In a key development that impacts the U.S. television broadcasting marketplace, Media General (MG) agreed Tuesday to acquire Meredith Corporation in a $3.1 billion cash, stock and debt deal that is expected to catapult the merged entity to the rank of the nation’s third-largest owner of local TV broadcast stations. Following on its 2013 purchase of New Young Broadcasting and its acquisition of Lin Media last year, Richmond, Virginia-based MG currently owns or operates 71 local television stations in 48 markets that, together, reach 23 percent of TV households in the U.S. Meredith—the publisher of popular magazines that include Better Homes and Gardens, Martha Stewart Living, and Shape—owns or operates 17 TV stations that collectively reach eleven percent of U.S. TV households. Upon consummation of the proposed transaction, which includes Meredith’s publishing assets, the merged entity would control 88 TV stations across 54 markets that reach nearly a third of U.S. TV households. To allay potential regulatory concerns, the merger partners have also agreed to sell or swap TV stations in six overlapping markets.
Under the terms of the agreement, Meredith stockholders would exchange each of their shares for $34.57 in cash and 1.5214 shares of stock in the merged entity, representing a 12% premium over Meredith’s closing stock price as of Friday, September 4. MG would also assume about $700 million in Meredith debt. At closing, MG shareholders would own 65% of the combined entity and Meredith shareholders would own the remaining 35%. Contingent upon receipt of FCC and other required approvals, the companies expect to close the transaction by June 2016. As Meredith CEO Steve Lacy remarked that the deal “puts us in an even stronger position to continue the industry consolidation strategy that has been successfully employed by both Meredith and [MG] over the last several years,” MG Chairman J. Stewart Bryan III asserted: “this merger creates greater opportunity for profitable growth than either company could achieve on its own.”