June 2, 2016

Tribune Publishing’s slate of directors was elected at today’s annual meeting. But Gannett, which is attempting a takeover of Tribune Publishing, claimed that a majority of those shareholders who are independent of management had followed its recommendation to withhold their votes.

Citing a firm that helped solicit withhold votes, Gannett said that 49 percent had voted withhold on all the director nominees and that more than 50 percent withheld votes for Chairman Michael Ferro, CEO Michael Dearborn and former Chairman Eddy Hartenstein.

Gannett said its own board will meet and decide whether to continue its offer of $15 a share, drop the takeover effort or pursue a different strategy. It did not say when that will happen. Tribune Publishing, which earlier had announced the election of the directors (who needed only a plurality of those voting) had no immediate comment on Gannett’s tally.

Gannett, which has reported owning about 1,000 shares of Tribune Publishing stock, was represented at the Los Angeles meeting by Investor Relations director Michael Dickerson. He repeated the company’s claim that Tribune’s 11 newspapers would be strengthened by an affiliation with USA TODAY and Gannett’s more than 100 regional titles:

Today, scale and efficiency are crucial to preserving the profitability needed to invest in great journalism and content. Gannett has the scale to succeed independently well into the future. An acquisition of Tribune would better position Tribune’s worthy publications to withstand the ongoing industry challenges.  

Can Tribune navigate these challenges alone? We do not believe so. Gannett continues to have faith in the value of all of Tribune’s assets as part of Gannett. Our $15.00 per share offer would deliver superior and certain value for Tribune's owners at a tumultuous time for the Company.

Tribune Publishing, which earlier had announced the election of the directors (who needed only a plurality of those voting), issued a rejoinder saying Gannett’s claim was misleading. The full vote has not been certified, Tribune Publishing’s statement asserted, but “it is clear that all Tribune Directors were elected by a majority of the votes cast.”

The distinction between the competing claims is that Gannett highlighted percentages of unaffiliated shareholders while Tribune Publishing included votes of management as well.

As earlier reported, Gannett’s cause also got a boost when a shareholder filed suit alleging that Ferro and the directors had breached their fiduciary duty issuing new shares and selling a 13 percent stake to Dr. Patrick Soon-Shiong two weeks ago.

The suit, brought by Capital Structures Realty of San Diego in Delaware’s courts, asks for expedited injunctive relief to block or reverse the sale.

Tribune shares closed at $11.38, down 1.8 percent for the day. That mild market reaction indicated investors did not consider the day’s events surprising or definitive.

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Rick Edmonds is media business analyst for the Poynter Institute where he has done research and writing for the last fifteen years. His commentary on…
Rick Edmonds

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