It was revealed on Monday (Jan. 3) that Seattle-based Fisher Communications received an unsolicited purchase offer last month from a Canadian real estate investment trust called Huntingdon.
The Fisher board rejected the proposal, deeming it “not in the best interest of the shareholders,” according to a press release issued by Fisher’s San Francisco PR counsel.
End of story? Maybe not, as several factors seem to indicate that there may be more going on behind the scenes than any press release can do justice.
First off, Fisher owns the 300,000 square foot Fisher Plaza complex on Denny Way, and 20 TV stations and 10 radio stations (including the venerable flagship KOMO TV and radio in Seattle). Huntingdon’s offer puts the value of Fisher’s holdings at about $211 million. But, since Huntingdon is a foreign company, it can’t legally own American broadcast stations.
Second, the Fisher and Huntingdon boards have a member in common. The same press release announcing Fisher’s rejection of the offer said that, “David Lorber has been excused from all Fisher Board deliberations and reports in connection with the Huntingdon offer.” Fisher also said that Lorber is also a co-founder, along with Huntingdon CEO Zachary George, of something called FrontFour Capital Group LLC.
Asked about Lorber’s possible role as an intermediary in the rejected offer or whether Fisher might make a counter proposal, Fisher spokesman Ron Low said via email late Tuesday, “We are not going to comment beyond the statement.”
Huntingdon CEO Zachary George also declined comment Tuesday, but provided a copy of an “Express Pulse” email sent by a Canadian investment firm called Desjardins Securities. The email from Desjardins details Huntingdon’s offer and says, “Fisher Plaza is Huntingdon's true target; it would have to sell off the TV and radio assets immediately because of strict US media foreign ownership rules. If successful, Fisher Plaza would represent the largest asset in Huntingdon's portfolio.”
Huntingdon's George was formerly with a firm called Pirate Capital, and was featured in a not-quite-flattering 2005 New York magazine article called "Hedge Fund Managers Get Rich Quickest." The article profiled George, then 27 years old, and his combative relationship with the 55-year old CEO of a company that Pirate Capital had taken control of. During a conference call, George tells the current CEO that Pirate Capital is actively looking for the CEO’s replacement, and says, “Next year we’re going to be here, and you won’t.”
In the rough and tumble world of mergers and acquisitions, this kind of gamesmanship is just part of doing business, and it may be that Huntingdon, under George’s leadership, will take advantage of any available strategy to get what it really wants from Fisher: the real estate.
According to the same email from Desjardins Securities, “Huntingdon sent another letter to Fisher's board urging a reconsideration of the proposal, and mentioning that it had purchased ‘significant amount of Fisher common shares.’”
Thus one possible scenario is that Huntingdon’s offer (and acquisition of other Fisher stock in the meantime) is part of a squeeze play to ultimately force Fisher to sell only Fisher Plaza to Huntingdon, leaving Fisher stuck with the broadcast properties for now.
Fisher Plaza is valued around $112 million, but the value of Fisher’s radio and TV stations is unclear — down from its high, and maybe still in decline, as the future of local broadcast media is likely nothing like its lucrative past.
Gary Stevens, managing director of Gary Stevens & Co., a New York area media brokerage, said in an email Tuesday, “In the current environment, it is difficult to value the Fisher [broadcast] holdings, as nothing comparable has traded in several years. You simply can't get a reliable valuation in these times.”
So one question before the Fisher board must now be, are they willing to sell Fisher Plaza separately to Huntingdon (or anyone else, for that matter)? It could be that the Fisher board was counting on holding out until they could sell the real estate (a more reliable investment) and the broadcast properties as a bundle. But with Huntingdon’s recent moves, that option may be about to evaporate.