NEW YORK (The Deal) -- Regional media companies E.W. Scripps (SSP - Get Report) and Journal Communications (JRN) said Thursday they intend to merge and then separate television and newspaper assets into two publicly-traded companies.
Scripps, of Cincinnati, is the owner of 21 local television stations as well as daily newspapers in 13 U.S. markets and a collection of local and national digital information sites. Milwaukee-based Journal meanwhile owns or provides services for 14 television and 35 radio stations in 11 states and publishes the Milwaukee Journal Sentinel.
The companies said post-deal the merged broadcast company, which will keep the E.W. Scripps name and Cincinnati base, would own television and radio stations serving 27 markets and reaching 18% of U.S. television households, ranking as the fifth-largest independent television group. The newspaper company, to be called Journal Media Group and based in Milwaukee, would operate publications in 14 markets and generate annual sales of more than $500 million.
Terms of the deal call for Journal class A and class B shareholders to receive 0.5176 Scripps class A shares and 0.1950 shares in the new Journal Media. Current Scripps holders will receive 0.25 shares in Journal Media. Post deal, current Scripps shareholders will own 69% of the broadcasting entity and 59% of the print firm, with Scripps shareholders also promised a $60 million special cash dividend.
The companies said that the moves would create about $35 million in annual synergies spread across the two new entities, resulting in two focused firms better able to compete in their respective markets.
"In one motion, we're creating an industry-leading local television company and a financially flexible newspaper company with the capacity and vision to help lead the evolution of their respective industries," Scripps chairman and CEO Rich Boehne said in a statement. "For shareholders, this deal should unlock significant value as both companies gain efficiency, scale and more focus on the industry dynamics unique to these businesses."