Facing a challenge from investor Mario Gabelli’s Gamco Asset Management, the E.W. Scripps Co.’s management defended its board and its strategy, urging shareholders to use their proxies to vote for its slate.
“We have a plan underway based on real numbers and tied to real decisions we’re making that we anticipate will create as much if not more value and performance improvement than Gamco asserts we need,” said Scripps CEO Adam Symson. “Gamco has put forth margin targets that are vague and baseless, while the Scripps plan is based on specifics. We have the right board members and the right plan in place, and we are moving forward with urgency.”
Gamco has put up a slate of three directors for election to the Scripps board. The executives, Colleen Brown, Ray Cole and Vincent Sadusky all have TV station management experience.
“Gamco is trying to help management increase intrinsic value. We believe Scripps should engage three proven individuals with hands on knowledge of operations in the broadcast ecosystem,” Gamco said. It said that if Scripps improved its broadcast cash flow margins, its share price would rise, it would be able to cut debt and buy more stations.
Scripps said Symson spoke with Gabelli and offered a compromise, which Gabelli dismissed, saying he wanted all three nominees on the board or nothing at all.
Scripps says it has the right board and the right strategy.
“The company has streamlined its Local Media segment and corporate cost structure and expects to yield more than $30 million in annual savings. It aims to strengthen its broadcast television portfolio through a buy-sell-swap acquisition strategy. Scripps’ National Media businesses are growing rapidly, and the segment delivered its first profitable quarter in the fourth quarter of 2017. Meanwhile, the board continues to return cash to shareholders, announcing a regular dividend in February 2018,” the company said.
Scripps also said it expect cash flow from operation to grow more than 40% from 2016 to 2020.