Three nominees backed by a dissident investor group that has been pushing for changes at Media General Inc. have won seats on the nine-member board of the media company.
The newspaper publisher and television station operator had opposed the nominees but said Thursday that a preliminary count shows shareholders have elected them to its board at its annual meeting in suburban Richmond.
The hedge fund Harbinger Capital Partners said preliminary, onsite results provided by Corporate Election Services show its candidates received between approximately 57 percent and 68 percent of the total votes cast. Final results were to be available in the next few days.
Harbinger, which holds about 18 percent of Media General's Class A shares, announced plans in January to nominate the directors, citing a decline in the company's key operating benchmarks over the last four years.
The fund recently had success gaining two seats on the board at the New York Times Co., which agreed to nominate two of its directors to defuse a proxy battle.
Media General questioned the nominees' experience and the investment group's long-term plan to improve profitability.
"Our preference would have been to re-elect the slate that we proposed," said Media General's chief executive Marshall N. Morton, adding that the company has lost three "very strong" directors.
"We may find these folks have something to contribute but we don't know yet," Morton said. "All we've heard from them (Harbinger) are prescriptions we don't think are worthwhile. I don't know whether those reflect these men's thinking or not."
The directors are former broadcasting executive J. Daniel Sullivan, investment manager F. Jack Liebau Jr. and turnaround consultant Eugene I. Davis.
"We're looking forward to getting past the proxy process and moving on with improving shareholder value," Joseph Cleverdon, Harbinger's vice president and director of investments said during the meeting.
"We believe these individuals will bring experience, judgment, independence and accountability to the board," Cleverdon later said in a written statement.
The nominees succeed Charles A. Davis, chief executive of Stone Point Capital; Rodney A. Smolla, dean of the Washington & Lee University School of Law; and Walter E. Williams, a George Mason University economics professor.
The new directors won't have a majority say because of Media General's dual-class structure. The family of its chairman, Stewart Bryan, elects 70 percent of the company's board seats. Media General said its six Class B directors were re-elected.
The company on Thursday also declared a quarterly dividend of 23 cents per common share, payable on June 15 to shareholders of record on May 30.
Media General shares rose 52 cents, or 3.9 percent, to $13.92.
The publisher of the Richmond Times-Dispatch, The Tampa Tribune and Winston-Salem Journal said last week its first-quarter loss widened, hurt by a charge related to the planned sale of some TV stations. The company lost $20.3 million, or 91 cents per share, in the January-March period compared with a loss of $6.5 million, or 27 cents per share, last year.
The company said and publishing results were hurt by soft economic conditions in Florida, where it owns several newspapers.
Newspaper publishers have struggled as advertisers shift spending online, following readers who get their news from Internet sites. Slower employment growth and the housing market meltdown also have curbed spending on classified and real estate ads. Automotive ads have been down for several years.
During the meeting, Morton reiterated Media General's moves to create new niche products and Internet ventures that would help increase advertising, and said the company has made efforts to reduce debt and strengthen its balance sheet.
Morton told the audience of about 250 people that 2008 brings a number of opportunities to increase value, including advertising revenues from the presidential campaign and the Olympics as well as cost-cutting measures.
Last week, the company's Florida Communications Group offered buyout packages to half of its 1,326 employees as part of cost-cutting measures and consolidation of platforms.
In addition to its three metropolitan newspapers, Media General owns 22 daily community newspapers in Virginia, North Carolina, Florida, Alabama and South Carolina, more than 150 weekly newspapers and other publications and 23 network-affiliated television stations.
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