Harbinger Capital Partners came a
step closer to getting representatives on the board of Media General, Inc. yesterday with the announcement by one of the company's biggest shareholders, Mario J. Gabelli, that he would support the
private-equity firm's slate of three new directors. Gabelli divulged the decision in a letter to the Securities and Exchange Commission.
Harbinger has suggested nominees
for the role of publisher at the Richmond Times-Dispatch, The Tampa Tribune and Winston-Salem Journal. The nominees are J. Daniel Sullivan, a broadcast executive, F. Jack Liebau Jr., an
investment manager, and Eugene I. Davis, a consultant who specializes in reviving struggling companies.
Over the last week, Harbinger has also drummed up support from investment advisory
firms, including RiskMetrics, which advised Media General's Class A shareholders to vote for Liebau and Sullivan, and Glass Lewis & Co, which advised them to vote for just Sullivan.
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If Gabelli
also votes his 22% Class A stake with Harbinger's 21% stake, the investors have a much better chance of getting at least one of their nominees on the board, perhaps by compromising with Media
General's management. So far, Media General has opposed Harbinger.
If Harbinger succeeds, this would mark the second time it has penetrated the board of directors of a major newspaper
publisher in as many months. In mid-March, the private-equity firm reached a compromise with the Ochs-Sulzbergers, who control The New York Times Company, placing two Harbinger nominees on the NYTCO
board of directors. Harbinger and its partner Firebrand had originally proposed a slate of four nominees. The compromise also increased the size of the NYTCO board, from 13 to 15 directors.
Like NYTCO, Media General has a two-tiered ownership structure that protects one family's historical control of the company. Regular Class A shareholders elect three members of the company's
nine-member board, while the Bryan family, with the majority of its Class B shares, elects the remaining six.
Harbinger disavowed any intention of changing this share structure--an issue on
which the family is unlikely to compromise.