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Media General, LIN Combine in $2.6B Deal

NEW YORK (The Deal) -- Media General (MEG - Get Report) said Friday it intends to acquire LIN Media (LIN) in a $2.6 billion cash, stock and debt deal that would create the nation's second largest "pure-play" television broadcasting company.

Terms of the deal call for Richmond-based Media General to pay $27.82 per share in cash and stock for LIN, a premium of 29% to the target's Thursday close, for total equity consideration of $1.6 billion. Media General will also assume about $968 million in debt.

The aggregate cash amount available to LIN shareholders in the deal is $763 million. Post-close, LIN holders would own about 36% of the combination.

TV station owners such as Gannett (GCI)Sinclair Broadcast Group (SBGI - Get Report), and Nexstar Broadcasting Group (NXST - Get Report) have been aggressively consolidating to increase their clout with cable operators, which pay to retransmit broadcasters' content, and the networks, which charge for programming they provide the stations.

Must Read: Warren Buffett's Warrants Shine in Media General Deal

The pace of TV deals may slow, because regulators have pushed back against deals that enabled broadcasters to skirt limits on station ownership by setting up partnerships. Sinclair said Thursday that it would rework its $985 million purchase of stations from Allbritton Communications.

Media General said that when combined with Austin, Texas-based LIN it would own or service 74 network-affiliated stations in 46 markets reaching about 23% of U.S. television households. The company said it expects to be forced to divest or swap certain stations to win regulatory approval for the merger.

The combined companies' $491 million in Ebitda would be second among TV broadcasters, exceeded only by Sinclair's $778 million. By number of stations, Media General and Lin would third behind Sinclair, with 166 stations, and Nexstar, with 108.

"Combining Media General and LIN Media will create the second largest pure-play TV broadcasting company in the United States, a financially strong organization that will have opportunities for profitable growth greater than either company could achieve on its own," said Media General chairman J. Stewart Bryan III. "Our two companies share a deep commitment to operating top-rated stations, to providing our local markets with excellent journalism and to engaging in meaningful ways with the communities we serve."

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LIN $25.00 0.00%
GCI $14.82 -0.60%
MEG $15.04 -0.66%
NXST $36.26 -3.20%
SBGI $26.97 -4.43%


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