Nexstar Makes Surprise Bid For Media General

Earlier in September, Media General agreed to buy Meredith for about $2.4 billion in cash and stock.

Nexstar has offered $10.50 per share in cash, and 0.0898 of its shares per Media General share held. That’s valued by Nexstar at $14.50 a share, and 30% higher than Media General’s closing stock price on September 25.

A combination with Nexstar would create more synergies than Media General’s proposed deal with Meredith, Nexstar said in a letter to Media General’s board.

The Media General-Meredith deal is suddenly not such a sure thing.

Shares of Media General were up $2.54 at $13.69 as of $8:44 a.m.in New York.

Though Meredith has substantial magazine holdings, including women’s titles such as Family Circle and Better Homes and Gardens, Media General was more interested in its TV stations. But its 17 local TV stations are the centerpiece of the Media General deal. Its broadcast outlets reach 23% of households in the United States.

“We would be an enhanced retransmission partner, have available potential additional spectrum for upcoming auctions and deliver greater opportunities for disciplined expansion in digital media and other complementary operating areas”.

Nexstar indicated in its letter that it believes it is a mistake for Media General to increase once again its exposure to the publishing business, which has been bedeviled by declining circulation and advertising revenue.

“Based on our estimates, the combined Media General/Meredith would be required to divest approximately 37% of the acquired broadcast EBITDA, compared to only 7% in the case of a Nexstar/Media General combination”.

The developing tussle comes as many media companies are splitting their broadcast businesses from their print operations. That followed similar moves by Tribune Media Co. and News Corp, publisher of the Journal.

Sook said his company has been trying to enter into “substantive” negotiations with Media General for months about a merger.