The acquisitions half of “mergers and acquisitions” has slowed in local broadcasting, but the mergers side of the category got a jolt with word of Media General and LIN Media pairing up.
“Thanks for contributing to March Madness in a positive way,” quipped analyst Aaron Watts of Deutsche Bank on the Media General-LIN conference call March 21.
George Mahoney, current Media General president and CEO, stressed the word “creative” in explaining how to gain regulatory approval for the merger, which is expected to close early in 2015. The two broadcasters overlap in Birmingham, Green Bay, Mobile, Providence and Savannah.
The pending transaction occurs at a time when the FCC is looking very carefully at mergers, acquisitions and shared operations. “We couldn’t help but be very mindful of the regulatory environment as we put this transaction together,” said Mahoney. “We’re going to work carefully with the FCC, and we’re committed to moving the transaction forward very promptly. We’re clear that certain stations have to be swapped or sold.”
A trade is preferable, Mahoney said, but if a sale takes place, it won’t be at a “fire sale” price. His phone began buzzing with interested buyers the morning of the announcement. “Our emails are already lighting up this morning,” he said.
Vincent Sadusky (pictured) will take over as president and CEO. Mahoney stays on as president, CEO and director on the board until the deal closes.
The joint group, which would be comprised of 74 stations and will be called Media General, should realize around $70 million in synergies, including corporate overhead efficiencies and retrans leverage. “It’s a good thing and a healthy thing for our industry to have quality players like ourselves come together and have a more efficient scale in conversations with the very large entertainment networks,” said Sadusky.
Pro forma yearly revenue for the combined outfit—the bulk of which are No. 1 or No. 2 stations—comes in at around $1.2 billion. Mahoney said Media General was particularly attracted to LIN’s stations in politically contested states, including Wisconsin, Ohio and Virginia. Both Mahoney and Sadusky also spoke extensively about the digital revenue prospects of a joint operation.
“Media General has been a real leader in digital and digital revenue and LIN has taken that fairly one step beyond where we are,” said Mahoney.
Both groups have been active acquirers. Media General completed its merger with Young Broadcasting in November. LIN pulled off a $330 million grab of New Vision late in 2012, and has picked up a batch of digital outfits too, including Federated Media Publishing.
Mahoney and Sadusky mentioned the attractiveness of a diverse station portfolio in terms of geography and affiliation. The principals of a merger or acquisition typically like to speak of shared corporate values, and those at Media General and LIN are no exception.
“It’s very important that people see the world the same way,” said Mahoney. “Vince and I see the world the same way and our two companies have been organized to go out and chase the same kinds of dollars in the same way and develop ratings in the same kind of fashion.”
Sadusky noted a “similar operating philosophy” between the two.