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A.H. Belo Shareholder Takes 'Activist' Role, Suggests Exploring Sale of Dallas Morning News
Investment management firm Minerva Advisors, a Pennsylvania-based shareholder in A.H. Belo, filed paperwork with the SEC late this afternoon announcing plans to take an “activist approach” and request a strategic review that could include selling the Dallas Morning News. The “13D” filing can often presage a forced sale or a hostile takeover. It’s an indication to the board of directors that a significant shareholder is unhappy with the operation of its investment.
The money graphs are here:
At this point, we believe several actions are crucial to avoid further harm. First, we urge an immediate cessation of the use of cash for acquisitions and for insider compensation beyond salaries and incentive compensation based on financial performance.
Second, we believe the long suffering shareholders should receive some of the cash on the balance sheet in the form of a special dividend or substantial one-time stock buyback.
Third, we request that A.H. Belo retain an advisor to consider strategic options for the company and its two divisions. Management has previously indicated that current conditions do not justify a one-newspaper public company, and we believe that one of the roots of AHC’s recent struggles is an effort to build the company to a size which would justify its status as a public company rather than undertaking an intellectually honest process to determine whether that status makes any sense.
Second, we believe the long suffering shareholders should receive some of the cash on the balance sheet in the form of a special dividend or substantial one-time stock buyback.
Third, we request that A.H. Belo retain an advisor to consider strategic options for the company and its two divisions. Management has previously indicated that current conditions do not justify a one-newspaper public company, and we believe that one of the roots of AHC’s recent struggles is an effort to build the company to a size which would justify its status as a public company rather than undertaking an intellectually honest process to determine whether that status makes any sense.
A spokesman for Minerva declined to comment.
Unless the company’s management staff has been willfully negligent, this can’t be a tremendous surprise. As I noted in 2016, shareholder frustration was made clear to the paper’s leadership. Continued worrisome financial performance and staff layoffs did little to allay shareholder concerns. The letter explains that Minerva told management that it “has no business remaining publicly traded.”
“We have previously conveyed that opinion to management, but the company instead responded by embarking upon an ill-conceived effort to diversify into digital marketing, a highly competitive business in which AHC had no apparent competitive advantage. We expressed this sentiment to management as well, and were told that the connection with the DMN would provide additional opportunity for the marketing business, and that the DMN’s top line would benefit as well. The company’s 2018 10-K offers some insight as to who was right.”
Read more: https://www.dmagazine.com/frontburner/2019/04/a-h-belo-shareholder-takes-activist-role-suggests-exploring-sale-of-dallas-morning-news/
Cross-posted in the Texas Group.