Fisher Elections in Turmoil in Advance of Shareholder Meeting

Roger Ogden up for director spot; "dissident" shareholder wants reduced costs at stations

Fisher Communications is involved in a heated battle with what it calls a "dissident" faction of its shareholder body in FrontFour Capital Group. A series of barbed letters from both parties to shareholders in advance of Fisher's annual meeting in Seattle May 11 has seen Fisher push to have the broadcast veterans Roger Ogden, Anthony Cassara and Michael D. Wortsman, along with business leader Richard L. Hawley, elected to its board at the meeting.

Cassara was recently elected to fill a vacancy on the Fisher board; he was also named CEO of Young Broadcasting last month. (Young's stations are in different markets than Fisher's group, eliminating conflict of interest issues.) Wortsman and Hawley are currently on the 10-person board, while Ogden, formerly the president and CEO of Gannett's broadcasting division, is not.

FrontFour, a Stamford, CT-based hedge fund fronted by David Lorber, is pushing for a different slate of directors with rich real estate backgrounds: Matthew Goldfarb, portfolio manager of Fourth Street Holdings; Stephen Loukas, portfolio manager of FrontFour Capital; John Powers, regional chairman of CB Richard Ellis; and Joseph Troy, CFO of Quality Distribution, Inc.

Lorber has been on the Fisher board since April 2009. A letter from FrontFour Master Fund, an affiliate of FrontFour Capital, to shareholders May 3 charged Fisher with dispensing misleading information. "The company's broadcast cash flow margins substantially trail those of its peer group," read the FrontFour letter. "Also, the company's stock price has underperformed its peers by over 25% from October 2005 through December 31, 2010, prior to both an unsolicited offer and the hiring of Moelis & Company."

Fisher charges FrontFour with unfairly representing the board's performance to shareholders, and claims the capital group seeks to sell the company for "its own short term gain."

"Over the past month, you have witnessed how FrontFour has repeatedly grasped at a variety of financial metrics, chosen at carefully selected points in time in an effort to mislead you into thinking that Fisher has underperformed," reads an April 29 letter to shareholders. "Despite FrontFour's rhetoric, one simple truth is undisputable: when it comes to shareholder value creation, Fisher outperformed its peer group on a relative basis between 2005 and 2010. "

The letter is signed by nine of the 10 board members--with Lorber excluded.

Lorber and FrontFour did not return a call for comment at presstime. In its letter, FrontFour stressed that it is not seeking to take control of the company with its election slate. "This election is not about control but a referendum for change," it said, and blasted Fisher for "ill-conceived acquisitions."

Part of the change FrontFour suggests includes cutting costs at Fisher. "The initial areas of focus would include: a reduction of corporate costs, optimization of Fisher Plaza, a focus on shared services among the operating stations, and streamlining and reducing costs within news production," stated the letter.

Fisher owns or operates 20 TV stations and 10 radio outlets. It reports quarterly earnings May 10.

Late in 2010, Huntingdon Capital attempted to take over Fisher with an unsolicited $211 million buyout proposal. Fisher turned down the bid, and said Lorber would not take part in further board discussion related to Huntingdon due to his connection to the company.

Puget Sound Business Journal reported in January that Lorber "is a member of Huntingdon's board of trustees," while FrontFour Capital Group "is the largest shareholder of Huntingdon. In addition, Lorber co-founded FrontFour with Huntingdon President and CEO Zachary George."

Fisher's current board is adamant about getting its candidates voted on board--and is ramping up the rhetoric to do so. "Do not allow FrontFour to steal your company away from you," reads the April 29 missive. "Any vote on FrontFour's green proxy card will help them achieve their takeover objectives."