Media General to buy diversified media company Meredith for $2.34 billion

With the merger, Meredith Media General owns 88 TV stations across 54 markets that reach 34 million households.

Once the deal is completed, Meredith Media General will have about $3 billion in annual revenue.

The resulting “powerful, multiplatform, highly diversified media company”, as Lacy said, plans to make even more acquisitions to achieve scale or a top position in a market.

Media General owns CBS affiliate KOIN, while Meredith Corporation owns FOX affiliate KPTV.

There is value for local broadcasters in joining forces.

Media General operates as well as services close to 71 TV stations. It requires approval from shareholders of both companies and from the Federal Communications Commission. Media General stockholders will own about 65% of the combined company, while Meredith shareholders will own approximately 35%. “The fact that a media general would be interested in combining with Meredith really shows the strength of that”, said Drake University Associate Professor Catherine Staub.

Meredith shares rose $4.31, or 9.4%, to $50.26 in morning trading Tuesday while Media General added 17 cents, or 1.5%, to $11.32.

Under the terms of the deal, Meredith shareholders will receive $34.57 per share in cash and 1.5214 shares of the combined company, according to a statement.

The merger has been approved by the Board of Directors for both Media General and Meredith.

Joseph Ceryanec, Meredith’s chief financial officer who will remain in that role at the combined company, said on a conference call with analysts Tuesday that in the last presidential cycle Meredith garnered about $45 million, compared with $200 million for Media General.

The deal could have implications for magazine publisher Time Inc., which was long seen as a potential merger partner for Meredith. Approximately $1 billion pro-forma cumulative free cash flow is also expected in the first full two years post-closing.

It also remains to be seen whether Meredith will hold on to its physical publishing business or follow the recent trend of media companies splitting print publications and TV and digital products into separate companies. Meanwhile, Media General, which trades on the NYSE as MEG, lost 67 cents, or 6 percent, to close at $10.48.