Brooke Sutherland is a Bloomberg Gadfly columnist covering deals. She previously wrote an M&A column for Bloomberg News.

Michael Ferro may have succeeded in getting his cast of friends on the board of Tribune Publishing, but Thursday's annual meeting was anything but a victory for the media-mogul wannabe.

Happy Returns?
Tribune's stock fell as some shareholders voted with their feet and exited the stock on news of the Ferro-backed board's election.
Source: Bloomberg
Intraday times are displayed in ET.

Shareholders have gotten increasingly annoyed (and vocal) over the way Ferro has handled takeover advances from USA Today publisher Gannett, whose latest $15-a-share offer represented a 99 percent premium to where the company's stock traded before its bid was disclosed. This week, investors put that talk into action: About 49 percent of shareholders not affiliated with the company or Ferro withheld their support for its entire slate of directors, according to Gannett. Even including those insiders, an estimated 39 percent weren't willing to back Tribune's nominees.

That's about the best possible outcome for Gannett. The successful election of Tribune's board slate was pretty much a lock from the start. Gannett missed the window to put forth alternative nominees and Tribune’s candidates didn't need an absolute majority of shareholder support anyway. Gannett was forced to push for an essentially symbolic statement, and it seems to have gotten that and more on Thursday.

Tribune says that a majority supported its board candidates -- which, it's worth noting, isn't something that Gannett appears to be disputing. But what are Ferro and his revamped board going to do about that approximately 39 percent of investors who are presumably not happy with the shenanigans that Tribune has pulled lately? Since Gannett made its offer for Tribune public in April, Tribune has adopted a poison pill, reportedly entertained the idea of bidding on Gannett instead, diluted shareholders by issuing a hefty chunk of stock to Ferro friend Patrick Soon-Shiong, granted its CEO a hefty and perhaps unnecessary relocation package and offered to buy out dissidents.

That 39 percent may not be a majority, but it's not nothing. Instead of calling for Gannett shareholders to reprimand the company for its "corporate waste" of a campaign, perhaps Tribune should listen to what its own investors are saying. Or at least pay attention to the way the Twitter universe reacted to the company's ridiculous plans to rename itself "tronc" and its grandiose talk of artificial intelligence.

The reality may be that Ferro simply doesn't care. During the 20-minute annual meeting, the Tribune chairman declined to answer shareholder questions after one investor asked for an explanation of why Tribune rejected Gannett's bid and called another "out of order" after he asked repeated questions about the deal. Ferro and buddy Soon-Shiong (now vice chairman) will own nearly 30 percent of Tribune between the two of them. After Thursday, a good portion of the board is now comprised of people with business and personal ties to Ferro.

But he doesn't yet control the entire company and eventually, shareholders are going to have their say. There's already been one lawsuit filed, with Capital Structures Realty Advisors contending that Tribune's board breached its fiduciary duty by entrenching itself against Gannett's advances. It's not unreasonable to think more legal action could follow, given how vocal some shareholders -- including Oaktree Capital Management, Towle & Co. and Hallador Investment Advisors -- have been.

Other Options
Gannett has other takeover possibilities besides Tribune.
Source: Bloomberg
Enterprise values are rounded and taken as of approximately 12:00 p.m. EST on June 3, 2016.

There's a possibility that Tribune shareholders' show of force could motivate Gannett to raise its bid (if even just slightly) to ramp up the pressure even further. Should that happen, Ferro would be wise to come to the negotiating table. Tribune has said it will engage with Gannett if it can get a look at its suitor's books as well. The companies have sparred over whether the initial agreement proposed by Tribune will still allow Gannett to wage a proxy contest. It's in everyone's best interest to get a deal figured out.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Brooke Sutherland in New York at

To contact the editor responsible for this story:
Beth Williams at