Meredith Allows Media General to Vet Nexstar Offer

DES MOINES and RICHMOND, VA.—Media General and Meredith Corp. reached an agreement this week that will allow Media General to explore a takeover over by Nexstar. Richmond-based Media General had hammered out a merger agreement with Meredith three weeks before Nexstar made an unsolicited bid to acquire Media General for $4.1 billion. Nexstar encouraged Media General to dump Meredith, but the company moved forward deliberately and brought in independent advisors on Oct. 5. Media General and Meredith both announced an agreement between them that allows Media General to enter into a confidentiality agreement with Nexstar to exchange non-public information.

This waiver, Meredith said, “allows Media General to conduct due diligence on the unsolicited offer it has received from Nexstar Broadcasting Group, Inc., and to provide Nexstar with certain information to attempt to support its previously claimed synergies. Meredith believes this analysis will confirm that a Meredith–Media General combination is in the best interest of both companies' shareholders.”

Media General said, “The board of directors of Media General continues to recommend the proposed transaction with Meredith.”

RBC Capital Markets, LLC and Goldman, Sachs & Co. are acting as financial advisors to Media General and Fried, Frank, Harris, Shriver & Jacobson LLP and Weil, Gotshal & Manges LLP are acting as its legal counsel.

Meredith laid out its case in its announcement, finding an extra $5 million in “synergies.”

“Meredith is extremely confident that Meredith—Media General has the potential to generate significant shareholder returns superior to Nexstar’s offer for Media General. …Meredith said today it is increasing the estimated synergies from a Meredith–Media General combination to at least $85 million, up from the $80 million identified when the merger agreement was announced. Meredith also believes synergies could be even higher as the two companies move forward with integration activities.”

Meredith-Media Genera would have $3 billion in revenues, $500 million a year in free cash flow over the first two years after closing, and 88 TV stations in 54 markets reaching 34 million U.S. TV households.

Media General plus Nexstar equals 162 in 99 markets reaching 39 percent of the national audience, or the legal maximum, and around $450 million a year in free cash flow averaged over two years.

Meredith spun the 39 percent national audience cap in its favor, saying that the Nexstar deal would end Media General’s opportunity to expand in broadcasting.

“Meredith Media General's 30 percent TV household reach provides for further expansion in the television space, as it is well below the government-mandated 39 percent ownership cap. A Nexstar-Media General combination puts it at, or possibly above, the ownership cap. “

Also see…
September 28, 2015

Media General to Consider Nexstar’s $4.1 Billion Bid
Media General this morning confirmed the unsolicited $4.1 billion acquisition offer from Nexstar Broadcasting, and said it would think about it and get back to shareholders.