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Originally published Saturday, April 9, 2011 at 10:03 PM

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Sunday Buzz

Fisher's future turns on looming proxy fight

By Rami Grunbaum, deputy business editor, and Seattle Times business staff

When Fisher Communications' KVI Radio broadcast the first Mariners game in 1977, David Lorber wasn't born yet.

But the 32-year-old Wall Street whiz kid has a plan for the 101-year-old Seattle company: Sell it, and soon.

Fisher, whose flagship station is KOMO-TV, has been a fixture in Seattle's business community since before the dawn of commercial radio.

Hedge-fund manager Lorber, by contrast, calls himself a "long-term stockholder" though he first bought shares in 2007.

Regardless, Lorber has launched a proxy challenge against Fisher's slate of board candidates. That contest will heat up as a May 11 shareholder vote nears.

Current management will likely blast Lorber and his FrontFour Master Fund for their December attempt to engineer a lowball sale of Fisher to a Canadian company where his firm is the top shareholder.

Lorber will fault Fisher CEO Colleen Brown and the current directors, as he already has, for a laundry list of alleged failings, including spending $91 million since 2008 on "ill-advised and poorly executed acquisitions."

One Wall Street fund manager who owns a small amount of Fisher stock says "there's probably a little bit of truth on everybody's side in this."

As a modest-sized company with little analyst coverage and a less-than-stellar track record, Fisher is in the sweet spot for Wall Street opportunists.

Along with Seattle's KOMO-TV and three radio stations it owns Portland's KATU-TV, more than a dozen smaller broadcast properties, and the high-tech Fisher Plaza data center and office complex on Denny Way, close to the Space Needle.

Lorber argues that Fisher, led by Brown for the past five years, has "continuously underperformed" and has dismissed acquisition offers without due consideration. He makes clear that if his slate is elected, its agenda is "a robust and impartial auction process" to sell Fisher's assets to the highest bidder.

With its stock at $30.31 at Friday's close, Fisher has a market capitalization of $266 million. Its Fisher Plaza complex alone has a book value of $108 million — and the company said last month it would resume earlier efforts to sell the property.


The stock is down some 30 percent since Brown took the helm in October 2005.

Lorber, a Fisher board member, argues the stock would be even lower if not for the December takeover bid by Huntingdon Real Estate, which offered about $24 in cash and stock.

That bid, quickly rejected by Fisher, seemed adroitly timed to come before the company reported results for a quarter juiced by heavy spending from political campaigns.

Indeed, the company subsequently announced its best quarterly revenue in 10 years. "You had a great year last quarter," quipped analyst Bishop Cheen of Wells Fargo Securities on the company's earnings call last month.

Fisher went from a $9.3 million yearly loss for 2009 to a $9.7 million profit in 2010. Brown told analysts the company's improved operating margins show her turnaround efforts are paying off.

Brown declined to be interviewed before the company's official proxy message to shareholders is approved by the Securities and Exchange Commission. Lorber did not respond to a request for comment.

Still to weigh in on the proxy fight are the two key advisory firms that give big shareholders an independent assessment on such battles: ISS and Glass, Lewis & Co.

No doubt the biggest factor in the proxy battle's outcome will be Mario Gabelli, whose mutual funds are Fisher's largest shareholder at 27.8 percent. Gabelli has repeatedly voiced frustration with the company's decisions, and he pressured Fisher to install Lorber on the board two years ago.

It's not clear which way Gabelli will vote. Barry Lucas, an analyst for Gabelli & Co., the brokerage firm affiliated with the Gabelli funds, wrote March 23 that electing the challenger slate "could give Mr. Lorber and FrontFour control of Fisher without any control premium being paid."

Still, in an interview, Lucas was generally critical of Fisher's track record, saying "assets have been undermanaged, evidenced by broadcast cash-flow margins that are below industry peers." He cited Brown's 2008 purchase of two TV stations in Bakersfield, Calif., for $55 million — "the wrong time and the wrong price."

Lucas, who puts Fisher's own value at up to $47 per share in an acquisition, stressed he wasn't speaking for the mutual funds or for Gabelli himself.

He said in the long term, regardless of this proxy fight's outcome, the industry has "too many independent broadcast companies" without the scale to lower corporate overhead and bargain effectively with the networks.

In the short term, Lorber and Fisher management will wage a PR fight to win over investors to their viewpoint.

The Wall Street fund manager suggested there's a bright side to the conflict: "What's driving this is it's a great company that hasn't been recognized," he said.

The Highlands

can't keep

out foreclosures

A bank sells a home it has repossessed. Happens all the time these days. No story here.

Unless the house is in The Highlands — that exclusive, woodsy, super-private enclave that's long been linked with old Seattle money.

A 4,800-square-foot house in The Highlands was one of more than 80 Seattle-area bank-owned homes that put on the block at an auction in Bellevue late last month.

The successful bidder offered $745,500, the firm said. That's less than half what the previous owners paid for the house less than six years earlier, according to public records.

Deutsche Bank repossessed the 1.7-acre property in March 2010 after the owners defaulted on a loan with an outstanding balance of $1.3 million.

It turns out this wasn't the first foreclosure in The Highlands. Records reveal that Bank of America repossessed a 7,400-square-foot home on 1.6 acres two months before Deutsche Bank took back its house.

"It just goes to show that no one is immune," says broker Jane Powers, president of Ewing & Clark Residential, who specializes in luxury properties. "The wealthy have been hit, too."

Financial distress isn't something you usually associate with The Highlands, designed more than a century ago by the Olmsted Brothers, famed landscape architects.

Seattle's original gated community, The Highlands occupies 498 acres in Shoreline on a hill above Puget Sound, behind the Seattle Golf Club. Its residents over the years have included Boeings, Nordstroms, McCaws and Bullitts.

There are 102 homes in The Highlands, according to the community's website. They sit on lots ranging in size from slightly under an acre to nearly 10. Many have views of the Sound.

You don't just buy a house in The Highlands — you buy membership in the community, with a nonrefundable initiation fee of $25,000 and steep quarterly dues. For that, you get a piece of the private roads and water and sewer systems, plus a community pool, trails, tennis courts, playfields and beach.

A dozen homes in The Highlands are for sale now, Powers says — a lot by historic standards, but down from 18 a couple years ago.

Why so many? "There were some financial situations, like everywhere else," Powers says. But folks also were selling for all the usual reasons — death, divorce, relocation, downsizing.

They didn't have much luck in 2009, the broker reports — not a single home sold. But since January 2010, she says, 11 houses have closed or are under contract. "I think they're out of the worst of it," Powers says.

Interested in one of the dozen homes on the market now? Bring your checkbook — they range in price from $1.375 million to nearly $5 million.

— Eric Pryne,

Comments? Send them

to Rami Grunbaum:

or 206-464-8541.

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