- Amended Statement of Ownership: Solicitation (SC 14D9/A)
21 May 2009 - 5:36AM
Edgar (US Regulatory)
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14D-9/A
SOLICITATION/RECOMMENDATION STATEMENT UNDER
SECTION 14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. 1)
HEARST-ARGYLE TELEVISION, INC.
(Name of Subject Company)
HEARST-ARGYLE TELEVISION, INC.
(Name of Person(s) Filing Statement)
Series A Common Stock, Par Value $0.01 Per Share
(Title of Class of Securities)
422317 10 7
(CUSIP Number of Class of Securities)
Jonathan C. Mintzer, Esq.
Vice President, General Counsel and Corporate Secretary
Hearst-Argyle Television, Inc.
300 West 57th Street
New York, New York 10019
(212) 887-6800
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of the Person(s) Filing Statement)
Copies To
:
Charles I. Cogut, Esq.
Sean D. Rodgers, Esq.
Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, New York 10017
(212) 455-2000
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Check the box if the filing relates solely to preliminary communications made before the
commencement of a tender offer.
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TABLE OF CONTENTS
This Amendment No. 1 amends and supplements the Solicitation/Recommendation Statement on
Schedule 14D-9 initially filed on May 4, 2009 (as amended and supplemented, the
Statement
) with
the Securities and Exchange Commission (the
SEC
) by Hearst-Argyle Television, Inc., a Delaware
corporation (
Hearst-Argyle
or the
Company
), relating to the tender offer (the
Offer
) by
Hearst Broadcasting, Inc., a Delaware corporation and an indirect wholly-owned subsidiary of The
Hearst Corporation, to purchase all of the outstanding shares of Series A Common Stock of the
Company, par value $0.01 per share (the
Series A Shares
) not owned by Hearst Broadcasting, Inc.
at a price of $4.50 per Series A Share, net to the seller in cash (the
Offer Price
). The Offer
is on the terms and subject to the conditions set forth in the Offer to Purchase dated May 4, 2009
(as amended or supplemented from time to time, the
Offer to Purchase
) and the related Letter of
Transmittal contained in the Tender Offer Statement on Schedule TO initially filed by The Hearst
Family Trust, The Hearst Corporation, Hearst Holdings, Inc., Hearst Broadcasting, Inc. and
Hearst-Argyle on May 4, 2009, as amended by Amendment No. 1 filed by The Hearst Family Trust, The
Hearst Corporation, Hearst Holdings, Inc. and Hearst Broadcasting, Inc. on May 20, 2009 (as amended
or supplemented from time to time, the
Schedule TO
). Capitalized terms used but not defined
herein have the meaning ascribed to them in the Statement.
ITEM 4. The Solicitation or Recommendation
Item 4 is hereby revised and supplemented as follows:
The following replaces the first paragraph under the heading Position of the Special Committee:
At a meeting held on May 3, 2009, the Special Committee unanimously determined, on behalf of
the Company, that the Offer is fair to the stockholders of the Company unaffiliated with Hearst.
Accordingly, the Special Committee unanimously recommends, on behalf of the Company, that the
Companys stockholders accept the Offer and tender their Series A Shares pursuant to the Offer.
The following replaces the last sentence of the last paragraph under the heading Background of the
Offer:
At the conclusion of the meeting, after confirming the various reasons for the position
discussed below, the Special Committee unanimously determined that the Offer is fair to the
stockholders of the Company unaffiliated with Hearst, and resolved to recommend that the Companys
stockholders accept the Offer and tender their Series A Shares pursuant to the Offer.
The following sentence is added at the end of the fifth paragraph under the heading Reasons for
the Position Supportive Factors:
In addition, the Special Committee considered the going concern value of the Company through
its consideration of the discounted cash flow analysis performed by Morgan Stanley, which is
discussed in more detail under Opinion and Presentation of Financial Advisor to the Special
Committee.
The following replaces the seventh paragraph under the heading Reasons for the Position
Supportive Factors:
Controlled Company Status and Lack of Strategic Alternatives.
The Special Committee took into
account the fact that Hearst currently owns approximately 82% of the outstanding Series A Shares
(assuming conversion of Series B Shares owned by Hearst), that Hearst has stated it is not
interested in selling any of the Series A Shares beneficially owned by it and that Hearst has
stated its desire to continue to conduct the business of the Company as a subsidiary of Hearst. In
addition, the Special Committee is not aware of any firm offers made by third parties (other than
Hearst and its affiliates) to acquire the Company during the past two years. Accordingly, the Special Committee concluded that the
sale of the Company to a third party or causing a sale of a substantial portion, in a liquidation, break-up
or similar transaction, of the Companys assets were not feasible alternatives to the Offer.
Consequently, the Special Committee considered a transaction with Hearst or continuing the Company
as a publicly-traded company, with Hearst remaining as controlling stockholder, as the only
practical alternatives available.
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The following subsection is added before Reasons for the Position Matters Not Considered in
Determining Fairness of the Offer:
Process and Procedural Fairness
The Special Committee believes that sufficient procedural safeguards were and are present to
ensure the fairness of the transaction and to permit the Special Committee to represent effectively
the interests of the stockholders of the Company unaffiliated with Hearst, including the following:
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the Special Committee consists solely of directors who are not affiliated with Hearst;
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the Special Committee retained and was advised by independent financial and legal advisors;
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in retaining its advisors, the Special Committee took into account the possibility of
potential conflicts of interest;
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the Special Committee was aware that it had no obligation to recommend a transaction to the
Companys stockholders unaffiliated with Hearst;
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the Special Committee acted diligently in discharging its responsibilities and was provided
with access to the Companys management, both directly and in connection with the due
diligence conducted by its advisors; and
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the existence of the Minimum Tender Condition, which cannot be waived by Hearst.
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In light of the mandate of the Special Committee with respect to the Offer and the retention
of advisors to assist the Special Committee, a majority of directors who are not employees of the
Company did not (i) retain an unaffiliated representative to act solely on behalf of unaffiliated
stockholders for purposes of negotiating the terms of the Offer and/or preparing a report
concerning the fairness of the transaction or (ii) make a determination as to whether or not to
approve the Offer. The Special Committee does not view the absence of such actions as affecting
its determination that sufficient procedural safeguards were and are present to ensure the fairness
of the transaction.
The following paragraph is added after the end of the first paragraph under the heading
Projections Prepared by Certain Members of Management of the Company immediately following the
summary of the Hearst-Argyle Management Sensitivity Case Projections:
The base case and sensitivity case projections prepared by Company management reflect the
range of the Companys expectations for performance for the years 2009-2013. The Company benefits
from political and Olympic advertising in even-numbered years. Given current economic recessionary
conditions and trends in advertising spending, the Company projected a decline in 2009 total
revenues of 11.0% in the base case and 17.3% in the sensitivity case, with a gradual recovery in
the economy and therefore a gradual increase in total revenues, taking into account the even-odd
year dynamic, through 2013. The primary components of total revenues are net advertising sales,
retransmission consent fees, net digital media revenue, network compensation and other revenues. Because
each of the base and
sensitivity cases assumes the same increases in retransmission consent fees, net digital media
revenue and other revenues and the elimination of network compensation revenues in 2010, the
variability of net advertising sales led to the two different sets of projections. Net advertising
sales, the largest component of total revenues, is highly dependent on economic conditions. The
current recession has significantly impacted the automobile industry, which historically has been
our largest advertising category. Given the current recessionary conditions and accompanying
declines in advertising spending across the markets in which the Company operates, the Company
projected a net advertising sales decline for 2009 of 16.1% in the base case, and of 23.3% in the
sensitivity case, with modest recovery assumptions through 2013 that
the recession will end during the period, the automobile industry
will gradually recover and advertising sales will increase. Thus, while discretionary
operating expense reductions at both the stations and corporate headquarters were assumed to be
modestly higher in the sensitivity case, the variability and range of the decline in net
advertising sales (rather than a reduction in expenses) in 2009 is the primary difference between
the two sets of projections.
Managements
assumptions were based on the best information available at the time,
including current expectations and projections about future events.
Such assumptions involve risks and uncertainties, and are subject to change based on various important factors,
including but not limited to changes in the economy, the automobile
industrys recovery and changes in
advertising trends. Therefore, management assumptions are materially
limited by the foregoing and, as a result, actual results may differ from managements projections.
2
ITEM 8. Additional Information
Item 8 is hereby revised and supplemented as follows:
The following section is added before Provisions for Unaffiliated Security Holders:
Certain Effects of the Offer and the Merger
As described elsewhere in this Statement, Hearst has stated that if the Offer is completed, it
will convert its Series B Shares into Series A Shares promptly after it purchases the Series A
Shares tendered in the Offer. When it does so, it expects it will own at least 90% of the
outstanding Series A Shares and on that basis, will be entitled to, and will, as soon as reasonably
practicable, complete the Merger pursuant to the short-form merger statute of the DGCL. After the
Merger, the Company would be a wholly-owned subsidiary of Hearst, and a privately-held corporation.
Accordingly, former stockholders (other than Hearst) would cease to participate in the future
earnings or growth, if any, of the Company after the Offer and the Merger are completed.
Similarly, former stockholders (other than Hearst) would not face the risk of future losses
generated by the Companys operations, if any, or a decline in value of the Company, if any, after
the Offer and the Merger are completed.
As Hearst has noted in the Offer to Purchase, the receipt of the Offer Price for Series A
Shares in the Offer or the Merger will be a taxable transaction for U.S. federal income tax
purposes. Certain material U.S. federal income tax consequences are described more fully in the
Offer to Purchase under The Offer Section 5. Material U.S. Federal Income Tax Consequences.
In addition, further information regarding the effects of the Offer and the Merger is included
in Item 3. Past Contacts, Transactions, Negotiations and Agreements, Item 4. The Solicitation
or Recommendation, this Item 8 under Merger and Appraisal Rights and in the Offer to
Purchase under Special Factors Section 9. Effects of the Offer and the Merger and The Offer
Section 13. Certain Effects of the Offer and the Merger on the Market for the Shares; NYSE
Listing; Exchange Act Registration and Margin Regulations.
3
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that the information
set forth in this statement is true, complete and correct.
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HEARST-ARGYLE TELEVISION, INC.
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By:
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/s/ David J. Barrett
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Name:
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David J. Barrett
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Title:
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President and Chief Executive Officer
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Dated: May 20, 2009
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