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FrontFour Delivers Letter To Fisher Communications Stockholders

Stocks in this article: FSCI


In a recent investor presentation, the Company apparently agrees with our assertion that it lacks scale stating "While Fisher has less scale relative to its public pure-play TV broadcasting peers, management is executing upon a well developed strategy to build scale."   Given this statement, we have serious concerns that the Company is looking to continue to pursue an acquisition strategy.  The CEO and Board have proven to be poor capital allocators, and we do not want corporate assets to be wasted any further.

To set the record straight, Fisher stockholders should be seriously concerned with Fisher's poor track record on capital allocation, as evidenced by three notable acquisitions completed under the current CEO for a total of $91.6 million. Yet, despite these investments and during the same period, Fisher's stock declined by a stunning 48%, representing a total stockholder loss of $173 million. We believe that such underperformance is unacceptable and wish to ensure that such mistakes are not repeated.

In light of this, can stockholders trust Fisher's CEO and Board to make responsible and prudent investment decisions? In the event that the Company carries through with the sale of Fisher Plaza, can stockholders be sure that the resulting capital will be allocated properly and competently? It's all about trust. Fisher's CEO and Board need to earn it, and so far, stockholders have good reason to be skeptical.


On conference calls investors have asked management to provide more data around the acquisitions so that investors can properly assess management's ability to make acquisitions. Management has refused to provide such data. In fact, in management's latest discussion of performance the Company highlights revenue and EBITDA growth, yet fails to separate out revenue relating to the acquisitions.  In a slide, the Company specifically highlights revenue growth from 2006 to 2010 of $18 million. So, the Company spent more than $90 million on acquisitions, yet has only grown its total revenues by $18 million?

Ms. Brown has stated on conference calls that margin improvement is a primary operational goal for the Company.  Why didn't we see any slides in the investor presentation or in the Company's letters about how margins have improved?  Clearly, they don't highlight margins because margins have not improved, even taking into account these costly acquisitions. How can stockholders trust the information Fisher tries to spin?

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