createpositivechange

Author: muckety

  • Hearst needs a re-write on TV takeover

    TV can be a goofy business, but this couldn’t be the script the boys in Hearst Tower had in mind when they offered $600 million a few weeks ago for the small piece of Hearst-Argyle Television they don’t already own.

    A special committee of Hearst-Argyle directors advised against the deal last week, calling it “inadequate” and saying it is “not in the best interests” of stockholders, other than Hearst.

    That’s the same argument made by nine class-action lawsuits filed against Hearst-Argyle and Hearst Corp. since the buyout offer was made Aug. 24.

    The stock market certainly agrees. Hearst’s tender offer is $23.50 a share for the nearly 27 percent of Hearst-Argyle shares held by others. The stock closed Friday at about $26.

    Privately held Hearst Corp., founded by legendary newspaperman William Randolph Hearst, is one of the nation’s largest media companies. Based in New York City, it owns newspapers (including the San Francisco Chronicle and Houston Chronicle), magazines (Cosmopolitan, Esquire, O), interactive media and 20 percent of ESPN.

    Hearst-Argyle owns 26 TV stations in markets reaching about 18 percent of the nation’s households. Stock analysts say the company should benefit by record spending on political advertising and by new retransmission agreements for its standard and high definition TV signals. Some analysts value Hearst-Argyle stock at $28-$32 a share.

    Hearst-Argyle detailed the takeover saga, including information on the lawsuits, in a long filing with the SEC last week. The filing said:

    In April 2006, at Hearst’s request, Hearst-Argyle executives first prepared a takeover scenario. At the time, the stock was trading at $23.23. The project was put on hold.

    Independent Hearst-Argyle directors David Pulver and Caroline Williams are each being paid $150,000, plus expenses, to be the sole members of the special committee considering the offer. The committee met 19 times.

    The special committee believes 2008 could be stronger financially than the company forecasts.

    Pulver, Williams and director Bob Marbut do not intend to tender their shares to Hearst Corp.

    Directors Frank Bennack Jr., John Conomikes, Victor Ganzi, George Hearst Jr., William Randolph Hearst III and Gilbert Maurer do intend to tender their Hearst-Argyle shares. Each is also a director of Hearst Corp. Ganzi is Hearst Corp.’s CEO; Bennack is its vice chairman.

    One name conspicuously absent from the lawsuits is that of Florida investor Bruce Sherman. As of April, his Private Capital Management owned 8.4 million Hearst-Argyle shares. Sherman is the investor who put newspaper publisher Knight-Ridder in play, leading eventually to the sale to McClatchy.

    Some of the lawsuits question the independence of Pulver and Williams. Both have been directors of Hearst-Argyle and its predecessor since 1994 and are included in the company’s medical insurance plan.

    Pulver runs an investment company and is chairman of Colby College’s investment committee. He received $145,461 in compensation from Hearst-Argyle last year.

    Williams, who works with the Nathan Cummings Foundation, received $140,961 in compensation from Hearst-Argyle last year. One lawsuit said the Cummings Foundation works frequently with the William Randolph Hearst Foundations.

    Some of those filing the lawsuits worry that Hearst is holding so many cards that it could still force the transaction, leaving those who didn’t go along with illiquid shares.

    As they say on TV, stay tuned.

  • Legality of Hunt Oil Deal Uncertain

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  • Smithsonian Faces More Criticism

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  • Burkles New Pied a Terre

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  • Exxonmobils Well Paid Directors

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  • Legality of Hunt Oil deal “uncertain”

    Hunt Oil’s controversial production-sharing deal with Kurdistan is “legally uncertain” and has “needlessly … Baghdad told The New York Times.

    Dallas-based Hunt Oil is run by Ray Hunt, a close friend and advisor of president Bush.

    Speaking anonymously, the official told The Times that the State Department advised Hunt before the… American and international oil companies.

    On the web
    Official Calls Kurd Oil Deal at Odds With Baghdad – New York Times

    Related stories on Muckety
    Why Ray Hunt is so powerful

  • Burkle’s new pied-a-terre

    Billionaire Ron Burkle has a new crash pad in New York, complete with a heated swimming pool and a panic room.

    Burkle, one of former President Bill Clinton’s best friends, has purchased a swank Manhattan apartment for a whopping $17.5 million, plus nearly $100,000 a year in maintenance fees. Burkle already owns the lavish Green Acres estate in Beverly Hills, where frequent Democratic fundraisers are held.

    The three-level apartment with 5 bedrooms and 5.5 bathrooms doesn’t have a doorman and is situated in a fairly uninteresting part of lower Manhattan.

    But, according to the Real Estalker, the 11,000-square-foot “behemoth has ridiculously high ceilings, 50+ windows, walls of glass, a panic room behind the library bookcases, and a carpet of green grass and a small forest on the eastern terrace. But by far the most remarkable and notable feature of the aerie is the heated swimming pool that hangs over the city with 360 degree views as far as the eye can see.”

    The apartment is said to be exquisitely detailed with massive Danish Tudor wood-burning fireplace, two separate sound systems controlled from every room with speakers throughout. Perfect for more Democratic fundraisers.

    Burkle is best known as Clinton’s pal and as a major donor to the Democratic party. He earned his fortune buying and selling grocery chains; Forbes magazine calculates that he has been involved in 17 major business deals worth $15 billion – 11 of which involved grocery stores. He recently expressed interest in buying the Tribune Company, or the Los Angeles Times, but was beat out by real estate magnate Sam Zell.

    Venture capitalist Jonathan Leitersdorf reportedly purchased the entire building at 700 Broadway for about $2.5 million before gutting it and renovating. Burkle’s new home was first put on the market in 2002 for $27,500,000, but was reduced to its final asking price of $18,750,000. Burkle apparently cut the price even more.

    On the web: Ron Burkle’s Swimming Pool in the Sky – Real Estalker

  • ExxonMobil’s well-paid directors

    Outside directors of ExxonMobil are among the highest-paid board members in the world. Each earned well over $300,000 in compensation from the giant oil company in 2006.

    And that’s only part of the story.

    Because of ExxonMobil’s strong stock, if the directors’ 2007 compensation were calculated based on today’s share prices, it would total about $500,000 apiece.

    That may be one reason why ExxonMobil changed its non-employee director pay last week, reducing the annual award of restricted stock from 4,000 shares to 2,500 shares apiece, beginning next year. The company also increased cash payments to each director to $100,000 from $75,000, while eliminating smaller payments for some committee duties.

    When ExxonMobil filed its annual proxy statement in April, it put the value of 4,000 restricted shares at $230,680, or $57.67 a share, about the price at the end of 2006. ExxonMobil stock closed Friday, the end of the third quarter, at about $92.50, making 4,000 shares worth $370,000. At current prices, 2,500 shares are worth about $231,000.

    Directors are paid regular dividends on their restricted shares, but can’t sell them, generally, until they retire from the board.

    At current prices, three directors (Marilyn Carlson Nelson, William Howell and Philip Lippincott) hold restricted shares worth more than $4 million. Nelson is CEO of Carlson Companies, Howell is chairman emeritus of J.C. Penney and Lippincott is the retired chair of Scott Paper and Campbell Soup.

    Four other directors (Michael Boskin, James Houghton, Reatha Clark King and Walter Shipley) hold restricted shares worth $3.5 million or more. Boskin is a professor at the Hoover Institution, Houghton is former chairman of Corning, King is former chairman of the General Mills Foundation, and Shipley is retired chairman of Chase Manhattan.

    When Sam Palmisano, CEO of IBM, joined the ExxonMobil board last year, he received a one-time grant of 8,000 restricted shares, like all of the company’s new directors. At the time, those shares were valued at $484,640. At today’s prices, those shares are worth $740,000.

    Of course, the directors’ highly paid part-time jobs go with the territory. They are helping lead one of the largest commercial enterprises in the world. At the end of third quarter, ExxonMobil had a market cap of about $510 billion, equal to the combined market caps of Microsoft, Google and eBay.

    It can be easy to get excited about high tech, but never under estimate the power of $80-a-barrel oil.

  • Senate Reviews Google Doubleclick Deal

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  • Senate reviews Google-DoubleClick deal

    Execs from Google and Microsoft are scheduled to appear before the Senate today to argue the merits of Google’s proposed acquisition of DoubleClick.

    Google announced the $3.1 billion deal in April, but the plan requires approval of the Federal Trade Commission and regulators abroad.

    As CNet notes today, this will be the first time that Congress has scrutinized the Internet behemoth. Microsoft, with years of experience in arguing antitrust issues, has mobilized a legion of lobbyists to block the deal, saying it would create an online advertising monopoly.

    Consumer privacy groups have also raised concerns. Marc Rotenberg, executive director of the Electronic Privacy Information Center, is scheduled to testify today as well. His group says the deal would give Google too much information about web users.

    Google is expected to argue that it respects users’ privacy, and that its current business focuses on text-based advertising, while DoubleClick specializes in banners.

    In his prepared testimony, released before the hearing, Google Senior VP David Drummond says Google and DoubleClick offer complementary services. “DoubleClick is to Google what FedEx or UPS is to Amazon.com,” he said.

    Those of us who have been running Google AdSense banners for ages find this argument a bit puzzling.

    On the web:
    Microsoft, Google square off in Washington – CNet

    Related stories on Muckety:
    Advantage Microsoft in flap with Google?