OMAHA, Neb. – Three directors at newspaper publisher Lee Enterprises were reelected Thursday over the objections of a hedge fund that has been trying to buy the company since last fall.
Lee said its chairman, CEO and lead independent director were all reelected as expected at the Davenport, Iowa-based company's annual meeting, with each receiving support from more than 70% of the votes cast. Alden Global Capital had urged shareholders to vote against Chairman Mary Junck and longtime director Herbert Moloney after a judge blocked its effort to nominate its own directors, but the rules of the election had made “no” votes symbolic.
Alden, which is already one of the largest newspaper owners in the country, probably won't abandon its effort to buy Lee after this latest setback, but it wasn't immediately clear what the New York-based hedge fund might try next. Alden did not immediately comment on Thursday's vote, and an Alden spokeswoman did not immediately reply to phone and email messages from The Associated Press.
The directors were ensured they would be reelected because Lee decided to use a plurality standard in the elections. That meant that the directors only had to get one “yes” vote to get reelected because that is more than any other candidate could receive because the directors were running unopposed. Alden tried to force the directors to have to win a majority of the votes to keep their seats, but a judge also rejected that suggestion.
It appeared that the directors would have prevailed even under Alden's call for a majority of votes, since Lee said preliminary vote results showed each director receiving support from more than a majority of the company’s outstanding shares.
The vote also showed high participation from Lee shareholders, with more than 75% of Lee’s outstanding shares casting votes on directors, an increase of over 20 percentage points from the company’s average turnout in the previous three years, Lee said.
“We deeply appreciate the record turnout and strong support we received from shareholders at this pivotal annual meeting," Lee said in a written statement. “The results represent a resounding rejection of Alden Global Capital’s campaign against Lee.”
Final results will be tabulated and certified within four days, Lee said.
The publisher of the St. Louis Post-Dispatch, Buffalo News, Omaha World-Herald and nearly every other newspaper in the state of Nebraska rejected Alden's $141 million takeover offer in December because Lee officials said the $24 per share bid grossly undervalued the company.
Lee has been fighting hard against Alden, which it called a “vulture hedge fund.” Alden has a reputation for imposing severe cost cuts and widespread layoffs at the newspapers it owns.
Alden had argued that changes are needed at Lee because the company has delivered disappointing results since it bought all of Berkshire Hathaway's newspapers in 2020. But Lee defended its approach and said it is making good progress in growing digital subscriptions and online ad revenue.
Two other hedge funds that own larger stakes in Lee than Alden have said they believed the company is worth significantly more than Alden offered. Alden has said it holds 6.3% of Lee's stock.
Lee also received the backing of The NewsGuild–Communications Workers of America union that represents journalists at several of its newspapers.
“We believe that Alden Global Capital has done more harm to the news industry than any single factor, including the online platforms,” the union wrote in a letter to shareholders before the vote. “Within a few years of acquiring a news organization, Alden quickly hollows it out, taking a liquidation approach of selling off historic offices, shutting down printing plants and slashing staff, while hiking subscription prices.”
Alden built its group of newspapers primarily by buying up MediaNews Group and Tribune's newspapers. It owns the Denver Post, the Orange County Register and the Boston Herald.