Gannett shareholders reject hedge fund’s board candidates
Shareholders of the Gannett newspaper chain backed all eight of the company’s board candidates Thursday, turning away an attempt by New York hedge fund Alden Global Capital and its media company to populate the board with its own candidates.
The vote, completed at Gannett’s annual meeting in McLean, amounted to a rejection of Alden’s Media News Group — possibly a final one — of Alden’s attempt to acquire Gannett through a hostile takeover launched in January.
Board chairman John Jeffry Louis pumped his fist after the vote to applause from the company’s board members and employees in the company’s auditorium. Gannett issued a statement afterward saying the outcome “demonstrates that Gannett shareholders recognize the continued progress we have made toward” transitioning its 100-plus newspapers, including USA Today, into predominantly digital businesses.
MNG, formerly known as Digital First, initially proposed six board candidates, later narrowing it to three, including Heath Freeman, Alden’s president. Alden owns 7.5 percent of Gannett’s stock and controls more than 100 local newspapers.
An investigation by The Washington Post found that Alden has cut jobs more rapidly than other newspaper owners, monetized real estate assets and come under federal investigation for its management of pension funds.
Freeman did not attend the meeting. Consultant Bruce H. Goldfarb attended in Freeman’s place but declined to comment.
MNG issued a statement after the vote saying: “This is a win for an entrenched Gannett Board that has been unwilling to address the current realities of the newspaper business, and sadly a loss for Gannett and its shareholders.”
A spokeswoman for the company declined to comment on whether MNG would continue to pursue the acquisition.
When MNG proposed buying Gannett, for $12 a share, it sparked concerns about how many more reporters at Gannett papers might lose their jobs should MNG employ the same cost-cutting that it has elsewhere.
Senate Minority Leader Charles E. Schumer wrote to Freeman in February with concerns about how Alden would manage Gannett papers. Last week Sen. Sherrod Brown (D-Ohio) said in an interview that he opposed the takeover and was urging his colleagues to speak against it as well so that Gannett papers — including a dozen in Ohio — can “serve their communities and keep politicians and businesses honest.”
He said local reporters were particularly important at a time when President Trump has made a habit of demonizing journalists.
“We see the disrespect that the president shows toward the media generally; you see that on a national level,” Brown said. “If these papers seem more distant to the reading public, I think more politicians and businesses will follow the president’s lead with his disrespect to the media.”
Media companies focused on producing original journalism continue to suffer myriad economic maladies. The biggest newspaper in New Orleans, 182 years old, recently laid off all of its staff. Warren Buffett, a bullish newspaper investor for decades who owns about 30 today, said recently that virtually all such publications are “toast.” Even some of the most promising online-only outlets have laid off workers this year.
Gannett reported that it has more than 500,000 digital-only subscribers and has increased the share of its revenue from digital advertising and subscriptions. But its stock price remains roughly where it was two years ago and some analysts believe it will have to continue cutting costs and possibly combine with another company in order to survive.
Union leaders backed Gannett’s board candidates. Speaking at the annual meeting, Bernie Lunzer, president of the NewsGuild, praised Gannett’s management for “still believing in sustainable journalism.”
In addition to Freeman, MNG nominated former MNG chief executive Steven Rossi and Dana Goldsmith Needleman, a real estate executive. In an effort to convince shareholders to support its board candidates, the company has pitched itself as best positioned to “save” Gannett, launching a web site, SaveGannett.com.
Lunzer rejected that view: “We don’t believe that [MNG] believes in sustainable journalism. They believe in liquidation.”
The elected board members are Louis, John E. Cody, Stephen W. Coll, Donald Felsinger, Lila Ibrahim, Lawrence S. Kramer, Debra Sandler and Chloe R. Sladden.
One of the only other shareholders to speak at the meeting was John Lauve, who traveled from his home in Detroit for the meeting. Lauve lamented the state of the Detroit Free Press, a paper that has suffered dramatic staff cuts under Gannett’s ownership.
He suggested that the company needed to produce better journalism if it expected readers and advertisers to return.
“The only hope for this country is the news media,” he said. Lauve added: “You’ve got the great assets. Dial it up about five more notches and I’ll be pretty happy.”