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Did Dan Loeb use the media to make his case against Yahoo CEO?

Yahoo!'s Santa Monica location. Activist shareholder Dan Loeb has fired another salvo in his ongoing battle to change the company's management.
Yahoo!'s Santa Monica location. Activist shareholder Dan Loeb has fired another salvo in his ongoing battle to change the company's management.
stevelyon/Flickr/Creative Commons

Dan Loeb, the swashbuckling hedge funder who's trying to remake Yahoo's board of directors and, while he's at it, get Yahoo to jettison its CEO, has just upped the ante yet again. And he's done it, in typical Dan Loeb fashion, with an ancient means of communication. No, I don't mean a stone tablet or dispatch carried by Pheidippidian messenger over great distance. I mean a letter. Printed on paper and delivered, the letter itself says, by "Federal Express and Hand Delivery." 

You half expect Loeb to revive the Pony Express at this point! This is all starting to feel like a novel by Laclos.

But I kid. Here's the top part:

Third Point LLC sent Yahoo! a demand today pursuant to Section 220(b) of the Delaware General Corporation Law to inspect books and records relating to the hiring of CEO Scott Thompson, the appointment of Patti Hart to the Yahoo! Board, and the selection of Board Members Peter Liguori, John Hayes, Thomas McInerney, Maynard Webb, Jr., and Fred Amoroso. A copy of Third Point’s demand is attached below.

Third Point believes that Yahoo! shareholders and employees will be best served if the Board accepts responsibility quickly for this latest debacle. If the Directors are truly interested in “working in a constructive manner with Third Point”, they should provide answers promptly. We believe that this internal investigation by this Board must not be conducted behind a veil of secrecy and shareholders deserve total transparency.

The missive goes on to elaborate on the case against Thompson and, secondarily, Patti Hart, the Yahoo board member who, like Thompson, Third Point accused of lying about her educational background. 

What's interesting here is how Thompson is aggressively using — you could say "manipulating" — the media to make his case. The letter contains an entire section devoted to the media feeding frenzy that the Thompson resume-padding scandal has set off: "Since the revelation that Mr. Thompson does not possess a computer science degree, leading corporate governance experts have made it crystal clear that the consequences of such blatant wrongdoing should be very severe...."

There follows a cascade of damning pronouncements on Thompson's fitness to lead, from experts on the-evils-of-resume-padding quoted in the San Jose Mercury News, the San Francisco Chronicle, and on our KPCC's stablemate, APM's "Marketwatch." Even Warren Buffett throws in his two cents, via CNBC.

The question at this point about what Loeb is up to obviously has to be, "How much of this is planned and how much is Third Point making up as it goes along?" Third Point had to know that the media would jump all over the story about Thompson's college degrees, so did it plan to use the seemingly objective sourcing of "leading corporate governance experts" by journalists to bolster its Section 220(b) case to the Yahoo board? (Not to mention provide the attendant publicity.)

Third Point could also rely on various media outlets to deal with the Thompson story in a "right v. wrong" context. Can a CEO be less than truthful about his academic credentials? Is it a firing offense? The media has a reflexive tendency to revert to puritanical mean on stuff like this, seeing deception as something absolutely bad. This isn't the reaction of Bert Cooper to Don Draper in "Mad Men," who when confronted by Don's web of lies, says that the men who founded the U.S.A. did far worse.

It's still unclear whether Thompson will stay or go. So Loeb will likely get additional chances to work the media's reaction to his favor.

Follow Matthew DeBord and the DeBord Report on Twitter.