Four Months Later, Seemingly Inevitable Nexstar-Media General Marriage Closer to Complete

Nexstar and Media General come to terms on deal, but Meredith counters

In early November, five weeks after offering an unsolicited bid to acquire Media General, Perry Sook, Nexstar Broadcasting Group chairman, president and CEO, made it clear he was confident Nexstar would “prevail” in the acquisition. Thursday, it seems he was proven right.

Nexstar and Media General announced that they had come to terms on a deal. Nexstar would sign a definitive agreement following Media General’s termination of its transaction with Meredith Corp., and the form of merger agreement had already been negotiated fully.

The news came after four months of announcements, updates and reports, with momentum seeming to sway back and forth between Nexstar and Meredith following the latter’s original $2.4 billion merger announced Sept. 8.

When Nexstar and Media General came to a reported impasse in negotiations in early December — after Media General’s board unanimously decided to negotiate with Nexstar once shareholders came out in favor of a deal with Nexstar — the major issue seemed to be the precise pricing. Media General, which wanted $18.61 per share, rejected Nexstar’s offer of $16.31, wondering publicly if it was “indeed its best and final proposal” given that it was down from the $17 in Nexstar’s original Aug. 10 proposal. Nonetheless, Media General’s board said it was still open to exploring a better deal.

Thursday, the two parties agreed to a price of $17.66 — solidly between the two December offers and above the initial proposal.

The December reports looked like public posturing and bringing the deliberation table to the press, with the “impasse” obviously not as definitive as the press release made it out to be. Wells Fargo Securities analysts said as much in their research report. “[W]e have a hunch that the Nexstar-Media General saga is not totally over,” they said. “We think a lot of what we are reading is just negotiating in the press.”

Before toucing on the financial implications and digital and leadership possibilities in his statement Thursday, Sook reiterated the fact that this deal would create a “pure-play broadcasting company with expanded audience reach.” Those are the two advantages, beyond the money, that Nextar has over Meredith. A Meredith Media General company would have seen Media General returning to the print business, rather than a broadcast-only company with Nexstar. In addition, Nexstar is bigger than Meredith; it services 107 stations hitting 18% of U.S. TV households compared to Meredith’s 17 stations that reach 11% of households.

Of course, nothing can be finalized until the Meredith-Media General merger is terminated, and Meredith hasn’t given up.

Meredith, which has considerable digital prowess from those print properties, countered Thursday with its “merger of equals.”

In addition to the money — over $20 per share in near-term value — Meredith noted that Nexstar and Media General might not be able to finalize everything before the FCC’s quiet period with the spectrum auction, causing issues with participating and the time frame thereafter.

Calling it a merger of “equals” specifically is interesting too, as Meredith — a smaller company than Media General — was to essentially be acquiring Media General previously. In turn, its chairman and CEO Stephen M. Lacy was set to take over as CEO of the new Meredith Media General, with Media General president and CEO Vincent Sadusky set to depart after closing. With Nexstar and Media General coming even closer Thursday to their seemingly inevitable marriage, an equal partnership is just one more facet of Meredith's pitch.