Fisher Blasts Shareholder Takeover Move

Fisher Communications has returned fire in the battle over who will control the company, accusing dissident shareholder David Lorber of trying to stack the board of directors deck so he can engineer a sale and gain a short-term profit at the expense of other Fisher shareholders.

In a strongly worded letter to shareholders filed with its proxy statement, Fisher’s current directors and executives called for shareholders to support the company’s slate of directors to avert a takeover effort by Lorber and his hedge fund, FrontFour Capital.

Lorber, who was named to the Fisher board in 2009, founded FrontFour along with Zachary George, president-CEO of Huntingdon, a Canadian real-estate investment trust.

Huntingdon late last year made an unsolicited $211 million bid for Fisher.  FrontFour is Huntingdon’s largest shareholder and Lorber serves as a Huntingdon trustee, the Canadian equivalent of director.

That close link clearly is a problem, the letter contends. “FrontFour’s ownership interest in Huntingdon, and the affiliation of  Mr. George and Mr. Lorber with Huntingdon, create a direct conflict of interest between its (and Mr. Lorber’s) interests and the interests of our other shareholders,” Fisher’s letter to shareholders states.

“Had our board pursued the Huntingdon proposal, then all Fisher shareholders would have received a poor value for their Fisher stock. However, as Huntingdon’s largest shareholder, FrontFour would have directly benefitted from the low value proposed for Fisher. Mr. Lorber’s affiliation with Huntingdon, FrontFour and Fisher raises obvious questions about whether he is focused on serving the shareholders and investors of Huntingdon, FrontFour or Fisher,” the letter continues.

Huntingdon’s primary target is Fisher’s headquarters building in Seattle. Fisher’s most recent financial statement valued the building at roughly $108 million.

Fisher also owns and operates 13 full-power and seven low-power television stations, including two ABC affiliates, among them flagship KOMO Seattle (DMA 13);  eight CBS affiliates; and two Univision affiliates. Fisher also owns eight radio stations.

Because foreign entities are precluded from owning any more than 24.9% of a U.S. broadcaster, Huntingdon would have to sell or otherwise spin off most of the broadcast assets.

Huntingdon made the unsolicited bid for Fisher late last year, the $211 million offer translating to about $23.99 a share. Shares closed Tuesday at $28.76, down just under $1 from Monday’s close. When Huntingdon made the offer last year, shares were hovering around $20.

“After Huntingdon’s unsuccessful and opportunistic attempt to buy the company in December, Mr. Lorber and FrontFour are now trying to take control of your company through a proxy contest,” the letter states. “Furthermore, FrontFour is seeking to gain control of Fisher without any control premium being offered to the rest of the shareholders. If successful, FrontFour says it intends to initiate a sale process for the company. It would be doing so at a time when valuations of broadcasting stocks remain near the bottom of the market.

“They have already made up their mind about the future of Fisher and have put forward no plan for how they would operate the business, either before, during or after the sales process or how they would honor their fiduciary duties to all shareholders. Instead, their sole proposal for value creation is to allow four non-broadcasters to join with Mr. Lorber in attempting an ill-timed auction of the company to potential buyers that may in fact include Huntingdon.”

Fisher executives took heat from its largest shareholder, Mario Gabelli, for failing to disclose Huntingdon’s bid in a timely fashion. Gabelli’s various investment companies own about 28% of Fisher shares.

In a letter to Colleen Brown, president-CEO of Fisher, Gabelli rebuked her for failing to disclose the offer to shareholders in a timely fashion and made clear that shareholders in Fisher through Gabelli entities could play a pivotal role in the proxy fight.

“…Shareholder of Fisher might have preferred that you issue a statement saying you had received a proposal that had many issues with it and Fisher had reservations about its ultimate success but you are releasing this proposal on the premise that the market and shareholders are better informed by knowing all dynamics….

“Since our clients own 25%, we will be an important element in determining who to vote for,” Gabelli’s letter states.

Gabelli, Lorber and George did not respond to phone calls seeking comment.

FrontFour has nominated John F. Powers, chairman of the New York Tri-State region of CB Richard Ellis commercial real estate firm; Joseph J. Troy, EVP-CFO of bulk tank truck firm Quality Distribution; Matthew Goldfarb, portfolio manager of private investment firm Fourth Street Holdings; and Stephen Loukas, partner and portfolio manager at FrontFour.

Fisher’s nominations for director include Anthony B. Cassara, Richard L. Hawley, Roger L. Ogden and Michael D. Wortsman.

The proxy fight culminates in Fisher’s annual shareholder meeting, set for May 11 in Seattle.