El País owner faces activist pressure for board shake-up
An activist hedge fund is pressing for a corporate governance upheaval at the owner of Spain’s El País newspaper ahead of the company’s board being put up for renewal.
Amber Capital, a $1.5bn London-based fund, has built a 15 per cent stake in Grupo Prisa, the heavily indebted Spanish media group, allowing chief executive Joseph Oughourlian to win a seat on Prisa’s board.
The hedge fund’s entrance increases pressure on Juan Luis Cebrián, the founding editor of El País and chairman of Prisa. Under Mr Cebrián, Prisa’s share price has plunged 95 per cent over the past five years, making it the worst performing large media stock in Europe.
The Amber Capital investment is a rare example of an activist hedge fund targeting a listed Spanish company, especially one that controls some of the country’s most influential media properties. Spain’s history of weak shareholder rights and a series of corporate scandals have tempered interest from foreign activists.
Grupo Prisa, which owns other newspapers, a set of TV and radio assets and the educational publisher Santillana, has been criticised by some investors for the high pay and lack of independence of its board during a period where it has made several billions of euros in losses.
Amber Capital specialises in activist investment in medium-sized European companies and has forced out executives at other targets including Parmalat in Italy and Nexans in France, among others. It declined to comment.
Prisa said that it had made progress cutting debt, and the investment by Amber Capital and other new shareholders demonstrated confidence in its prospects. A spokeswoman said that Prisa would work constructively with the new investors.
Mr Cebrián has served on the Prisa board for 32 years, while the director responsible for remuneration and who is classed as independent by the company, has been on the board for the same period.
Since 2007, Prisa has reported consolidated losses of €2.2bn, while its board has earned just under €80m over the same period, according to the company’s accounts, with Mr Cebrián one of the highest-paid media executives in Europe.
Mr Cebrián has moved to bring in friendly shareholders to defend his position ahead of an annual meeting later this year, where the board is up for re-election.
International Media Group, owned by a member of Qatar’s royal family, bought a 9 per cent stake in Prisa last year at a premium of almost double the share’s market value on the Madrid stock exchange.
Armada Capital, a Spanish hedge fund that holds 0.5 per cent of Prisa, has already called for Mr Cebrián to resign.
“His presence is a huge disincentive to mainstream investors who are well aware of his management legacy, as proven by phenomenal shareholder value destruction,” said Fernando Primo de Rivera, chief investment officer of Armada Capital. “The company is trading at a huge discount to its real value, let aside break-up value — and this mostly is due to the presence of Mr Cebrián.”