(Adds executive comment, background)
By Sruthi Ramakrishnan
March 21 Media General Inc said on
Friday it would buy LIN Media LLC for $1.6 billion to
create the second largest local TV broadcast company in the
The deal, putting the combined company in reach of about 23
percent of U.S. TV households, is the latest in a frenzy of
transactions involving local broadcast television.
The lure is TV stations' ability to attract local ad dollars
and fees collected from cable companies, which pay local TV
stations to carry their signal.
Gannett Co, Tribune Co and Sinclair Broadcast Group have all
made big TV acquisitions in the last 10 months.
Tribune became the largest local TV broadcaster
after it bought Local TV Holdings for $2.73 billion last June.
Gannett snapped up Belo Corp for $1.5 billion and
Sinclair Broadcast Group Inc agreed to acquire eight TV
stations from the Allbritton family for $985 million.
As part of the Media General deal, LIN shareholders will get
$27.82 per share in stock and cash, based on Media General's
trailing 20-day average price. At that price, the offer
represents a premium of 29.5 percent to Lin's Thursday closing.
Including LIN's debt of $968 million the deal is valued at
approximately $2.6 billion
Shares of Media General, in which Warren Buffett's Berkshire
Hathaway Inc held a stake of about 5 percent
as of December, jumped 12.5 percent to $19.51 in early trading.
LIN shares were trading at $27.98 on the New York Stock
LIN, which owns or operates 43 TV stations and seven digital
channels in 23 markets across the country, was founded in 1961.
Its initials stand for Louisville, Indianapolis and Nashville,
the cities where it originally owned radio stations.
The combined company will include 74 network affiliate
stations across 46 markets.
Media General is buying LIN as consolidation of the local TV
broadcast industry has come under scrutiny from federal
The Federal Communications Commission is set to vote on
March 31 on new rules that would prohibit broadcast companies
from controlling more than two TV stations in a market by
sharing advertising sales staff.
On Thursday, Sinclair proposed to sell some of its
Allbritton stations to meet the FCC requirements. [ID:
"We are very mindful of the regulatory environment as we've
been putting this transaction together," George Mahoney, Media
General CEO, said on a call with investors.
"We are clear that certain stations will have to be swapped
or sold," he said declining to go into more detail.
Stewart Bryan, chairman of Media General, will remain
chairman of the combined company, while LIN Media Chief
Executive Vincent Sadusky will be the CEO.
Bryan is the great grandson of the founder Joseph Bryan, who
in 1903 formed the Richmond Times-Dispatch, one of the
newspapers which would go on to become a part of Media General.
The company became a TV broadcaster in 1955 when it launched
WFLA-TV in Tampa, Florida.
Media General exited the newspaper business in 2012, selling
most of its newspapers to Berkshire Hathaway for $142 million.
The company combined with privately held New Young
Broadcasting Holding Co Inc last June.
RBC Capital Markets will provide $1.6 billion in financing
to Media General.
(Reporting by Sruthi Ramakrishnan in Bangalore; Editing by
Sriraj Kalluvila, Saumyadeb Chakrabarty and Tom Brown)