Investment adviser: Media General’s leadership ‘still the worst management team around’

Amit Chokshi is the founder and owner of Kinnaras Capital Management, and he’s been a constant pain in the collective neck of Media General’s management over the past few months. Many of his beefs with Media General’s leadership are summed up in a March 14 post: The bosses “missed a massive refinancing window in early 2011, costing investors potentially $15-20+MM in additional interest expense”; they have “no accountability, with the management team enjoying egregious compensation at shareholders’ expense”; and “Management appears aware of its own incompetence as illustrated by the lack of insider purchases irrespective of Media General’s price and valuation.” (For other criticism, see: 1, 2, 3.)

Reached by telephone Thursday, Chokshi says “everybody got lucky” with the deal announced today whereby Berkshire Hathaway will buy Media General’s newspapers and help pay off its onerous debt. “It doesn’t change my view on them,” Chokshi says about Media General’s leadership: “They’re still the worst management team around.” That money — a $400 million term loan and a $45 million credit line — will have an interest rate of 10.5 percent, which Chokshi calls a “phenomenal deal.” In return, Berkshire Hathaway will get warrants to buy about 20 percent of Media General’s stock, whose value rose sharply Thursday morning.

The market, Chokshi says, had been punishing Media General’s stock because it didn’t think the company would be able to refinance without paying 14 to 16 percent interest. Buffett paid “close to the top” of what the newspapers were worth, the analyst says, and his desire to own part of the newspaper-free Media General means “he’s saying, ‘I think the TV stations are undervalued.’ ”

“Somehow the newspaper sector caught fire,” Chokshi says. “I still think ultimately the best thing would be for these guys to sell off the broadcast properties.”

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