Media General, Young Broadcasting Plan Merger

Go big or go home -- joint broadcast op will retain Media General name while combining to reach 14% of households

By Michael Malone -- Broadcasting & Cable, 6/6/2013 8:07:01 AM

RELATED: Media General-Young 'Perfect Marriage' Enhances Broadcasters' Clout

The race to consolidate heats up as Media General and Young Broadcasting have announced a merger.

The combined company, which will be called Media General, will own or operate 30 affiliated stations in 27 markets, reaching 14% of U.S. households. Media General's 2011-12 average revenues were $320 million and Young's were $219 million.

The company will remain in Media General's base in Richmond, Va. George L. Mahoney retains the president/CEO title.

Media General owns 18 stations, and Young owns or operates 12. The companies have identified $25-30 million of operating and financing synergies. "The new company will be more geographically diverse and will have a presence in more markets that generate strong political revenues," Media General said in a statement. "Its increased size will enhance its ability to participate in retransmission revenue growth, share growth of national and digital advertising, and syndicated programming purchasing."

"The business combination of Media General and Young is a transformational event that will benefit shareholders, employees and the communities we serve," said J. Stewart Bryan III, chairman of Media General. "The combination provides immediate accretion to free cash flow, a strong balance sheet, the opportunity to refinance debt at a much lower cost and attractive synergies. Young's management and its owners share Media General's commitment to quality local journalism and to operating top-rated TV stations, making this merger a unique and compelling combination with significant growth potential."

Thomas J. Sullivan, executive chairman of Young Broadcasting, said the merger is "compelling on many levels and will create a company with valuable strategic assets, significant financial resources and a deep team of talented and experienced personnel. Together, these two great companies will be even better positioned to prosper in today's competitive media environment."

Deborah McDermott, chief executive officer of Young Broadcasting, called it "an exciting day for Young Broadcasting." McDermott will report to Mahoney and will oversee the expanded station group.

Under the all-stock merger agreement, Media General will reclassify each outstanding share of its Class A and Class B common stock into one share of a newly created class of Media General common stock. Media General will issue approximately 60.2 million shares of the new Media General common stock to Young's shareholders.

As of March 31, 2013, Media General's outstanding debt was $601 million, and Young's was $164 million. The new company intends to pursue a total debt refinancing of approximately $900 million.
The initial board will consist of 14 directors, including Media General's current nine and Young's five. Bryan will be the initial chairman.