Lee Enterprises is asking shareholders to re-elect members of their Board’s executive committee members. Furthermore, the newspaper company warns against voting for Alden Global Capital’s three “hand selected candidates”. Lee calls Alden a “vulture hedge fund” – sourcing an October 2021 NPR article for the inflammatory language. To be clear, Lee says vote to “ensure Lee’s Board remains fully loyal”.
The Bid and The Aftermath
Alden made a $24 per share bid for Lee back in November 2021. Lee describes the “hostile bid” as one that “grossly undervalues Lee and represents a 33% discount” to their stock (at close January 21, 2022). Meanwhile, Alden said their “interest in Lee is a reaffirmation of our substantial commitment to the newspaper industry.”
While Alden hoped to work constructively with Lee’s Board, the newspaper company instead has thrown up roadblocks. Lee Enterprises responded to Alden Global Capital’s acquisition proposal with a poison pill, also known as a “shareholder rights plan”. This tactic is often used by corporate boards when they are trying to avoid being the target of a hostile takeover by a larger firm. According to Investopedia, such plans are usually triggered whenever one individual or entity obtains a particular percentage of total ownership.
Lee Enterprises also announced in December that Alden’s nominations to their Board of Directors was “invalid”. The publisher claimed Alden had “failed to deliver a notice that complies with Lee’s bylaw requirements prior to the nomination deadline.”
Lee Enterprises Fact Box * Based in Davenport, Iowa * Founded in 1890 in Iowa, by A.W. Lee. * Provider of local news in 77 U.S. markets and communities * Newspapers include The Fredericksburg, Virginia Free Lance Star, Rapid City Journal in South Dakota and the Winston-Salem Journal in North Carolina * Had digital revenues of $66 million in Q3 2021 and 337,000 digital only subscribers * Average daily circulation of 1 million copies * 47 million digital unique visitors
The Candidates
Alden, who through an affiliate has a 6.3% ownership stake in Lee, has nominated three candidates. If elected, they will serve on the Lee Enterprises Board of Directors.
- Colleen B. Brown – served as President and Chief Executive Officer of Fisher Communications, Inc., a media company that owned a number of television, radio stations and technology facilities in the western United States. Ms. Brown also work in senior management at Belo Corp., Lee Enterprises and Gannett.
- Carlos P. Salas – Serves as President of The Change Company CDFI LLC (“The Change Company”), a financial services company focused on serving underbanked borrowers and communities across the U.S.
- John S. Zieser – Currently serves as Chief Development Officer and General Counsel of Meredith Corporation. Zieser played a key leadership role in transforming Meredith’s business. That included multiple expansion initiatives in the media, digital, consumer revenue and licensing sectors.
Meanwhile, Lee has three candidates for re-election: Chairman Mary Junck, President and CEO Kevin Mowbray and Lead Independent Director Herbert Moloney.
Lee’s Case For Status Quo
Lee makes their best case in the shareholder letter. “Lee is executing a clear strategy that has positioned the Company for rapid growth and expanded profitability. In 2021, Lee was the fastest growing digital subscription platform in the industry, with over 65% year-over-year growth in digital subscriptions.”
Is Lee Fighting The Future?
Alden successfully bought Tribune Publishing earlier this year. With that purchase and MediaNewsGroup, Alden controls media properties in half of the top 10 markets in the United States. This includes the three biggest media markets in the country, New York, Los Angeles and Chicago.
Lee would further expand Alden’s reach with a set of second and third tier markets, like Fredericksburg, Virginia. Furthermore, Lee has touted a new strategy based on recurring digital revenues. However, their Q3 pro forma total operating revenue declined 4.7%. A network approach as part of Alden’s other platforms could strengthen Lee’s shared goal of informing local communities.
