Dissonant Synacor shareholders react to poison pill

A month-old kerfuffle involving Buffalo, N.Y.-based TV Everywhere technology company Synacor continues to boil over.

On Thursday, dissonant shareholders JEC Capital Partners and Ratio Capital Partners issued a statement condemning Synacor's board of directors for adopting a shareholders' rights plan earlier in the week that is essentially a poison pill, designed to make it prohibitively expensive to execute a hostile takeover of the company.

The rights plan was executed under the direction of chairman Jordan Levy, who was called upon several days earlier to step down by JEC and Ratio. The dissonant investors also want the replacement search for departed CEO Ron Frankel suspended, and they want the company sold.

"Contrary to the company's assertion, there has been no 'recent accumulation of shares' by JEC Capital or Ratio Capital," reads a joint statement from JEC and Ratio, responding Levy's Tuesday shareholders' rights statement. "We each made our respective investment in the company months ago with the belief that Synacor's shares were undervalued. We firmly believe Synacor continues to be undervalued today and that value can be unlocked through a third-party strategic transaction."

Trading of Synacor shares was down to $2.46 on Thursday after steadily cratering from a high of $16.14 a share on July 9, 2012.

Synacor, which provides TV Everywhere portals and authentication technology to Charter Communications (Nasdaq: CHTR), Verizon (NYSE: VZ), CenturyLink (NYSE: CTL), Atlantic Broadband and several mid-sized distributors, saw fourth-quarter net income drop to $200,000 compared to $800,000 in Q4 2012. It posted $29.4 million in revenue, down from $32.2 million this time last year.

Synacor's board has preached patience, hoping that the upcoming rollout of a new product cycle will turn the company's fortunes around. But even among non-activist shareholders, patience seems to be wearing thin.

"The stock's been a disappointment to everyone," said Allen F. "Pete" Grum, president of Rand Capital Corp., a Buffalo venture capital firm, speaking to the Buffalo News. Rand was one of Synacor's earliest investors and still owns 2 percent of the company. "It's not what we thought we were getting into."

For more:
- read this Buffalo News story
- read this JEC and Rand Capital Partners statement
- read this Synacor statement

Related links:
Synacor management resists activist investors' call for sale
Synacor investors seek board spot as vendor hunts new CEO
Synacor CEO resigns as TV Everywhere vendor pummeled in Q4

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