The Debate Over Guns Now Colors a Buyout Bid

A takeover. Private equity. Politics. And guns.

That is the potent mixture of issues surrounding an obscure $200 million merger that is quietly combusting on Wall Street.

At the center of this fiery tale is Leo Hindery Jr., one of the biggest Democratic fund-raisers in the nation and a longtime media executive and investor who founded the YES Network, the cable channel of the Yankees.

Among the companies that Mr. Hindery’s private equity firm owns is InterMedia Outdoors, which publishes magazines including Guns & Ammo, RifleShooter and Handguns. It also owns the Sportsman Channel, which counts the National Rifle Associaton as one of its big advertisers. It broadcasts shows like “Cam and Company” from NRA News, and “Wanted: Ted or Alive,” featuring Ted Nugent.

Late last year, Mr. Hindery won a bid to acquire the rival Outdoor Channel, a publicly traded company, for $200 million. Outdoor Channel could be described as the more politically correct and less sensationalistic competitor to Sportsman Channel, focusing on hunting and fishing.

The deal, which is set for a shareholder vote on March 13, has inspired a heated debate about whether Mr. Hindery’s backing of Democrats who support stricter gun-control laws would alter programming and scare away advertisers. Some shareholders who see too much of a conflict between taking revenue from the National Rifle Association and supporting the likes of Gov. Andrew M. Cuomo of N! ew York, who recently signed a strong gun-control bill for the state, are seeking to block the deal.

The story took an even stranger turn last week with a conspiracy theory, published in The Daily Caller, the conservative news Web site, asserting that Mr. Hindery’s ultimate aim is “consolidating all of America’s leading gun-culture media outlets and stripping them down to virtual destruction.”

For Mr. Hindery’s part, he is dismayed by the speculation and said the accusations were categorically false. “This has nothing to do with gun rights or the fact I’m a Democrat,” he said in an interview.

He’s probably right. In truth, the debate over the Outdoor Channel has more to do with the price Mr. Hindery is paying â€" shareholders say it is not enough â€" than his politics.

Andrew Franklin, president of UTR,an investment firm with a large stake in Outdoor Channel, is among those who want a better payout. Mr. Franklin was part of a consortium that bid on the company but says his group was shut out of the auction in favor of a lower bid by Mr. Hindery.

While some other investors privately express opposition to the price, Mr. Franklin has emerged as the point man in the politically charged fight against Mr. Hindery. Mr. Franklin contends that because Mr. Hindery’s offer allows shareholders to receive cash or swap stock for a stake in the newly combined company, investors who choose to hold onto their investment in the combined company face risks because of Mr. Hindery’s supposed conflict of interest.

“Sponsors and advertisers will have a difficult time reconciling the fact that network ownership supports politicians and policies that are severely harming their business,” Mr. Franklin wrote in a commentary in The Daily Caller, which, somewhat oddly, has had a fascination with this deal. “Hindery will continue to be a lightning rod for aggrieved gun-control activists who will target the media network as a proxy. Should Hindery succumb to political pressure from his close friends in the Obama White House and throughout the Democratic Party, we could see a shift in programming, which would further alienate loyal viewers.”

Mr. Hindery said it was a disingenuous argument. For starters, his political views have not altered the tone and direction of his gun culture media holdings in the several years he has owned the companies. He insisted that his publications were simply responsible voices about hunting and fishing, what he described as the largest sport in the country.

“I believe in the Second Amendment,” he said, adding that he grew up hunting and fishing. Yet he insisted, “I’m a Democrat and I’m proud of it.” He said te contention that he has a grand plan to destroy the hunting media is plainly false. The claim, according to The Daily Caller, came from an InterMedia employee who spoke on the condition of anonymity.

“This is coming from a disgruntled employee,” Mr. Hindery said. “We know who it is.”

He also said that his company could responsibly accept the financial support of the N.R.A. “The N.R.A. is an appropriate advertiser. They represent four million people who hunt and fish.”

So does Mr. Hindery advocate reform of gun laws

“I believe in appropriate restrictions â€" that’s just my personal view,” he said without providing additional detail, but still differing with the N.R.A. He added, in reference to the coverage of hunting that his company provides, that “nobody with any integrity has said it should be limited.”

He said he was very sensitive to the issues of gun violence, which have been thrust into the national debate since the December mass shooting at ! Sandy Hook Elementary School in Newtown, Conn.

“What happened in Sandy Hook is an inescapable tragedy,” he said.

Still, Mr. Franklin, the investor, said in an interview that one other potential risk to the deal raised particular questions about the state of investing after the Sandy Hook killings.

The New Jersey General Assembly recently passed a bill aiming to prevent its state pension fund from investing in firearm manufacturers. The state is the biggest institutional investor in Outdoor Channel. Mr. Franklin questions whether the fund would feel pressure to withdraw from its investment in a combined InterMedia-Outdoors.

Mr. Hindery said the argument made no sense. “We don’t manufacture weapons. We don’t manufacture ammunition,” he said.

A spokesman for the New Jersey pension fund delined to comment.

Mr. Franklin’s grievances may be for naught. A rival bidder with a higher offer worth $8.75 a share, compared with Mr. Hindery’s $8 a share, emerged late last week: E. Stanley Kroenke, owner of the St. Louis Rams, the Denver Nuggets and the Colorado Avalanche.

Mr. Kroenke has made an all-cash offer and has been described as a staunch Republican.

Mr. Hindery said he wouldn’t talk about the deal’s price or whether he would raise it. If there new battle over the deal, it will most likely be more over cash than conspiracies.