special committee was appointed shortly after the offer was made.
In a statement Thursday the special committee said the $23.50 per share offer “is inadequate and not in the best interests of Hearst-Argyle Television stockholders, other than The Hearst Corporation and its affiliates.”
Other shareholders have come out against the offer, most notably Marathon Partners, which in August sent a lengthy letter to Hearst claiming the offer was too low.
A rejection recommendation was not unexpected given that Hearst-Argyle stock has soared above the offering price since the announcement was made. The stock closed at $26.05 per share on Sept. 27
Hearst-Argyle owns about 29 TV stations across the country and has been a vocal proponent of receiving cash from cable and satellite operators for retransmission consent.
In the second quarter, Hearst-Argyle said it received about $5.4 million in retransmission consent revenue, a 35% increase over last year.
Hearst Corp., one of the largest newspaper and magazine publishers in the country, also owns stakes in several cable networks, including Lifetime, A&E Network, The History Channel and ESPN.
In the past, Hearst has used the muscle of the Hearst-Argyle TV stations to secure carriage for some of its lesser-known cable channels, like Lifetime Movie Network