Tegna's third largest shareholder -- investment fund Standard General -- is pushing for four seats on the broadcaster’s board of directors, a move that the company says would not be in the best interests of shareholders.
Standard General owns about 9.7% of Tegna stock. In a letter to shareholders, the investment fund said it has been rebuffed by Tegna management in its quest for the board seats.
Tegna has about 62 TV stations across the country. In March, it agreed to purchase about 11 Nexstar Media Group stations for $740 million.
Shares of Tegna stock were up about 2% in early trading Wednesday to $17.28 each.
Tegna management issued a statement Wednesday disputing Standard General’s claims, adding that since the investor revealed its stake in the company, they have held several meetings with SG’s CEO and co-founder Soohyung Kim.
“In those meetings, Mr. Kim demanded a board seat for himself but offered no specific ideas to create value – only statements that if he were on the Board, he would have a unique ability to source and execute ‘transformative’ M&A.”
Standard General has criticized Tegna, claiming that its stock price lags its peers and pointing out that SG has unlocked value in its other broadcast holdings by seeking buyers for the assets. One of those assets -- Media General -- was purchased by Nexstar Media Group for about $5 billion, an 11.2 times multiple of cash flow.
In his letter, Kim also claimed that since his company disclosed its stake -- and Tegna revealed in August that it had received outside interest from Apollo Global Management about a possible deal -- Tegna stock has risen 25%.
In its statement, Tegna said it had thoroughly evaluated Kim as a potential director. After several meetings with him and interviewing others that have jointly served on boards with the executive, the broadcaster had “serious concerns.”
“The board has serious concerns about Mr. Kim’s prior business and board service, including a track record of endorsing and executing corporate actions in favor of his own investments to the detriment of other shareholders,” Tegna said. “The board is also concerned that his significant investments in and influence over other broadcasting companies would create a conflict of interest as a Tegna director.”
Tegna said its board unanimously decided that offering Kim a board seat was not in the best interests of shareholders, and informed him on Jan. 10.
“The board remains open to hearing Mr. Kim’s perspectives on Tegna’s business as a major shareholder,” Tegna said in its statement, adding that it will continue to evaluate the other three Sg nominees. ”The board will then make a determination that it believes will best serve the interests of the company and its shareholders.”
Wachtell, Lipton, Rosen & Katz is serving as legal counsel to Tegna.