Media General, Meredith Set $2.4 Billion Merger

Deal will create third largest U.S. station group

Consolidation has continued in local TV with the latest lightning bolt coming this morning with word that Media General and Meredith plan to merge in a $2.4 billion deal that creates the third-largest U.S. station group.

The combined company, to be known as Meredith Media General, will have 88 stations in 54 markets reaching 30% of the country. It also includes Meredith's female-skewing publishing portfolio, headed by magazines such as Better Homes and Gardens and Shape.

Meredith shareholders will receive cash and stock valued at $51.53 per share, a 12% percent premium over Meredith's closing stock price on Sept. 4. Meredith CEO Steve Lacy will lead the combined company as CEO and president. Joseph H. Ceryanec will be the chief financial officer. The two existing executive rosters will feed the new company’s senior management team. The company will maintain corporate and executive offices in Des Moines and Richmond, Va.

Upon the deal's closing, Media General shareholders will own about 65% and Meredith shareholders will own approximately 35% of the fully diluted shares of Meredith Media General.

“We are excited about the opportunity to create a powerful new multiplatform and diversified media company with significant operations on the local and national levels,” said Lacy in a press release announcing the deal. Added Media General chairman J. Stewart Bryan III, "Shareholders of both companies will benefit from the upside potential of a diversified and strategically well-positioned media company with a strong financial profile and the ability to generate significant free cash flow.”

The deal will need to get a clean bill of health from the Justice Department and the FCC before it can close. Justice will be looking for antitrust issues while the FCC goes beyond that to look at the public interest impact.

One veteran broadcast attorney said he thought that with the required station spinoffs to bring the deal in compliance with local ownership rules the deal should not a have a problem gaining that approval, even given the price tag and the usual concern from regulators about additional consolidation in the media business.

A second attorney agreed that, at an initial glance and given that Meredith does not have duopolies or JSA's to complicate the transaction, the 6 markets where there stations overlap are the only with any regulatory issues, which should be taken care of by the spin-offs or trades for stations in other markets.