Big Tegna Stockholder Heads To Proxy Fight: Proposes Five New Directors As Bidders Circle Broadcaster

A large shareholder of broadcaster Tegna, fund managers Standard General, has proposed an alternative slate of five new directors to counter what it calls “a continuing pattern of passivity” in financial performance, and to ensure the board considers multiple acquisitions offers.

Gray Television, Apollo Global and Allen Media have recently made offers to buy Tegna. The bids are comparable in terms of price – about $20 a share, or $8.5 billion. Gray’s offer is a combination of cash and stock, Apollo and Allen are offering all stock, according to sources.

“We are seeking to change a significant minority of the Company’s Board of Directors,” said Standard General in a proxy document sent to other shareholders of Tenga.

Standard General said it had tried to work with management for greater board representation but was rebuffed. It said its nominees “are committed to rigorous oversight of Tegna’s management, operations and business strategy, and to ensuring that Tegna conducts a full and fair evaluation of its strategic alternatives.”

“Our highly qualified nominees are committed to taking all actions necessary to maximize value for Tegna shareholders.”

“We invested in Tegna because of our conviction that Tegna should be the premier pure play local affiliate broadcasting company. Tegna has a leading portfolio of local affiliate television broadcasting stations and is the largest owner of Big 4 affiliates in the top 30 markets. Given the quality of its assets, TE should be delivering best-in-class performance, and commensurate shareholder returns,” it said.  But it said Tenga stock has underperformed “its closest pure-play local affiliate broadcasting peers as well as the broader market. From the time TEGNA became a pure-play broadcaster (spin from Gannett in June 2015) until Standard General disclosed its ownership stake on August 14, 2019, TEGNA’s total shareholder return was -28% vs. +33% for its peer group – this represents underperformance of 60%.”

Standard General said it had tried to work with management for greater board representation but was rebuffed. It said its nominees “are committed to rigorous oversight of Tegna’s management, operations and business strategy, and to ensuring that Tegna conducts a full and fair evaluation of its strategic alternatives. There can be no assurance that the business combination proposals received by Tenga will result in a transaction and our highly qualified nominees are committed to taking all actions necessary to maximize value for Tegna shareholders.”

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