Batten family consolidated Landmark voting power

Norfolk

Besides the Batten family, who owns a stake in Landmark Communications Inc.?

Last week, the Norfolk-based company confirmed media reports that it had hired investment bankers JPMorgan to investigate a sale of its Weather Channel, its Web site Weather.com and related properties.

Landmark, which owns The Virginian-Pilot, also said it hired a second investment banking firm, Lehman Brothers, to pursue the possible sale of its other assets, including newspapers, two TV stations and its Norfolk-based Dominion Enterprises subsidiary, which specializes in classified advertising.

The combined transactions, if they materialize, would likely generate several billion dollars for Landmark's shareholders. Media reports last week cited speculation by investment bankers and the No. 2 Landmark official that the weather-

related assets alone could fetch $5 billion.

Hundreds of officers and employees at the privately held media company hold modest stakes, but control lies in the hands of two individuals: its chairman and chief executive officer, Frank Batten Jr., and his father, the retired chairman and CEO who is credited with building Landmark.

Almost 90 percent of the company's voting stock is held by three trusts that the father and son oversee, according to a Landmark filing in May with the Federal Communications Commission. More than half of all Landmark stock, including those shares without voting rights, is owned by trusts controlled by members of the Batten family, according to the FCC filing.

Another trust, with 8 percent of Landmark's voting stock, is controlled by individuals unrelated to the Batten family but who have ties to Landmark's predecessor companies.

This information is part of Landmark's ownership report of its Nashville, Tenn., television station, CBS affiliate NewsChannel 5, with call letters WTVF.

The document also lists the 12 directors on Landmark's board, which is made up of Batten family members as well as current and retired top Landmark executives. The board also includes Robert Bruner, dean of the Darden School of Business at the University of Virginia, and Macon Brock Jr., chairman and former CEO of Chesapeake-based Dollar Tree Stores Inc.

Media companies, including family-owned newspapers, have routinely used trusts to pass along assets from one generation to another, said Lauren Rich Fine, who worked as a newspaper-

industry analyst with brokerage firm Merrill Lynch for 19 years before retiring in 2007.

Fine, a researcher at Kent State University's College of Communication and Information in Kent, Ohio, said it was difficult to put a value on Landmark's newspapers right now because there are fewer potential buyers than there were in the past. If Landmark, which had more than $2 billion in revenue in 2006, had put its papers on the market a decade ago, "probably every public newspaper company in the country would have taken a look," she said.

Landmark's biggest shareholder, with a 24.6 percent stake in the company, is a trust in the name of Fay M. Slover, the deceased widow of Samuel Slover. He was instrumental in expanding the Norfolk newspaper company during the mid-20th century, and was the senior Batten's uncle. Batten Sr. oversees the Slover trust, which controls 35 percent of the votes in the company.

Another shareholder, the Frank Batten Jr. Trust, holds 3.6 percent of Landmark's stock but has 36 percent of the company's votes, according to the FCC filing. Under a separate trust, Frank Batten Jr. controls another 18.25 percent of the votes, effectively giving him a controlling interest.

In an interview last week, Frank Batten Jr. said the decision was his to explore a sale of the Landmark properties, although he added it was approved by his father and other family members.

Richard F. Barry III, Landmark's vice chairman and a longtime officer of the company, is the largest individual shareholder outside the family, with slightly more than 2 percent of Landmark's stock. But he holds no voting shares.

Landmark, according to its filing with the FCC, has 116,555 common shares of voting stock outstanding and another 2.7 million non voting common shares.

Rusty Friddell, Landmark's general counsel, played down the prospect of enormous windfalls for many shareholders. After the payment of taxes, "the numbers come down pretty quickly," he said.

Landmark, he said, will have to pay a corporate tax rate of 40 percent on the assets it sells. He estimated that individual shareholders will have to pay about 20 percent in federal and state taxes on what they receive.

Landmark's Weather Channel assets, its TV stations, metro daily newspapers, community newspapers and other properties are likely to be sold to several buyers. That process will likely require additional work by bankers, lawyers and accountants and could cut into what shareholders ultimately receive.

"One of the attractions of doing one big deal is that it minimizes the costs," said John Morton, a veteran newspaper-industry analyst in Silver Spring, Md.

Tom Shean, (757) 446-2379, tom.shean@pilotonline.com