DallasNews calls shareholder meeting, urges acceptance of Hearst merger

DALLAS — In a new filing Monday, the DallasNews Corporation called a special meeting and asked shareholders to accept a merger proposal submitted by Hearst. 

The meeting was called amid increasing hostility between DallasNews’ Board of Directors and Alden Global Capital. The DallasNews Corporation is the holding company of The Dallas Morning News and its marketing arm, Medium Giant. 

In a preliminary proxy statement filed with the Securities and Exchange Commission, the DallasNews Board urged shareholders to accept the Hearst merger and reject Alden Global Capital’s bid. 

MediaNews Group, an affiliate of Alden Global Capital, previously submitted a “non-binding” bid to acquire the corporation, two weeks after DallasNews agreed to a buyout by Hearst, WFAA previously reported. 

Under the merger proposed by Hearst, one of the nation’s largest media companies, shareholders would receive $15.00 per share in cash, a 242% premium. 

MediaNews Group offered a purchase price of $16.50 per share, valuing the company at $88.3 million. 

In a letter to shareholders, the DallasNews board restated its belief that the Hearst proposal is the superior offer and asked shareholders to vote for the merger with Hearst. 

It’s unclear when exactly the shareholders will meet.

Robert W. Decherd, who has a majority of the voting power of DallasNews common stock, has agreed to vote his shares in favor of the Hearst merger, DallasNews Corporation said in a press release. 

“He further stated that there is no scenario involving Alden or its affiliates as a buyer for DallasNews, which he would support,” the release states. “Mr. Decherd’s message was clear: as long as he is the controlling shareholder, Alden will never own DallasNews.”

Without Decherd’s approval, a deal with Alden cannot go through. However, with its ownership stake and efforts to rally shareholders against the merger, Alden could deny the deal with Hearst, DallasNews said. 

“Should Alden thwart the Hearst Merger, it will have succeeded only in destroying tens of millions of dollars of potential shareholder value represented by the Hearst Merger,” the release states. “And while they may publicly state otherwise, Alden has no replacement transaction to offer: absent Mr. Decherd’s support, they cannot reach the requisite threshold for shareholder approval of their own deal.” 

Alden has attracted controversy for focusing on cost-cutting at the newspapers it owns, according to the Dallas Business Journal. The Denver Post had a newsroom of more than 250 before Alden took over in 2011. By 2018, the newsroom had shrunk by nearly two-thirds to around 70, prompting the editorial board of the Post to publish a public rebuke of Alden, the Dallas Business Journal  reported. 

In a letter to the DallasNews board, Alden urged the board to reconsider their “clearly superior” offer.

“We remain hopeful that we can work cooperatively with the Board and Mr. Decherd toward a mutually beneficial outcome,” the letter said. “However, if the Board continues to refuse engagement, we will simply be forced to take our case directly to your shareholders. As such, we urge you to reconsider your position.”