Fisher Avoids A Dissident Takeover

Fisher Communications shareholders, signaling some unease with the company’s direction, voted to add two of four directors nominated by a dissident faction to the company’s board.

The election of Joseph J. Troy and Matthew Goldfarb, nominated by hedge-fund manager FrontFour Capital Group, join FrontFour’s David Lorber on Fisher’s board of directors.

However, in a split vote, shareholders also elected two Fisher nominees: current director Richard Hawley and new nominee Roger Ogden, a veteran broadcaster.

While the vote may indicate a shift in sentiment, Fisher’s six directors still dominate the nine-member board.

The election resolves a proxy fight that started shortly after the first of the year when Fisher disclosed it had received a $211 million unsolicited takeover bid by Huntingdon REIT, a Canadian real estate investment trust.

Lorber serves on Huntingdon’s board and Huntingdon president-CEO Zachary George is a co-founder of Front Four with Lorber.

Had shareholders elected all of Front Four’s nominees, it would shifted board power 5-4 in favor of the dissident faction, opening up Fisher to a takeover by Huntingdon.

Fisher’s primary business includes 13 full-power television stations, including flagship KOMO, the ABC affiliate in Seattle, seven low-power stations and eight radio stations.

Huntingdon’s primary target was Fisher Plaza, the company’s 300,000-square foot headquarters building. Fisher had been shopping the building, a Class-A property in Seattle, in 2008 shortly before the recession hit but withdrew it from the market as the economy and real-estate values deteriorated.

Official company filings put a book value on Fisher Plaza of roughly $108 million.

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 the broadcast assets.

Fisher’s critics have cited the company’s decision to enter the real-estate business by building Fisher Plaza, cash-flow margins that have often lagged those of peers and most recently the company’s failure to disclose the hostile takeover bid in a timely fashion as evidence of ineffective management.

Huntingdon made the takeover bid on Dec. 6, 2010, but Fisher did not disclose it until early January of this year.

The disclosure issue prompted a stinging rebuke from Mario Gabelli, whose various GAMCO funds hold about 28% of Fisher shares.

“As we discussed several weeks ago, we are very uncomfortable by the existing board’s decision not to surface the proposal you received in mid-December,” Gabelli wrote to Colleen Brown in a letter dated Jan. 27. 2011.

“Let me echo my comments at that time — the shareholders 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.”

The election of two of the directors nominated by Front Four suggests Gabelli’s dissatisfaction — not only regarding the disclosure issue but also business operations — may have translated into a significant number of GAMCO-held Fisher shares voting in favor of the dissident faction.

Huntingdon’s bid is the second takeover attempt backed by Front Four in a little more than three years. The first bid was $384 million, which would have valued the company at $43-$45 per share. The most recent bid worked out to just under $24 per share, about an 18% premium on where shares were trading at the time and a 10% premium on where Fisher shares closed at year-end.

“There’s no need for a broadcaster to occupy a Class-A space in any market, what the hell’s the point,” said a Wall Street source familiar with the situation. “Get what you can for it, move into less expensive space, use proceeds to knock down the high cost of debt and move on from there. There was interest three years ago and I’m sure there’s interest today. Do something smart. It’s a troubling issue for dissidents and others that the company received two credible bids at above market prices and they were not disclosed on a timely basis.”

Fisher shares closed Thursday at $26.73, up 72 cents, but well off the $32 where shares closed on April 2.

The company struck a diplomatic note in a statement included in a press release about the vote: “We remain committed to building long-term value for all of our shareholders and we look forward to working with all of our newly elected directors to continue the operational and financial momentum that has enabled Fisher to deliver peer-leading growth. We are also very grateful to our departing board members for their significant contributions and outstanding service to Fisher and our shareholders.

We also appreciate the consideration and support from our shareholders, as well as the valuable insights they have offered to our board and management team.”

Fisher Plaza appears to be in play again. Fisher in late March contracted with Moelis & Co. to explore options for the building.