TV Giant Created With Nexstar's $4.6 Billion Deal for Media General

Cable Mergers Illustration - H 2013
Illustration by: Pawe? Jo?ca

Cable Mergers Illustration - H 2013

The combined company will operate 171 TV stations in 100 markets and reach approximately 39 percent of all U.S. TV households.

As widely expected in recent weeks, TV station operator Nexstar Broadcasting Group has finalized a deal to acquire Media General for $4.6 billion in cash and stock.

The combined company's broadcast and digital media platforms will have annual revenue of more than $2.3 billion. With 171 TV stations in 100 markets, it will reach approximately 39 percent of all U.S. television households, the maximum allowed by the FCC.

Media General operates or services 71 TV stations in 48 markets, including KRON-MY in San Francisco/Oakland/San Jose, WIVB-CBS and WNLO-CW in Buffalo, N.Y., and WTEN-ABC and WXXA-FOX in Albany/Schenectady/Troy, N.Y.

Once concluded, the transaction is expected to be immediately accretive to Nexstar’s operating results. Nexstar will change its name to Nexstar Media Group upon the completion of the transaction, which is expected late in the third quarter or early in the fourth quarter of 2016. The transaction is subject to a vote by stockholders of both companies, FCC approval and other regulatory approval. 

The deal is the latest in the TV station group space following previous acquisitions by the likes of Tribune Media and Gannett. Broadcasters have looked for scale to strengthen their position in dealings with networks and pay-TV operators.

Irving, Texas-based Nexstar will acquire all outstanding shares of Media General for $10.55 per share in cash and 0.1249 of a share of Nexstar Class A common stock for each Media General share. Media General and Nexstar shareholders will own about 34 percent and 66 percent, respectively, of the combined company’s outstanding shares.

The agreement follows the termination of the proposed acquisition of Meredith Corp. by Media General. Meredith will receive a $60 million termination fee. It will also get an opportunity to negotiate for the purchase of certain broadcast and digital assets currently owned by Media General that the combined entity plans to sell. Nexstar said it plans to divest certain TV stations "necessary to obtain FCC approval of the proposed transaction."

The price tag of the deal represents an approximate 54 percent premium over the closing share price of Media General on Sept. 25, the last trading day prior to Nexstar’s initial public announcement regarding its interest in acquiring the company.

"The acquisition of Media General’s broadcasting and digital media assets represents a transformational growth opportunity for Nexstar and is strategically and financially compelling," said Perry Sook, chairman, president and CEO of Nexstar. "The transaction increases Nexstar’s broadcast portfolio by approximately two thirds with very limited overlap with our existing properties, more than doubles our audience reach, provides entree to 15 new top-50 [markets] and offers synergies related to the increased scale of the combined digital media operations."