Nexstar-Media General: It's A Done Deal

As expected, Nexstar Broadcasting Group and Media General have reached a deal by which Nexstar will pay $17.14 per share in cash and stock for Merger General.The merger creates a new mega-group with 171 stations in 100 markets serving 39% of TV households. Current Media General shareholders will also be entitled to the proceeds from the sale of any Media General spectrum in the FCC's incentive auction. The parties have agreed to pay Meredith $60 million to terminate its competing merger agreement with Media General.

Nexstar Broadcasting Group and Media General have entered into a definitive merger agreement whereby Nexstar will acquire all outstanding shares of Media General at $17.14 per share in cash and Nexstar stock, it was announced this morning.

The price represents a 54% premium over the closing share price of Media General on Sept. 25, 2015, the last trading day prior to Nexstar announcing its interest in acquiring Media General.

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The deal also entitles Media General shareholders to any proceeds from the sale of Media General's spectrum during the FCC's incentive auction this spring.

The deal is valued at $4.6 billion, including assumption of Media General debt, and is subject to regulatory (FCC and Department of Justice) and shareholder approval.

With 171 full-power television stations in 100 markets, Nexstar Media Group, as the new company will be known, will reach approximately 39% of all U.S. TV households.

Nexstar Media will generate annual revenue of $2.3 billion, with more than $800 million in EBITDA and some $500 million in free cash flow ($10.50 per share).

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Nexstar promised synergy of $76 million in the first year from three sources: corporate overhead ($27 million), retransmission consent fees as Nexstar begins billing MVPDs at its higher rate ($24 million) and operational savings ($25 million).

Wells Fargo securities analysts pegged the seller's multiple at 10X and the buyer's multiple at 8.5X.

The Nexstar-Media General deal follows the termination of a competing merger proposal between Meredith Corp. and Media General.

Meredith will receive the $60 million termination fee. In addition, Meredith will receive an opportunity to negotiate for the purchase of certain broadcast and digital assets currently owned by Media General.

Upon closing, the transaction is expected to be immediately accretive to Nexstar’s operating results, assuming expected financial and operating synergies and the planned divestiture of certain assets, Nexstar said.

Upon completion of the transaction, expected late in the third quarter/early in the fourth quarter of 2016, Media General and Nexstar shareholders will hold approximately 34% and 66%, respectively, of the combined company’s outstanding shares.

The transaction is not subject to any financing condition and Nexstar has received committed financing for the transaction totaling $4.7 billion from BofA Merrill Lynch, Credit Suisse and Deutsche Bank.

Perry Sook, Chairman, president-CEO of Nexstar, commented, “The acquisition of Media General’s broadcasting and digital media assets represent a transformational growth opportunity for Nexstar and is strategically and financially compelling. 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 entrée to 15 new top-50 DMAs and offers synergies related to the increased scale of the combined digital media operations.

“Financially, the transaction is expected to more than double our revenue and adjusted EBITDA and result in over $500 million of annual free cash flow which we intend to allocate to leverage reduction, additional strategic growth investments and the return of capital to shareholders.

Importantly, Nexstar Media Group’s annual free cash flow per share is expected to exceed $10.50 per year over the 2015/2016 period, marking an approximate 34% increase in Nexstar’s pro-forma 2015/2016 free cash flow per share from Nexstar’s current pro-forma 2015/2016 free cash flow per share of $7.85."

Vincent L. Sadusky, President and CEO of Media General, said, “I look forward to working closely with the Nexstar team to bring our companies together to realize the power of this compelling combination and ensure a smooth transition.”

For more on Nexstar's perspective of the deal, click here.


Comments (18) -

RustbeltAlumnus2 Nickname posted over 2 years ago
$17.14 per share, per station, or is that million or billion?
RustbeltAlumnus2 Nickname posted over 2 years ago
$17.14 free cash flow per share?
SalesGrrl Nickname posted over 2 years ago
"39% of all U.S. TV households" isn't that over the cap?
FlashFlood Nickname posted over 2 years ago
39% is the cap; 40% is over the cap. However one or more stations in 7 medium to smaller markets will have to be divested to other owners for FCC approval.
Insider Nickname posted over 2 years ago
You realize that 39 is less than 40 and you want us all to be aware you know it. Congratulations. Your 2nd grade teacher much be so proud of you!
EricPost Nickname posted over 2 years ago
39% is the cap...From the FCC website The rule does not limit the number of TV stations a single entity may own nationwide so long as the station group collectively reaches no more than 39 percent of all U.S. TV households. For the purposes of calculating the “national audience reach” under this rule, TV stations on UHF channels (14 and above) count less than TV stations operating on VHF channels (13 and below), this is also known as the UHF Discount. Although the National TV Ownership rule is no longer subject to review in the FCC’s quadrennial review proceeding, in September 2013, the Commission commenced a separate rule making proceeding specifically proposing to eliminate the UHF Discount. The Commission notes in its rule making that the transition to digital television has undermined the technical justification for the discount and that the discount now has the effect of distorting the national audience reach rule. That proceeding remains ongoing.
SalesGrrl Nickname posted over 2 years ago
Ahh, that's right! 39% is the cap, but that is figured WITH the 1/2% rule, as well as with JSA's etc. not counting. So if either of those things change, it will be messy.
Insider Nickname posted over 2 years ago
No, they will be Grandfathered.
FreeRightsUSA Nickname posted over 2 years ago
The UHF discount should have been eliminated years ago considering the penetration of cable and satellite. On top of that, the swtich to digital TV made it irrelevant. Yet Sinclair and Nexstar have abused the discount and continue to be protected. How can one argue that this is in the public interest?
Insider Nickname posted over 2 years ago
No, the discount should be moved to VHF from UHF, as I stated years ago.
Ted Hearn Nickname posted over 2 years ago
Will feds slap (SIBI) Systemically Important Blackout Institution tag on Nexstar-Media General? Please Follow Me On Twitter: @TedatACA
Insider Nickname posted over 2 years ago
Will some slap your ass? One hopes.
FlashFlood Nickname posted over 2 years ago
Cable will die one day, Ted. It will die because of cord-cutters and streamers like Hulu and Roku. Than what will you do since your precious ACA will die along with it?
HansDampf Nickname posted over 2 years ago
He will whine even more and will try to come up with more nonsense.
MediaBigData Nickname posted over 2 years ago
It will be interesting to see how MEG and NXST work the auction (markets, floors, overlaps, CSAs).
FlashFlood Nickname posted over 2 years ago
I'd be surprised if any of their stations are in this stupid auction. Remenber, the Radio and TV airwaves belong to the American Public, NOT the FCC, the Networks, the TV Stations, or the Radio Stations.
TVGenMgr Nickname posted over 2 years ago
Has a hiring freeze been issued for Media General stations yet? Only a matter of time, then the cuts. So glad the shareholders got their best deal while screwing every employee they had.
Insider Nickname posted over 2 years ago
Media General had screwed every employee years ago. So, business as usual.
Marketshare Blog Playout Blog




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