NEW YORK, April 27, 2020 /PRNewswire/ -- Standard General L.P., the largest equity holder of TEGNA Inc. ("TEGNA" or the "Company") (NYSE: TGNA), today urged its fellow shareholders to vote for meaningful change, fresh perspectives, and diversity on TEGNA's Board of Directors by voting on Standard General's WHITE proxy card.
A LETTER TO THE SHAREHOLDERS OF TEGNA, INC.
April 27, 2020
Dear Fellow TEGNA Shareholder:
TEGNA's Annual General Meeting is this Thursday, April 30. This is your opportunity to restore the voice of shareholders. Standard General is not only the Company's largest shareholder, with a direct economic stake of almost 12% of TEGNA's shares, but we are also experienced investors in broadcasting companies with a strong track record of success. We firmly believe that TEGNA should be delivering enhanced value to shareholders commensurate with the quality of its unique assets.
There are significant issues at TEGNA that, time and again, the Board has failed to address: sustained underperformance, strategic missteps, and deficient corporate governance and management oversight.
Meaningful change is needed to revitalize the Board, and can be achieved with the election of our four diverse, independent, and exceptionally well-qualified nominees, who have the right background and experience to bring fresh perspectives and effective management oversight to TEGNA and ensure the Company performs for shareholders.
VOTE FOR REAL DIVERSITY WITHOUT COMPROMISE
Voting Standard General's WHITE proxy card is a vote for a majority woman-led Board, and would enable TEGNA to join just 1% of U.S. public companies with that distinction. It would also double the number of minority directors, who would make up one-third of the Board's membership, better reflecting TEGNA's audience.
Standard General has nominated a slate of fantastically qualified candidates that deliver on this promise, while also bringing critical experience, both in local affiliate broadcast operations and as C-level executives of publicly traded companies in our business. Although TEGNA is a 'pure-play' broadcaster, not a single independent director has ever served as an employee, executive, or director of a local affiliate broadcaster other than TEGNA. Adding diversity of experience, in this case, means adding relevant, industry experience.
All four of our nominees also sit on other public company boards and bring with them those diverse perspectives, whereas just three of TEGNA's 12 current directors have other board involvement. Notably, one of the three directors sits on a board that is facing an activist challenge, and another sits on the board of a major opioid distributor, which does not seem particularly relevant perspective to TEGNA. This is the opportunity to deliver a step change to the Board's diversity, experience, and quality.
VOTE FOR REVITALIZING THE BOARD AND ENHANCING VALUE FOR ALL SHAREHOLDERS WITH OUR NOMINEES
Management doesn't own this company – we do.
The response to Standard General having raised our hand to ask for proportional representation has been an unending barrage of invective and ad hominem attacks. And it hasn't come cheap. By their own admission, Management spent $6 million in the Fourth Quarter alone and has said they expect to spend at least another $6 million before this is through – all to avoid being held accountable.
I would posit that these expenditures are an unwise and unsuitable use of Company funds in the best of times. Amid the COVID-19 pandemic, they are unconscionable.
Our audience's demand for local news is higher than it has been for a long time, but Management has insisted that newsroom staffers take furloughs and pay cuts—the estimated savings of which are substantially less than the Board has spent on this proxy fight.1 That is shameful.
In contrast, TEGNA's peers Scripps and Gray have made a point about saying that there will no cuts in their newsrooms.2
While you have been inundated with an endless barrage of press releases and online and social media ads from the Company, shareholders have heard nothing about employee furloughs, which I certainly deem material and worthy of an 8-K filing. Management is so overly focused on preventing news of the furloughs from leaking out that they reportedly forced managers to read from a script when communicating with employees and swore all employees to silence. Are these the values we want espoused by our trusted news sources? We shareholders should not reward Management for this behavior.
VOTE AGAINST MANAGEMENT'S ATTEMPT TO RICHLY COMPENSATE THEMSELVES BY GETTING SHAREHOLDERS TO CONSENT TO ALMOST 10% FURTHER DILUTION
This management team has "successfully" held off strategic suitors for over a year until, finally, market conditions made a fantastic shareholder outcome unachievable. Should their reward be the ability to grant themselves more of the Company as a vote for PROPOSAL 4 would allow?
The CEO has received more than $35 million in compensation in the 12-plus years as a Named Executive Officer of this Company and its predecessor. Nearly $17 million of that was in the form of stock compensation, yet currently he owns less than $5 million of shares. How? Through terrible long-term stock performance married with insider selling over the entire decade.
The Board is no better, as there is no discernable buying activity from current directors. Given the abject failure of equity incentive compensation to date, we urge shareholders to VOTE NO on the 2020 OMNIBUS EQUITY INCENTIVE PLAN that will empower this Board to dilute us further by almost 10 percent.
We would also note that Glass Lewis gave TEGNA a "D" grade for pay-for-performance, commenting that the Company overall, "paid moderately more than its peers, but performed moderately worse than its peers." Yet, Glass Lewis recommended that shareholders vote for PROPOSAL 4. There appears to be a complete disconnect here. Should we shareholders take their recommendation and suffer another 10 percent dilution? If this Management and Board value shares so much, they should use their substantial pay to purchase some in the open market.
VOTE ON THE WHITE CARD AS RECOMMENDED BY INSTITUTIONAL SHAREHOLDER SERVICES (ISS)
Leading proxy voting advisor ISS supports change on the TEGNA Board. It noted the sustained underperformance at TEGNA after conducting a detailed analysis of Standard General's and TEGNA management's positions, and carefully considering, among other things, the Company's total shareholder return and operating and financial performance versus those of peers and relevant market indices.
"The key change that appears necessary is confirming the board's openness to negotiating with potential bidders. As such, votes are warranted on the WHITE card for dissident nominee Colleen Brown, who seems well suited to provide such oversight and contribute her experience with local broadcasting."
"At the same time, Tegna's presentation of the facts in its communication with shareholders raises concerns. The company's TSR presentation appears to use a cherry-picked time period, attributes the share price gains from M&A rumors to operational outperformance, and includes a non-broadcasting peer (Meredith) with substantially lower EBITDA margins."
"Although the board is involved in the company's shareholder engagement program, the discount that the market applies to its value of Tegna's EBITDA suggests that investors do not trust the guidance communicated by Tegna in the same way that the guidance from Tegna's peers is respected."
We have presented clear examples of misleading statements and inconsistencies, and other important information, at www.TomorrowsTEGNA.com.
In the end, the numbers don't lie. While this management has touted First Quarter results as "strong performance," our easy to follow, fact-based analysis shows that the Quarter was anything but inspiring. In fact, those results show the Company has generated no organic EBITDA growth, despite recent renegotiation of retransmission rates, and has failed to achieve the touted benefits of its acquisition strategy.3
THE TIME FOR CHANGE IS NOW
This is an entrenched and stale Board that has repeatedly given shareholders false hope. First, the Board said that the Gannett spin would create significant value. It didn't. Then, TEGNA spun off Cars.com and sold CareerBuilder. That didn't work either. TEGNA then began buying up stations, claiming scale would be the solution. Now, here we are: trading at $11 a share, recently downgraded further into junk status, with millions of shareholders' dollars spent on defending against much needed change.
We attribute these failures in particular to the four longstanding directors we are seeking to replace: Howard Elias, Scott McCune, Bruce Nolop, and Neal Shapiro. They are not the right directors for the current era of volatility and market uncertainty. None of them have the crucial operating experience in local affiliate broadcasting needed to effectively oversee Management, and they all have allowed for a massive destruction of shareholder value.4
You have the opportunity to vote to replace them with the right directors. Our nominees – Colleen Brown, Ellen McClain Haime, Soo Kim, and Deborah McDermott – have a history of delivering profitable returns in similarly situated local affiliate broadcasting companies. Their independence, diversity, and deep experience is needed now more than ever to help achieve profitable returns for shareholders. We have the opportunity to position TEGNA for success.5
Let's not wait any longer for Tomorrow's TEGNA.
Standard General L.P.
VOTE YOUR SHARES TODAY ON THE WHITE PROXY CARD FOR BOARD CHANGE
We encourage shareholders to submit proxies online or via telephone if possible, given current circumstances surrounding COVID-19. Information related to TEGNA's 2020 Annual Meeting of Shareholders and instructions on how to vote are included materials you have received and available at www.TomorrowsTEGNA.com.
To vote online, simply access www.proxyvote.com and reference the Control Number on your WHITE proxy card.
If you have questions or need assistance:
Shareholders may call toll-free (from the U.S. and Canada): +1 855-208-8902
Banks, Brokers, and International Shareholders: +1 212-297-0720
Email: [email protected]
IMPORTANT NOTE: If you have already voted using a gold proxy card, you can change your vote using the WHITE proxy card. Only your latest-dated vote will count.
About Standard General
Standard General was founded in 2007 and primarily manages capital for public and private pension funds, endowments, foundations, and high net-worth individuals. Standard General's extensive experience in local television broadcasting includes investments in: Media General, a former publicly-traded broadcasting company now part of Nexstar Media Group; Standard Media Group, an innovative and diverse media company committed to high-quality local news; and MediaCo Holding, a holding company that invests in local broadcast media and radio stations.
Media General was a publicly-traded broadcaster which, like TEGNA, had a long tradition in print media, and had divested those assets to pursue a pure-play broadcasting strategy. As a substantial shareholder with a single Standard General principal on the Board, we worked constructively with the management team and directors to help guide Media General through a merger with publicly-traded LIN Media LLC that more than doubled its station portfolio.
Following that merger, we helped oversee substantial increases in cash flow through a series of operational improvement initiatives and strategic acquisitions before ultimately selling the combined company to Nexstar Media Group in transaction valued at approx. $5 billion. The sale price represented a multiple of 11.2X EBITDA and an implied return of 179% during our 3.6 years of ownership.
Standard General L.P., together with the other participants in Standard General's proxy solicitation, has filed a definitive proxy statement and accompanying WHITE proxy card with the Securities and Exchange Commission ("SEC") to be used to solicit proxies in connection with the 2020 annual meeting of shareholders (the "Annual Meeting") of TEGNA Inc. (the "Company"). Shareholders are advised to read the proxy statement and any other documents related to the solicitation of shareholders of the Company in connection with the Annual Meeting because they contain important information, including information relating to the participants in Standard General's proxy solicitation. These materials and other materials filed by Standard General with the SEC in connection with the solicitation of proxies are available at no charge on the SEC's website at http://www.sec.gov. The definitive proxy statement and other relevant documents filed by Standard General with the SEC are also available, without charge, by directing a request to Standard General's proxy solicitor, Okapi Partners LLC, at its toll-free number 1-855-208-8902 or via email at [email protected].
1 Estimated using median employee pay and number of employees, as reported in TEGNA's 2020 proxy statement.
2 See: Appendix C – Industry Websites' Coverage Regarding TEGNA's Furloughs.
3 See: Appendix D – TEGNA's First Quarter Results Were Anything but "Strong" or "Solid," Contrary to Management's Claims.
4 See: Appendix A – Directors We Are Targeting Have Overseen Poor Performance.
5 See: Appendix B – Standard General's Nominees: More Qualified and Committed to Maximizing Value for All Shareholders.
SOURCE Standard General L.P.