October 15, 2015 Last Updated 7:39 am

Meredith grants Limited Waiver so Media General can conduct due diligence on Nexstar offer

The deal between Meredith and Media General, which would create a new company to be called Meredith Media General, is on thin ice thanks to an unsolicited offer from Nexstar.

At least two shareholder groups, Oppenheimer and Starboard, have expressed a preference for the offer from Nexstar – not least because it does not involve Meredith’s print properties. Those print properties, some of the best known consumer magazines in the business, might be spun-off as a separate company or sold off at some point after a deal is finalized – or at least, that is the speculation.

In the meantime, Media General will be sizing up Nexstar’s offer. The release below is Meredith’s Limited Waiver to Media General, as well as more arguments for the original deal. Should the original deal fall through, Meredith will be due a $60 million break-up fee should Media General terminate the acquisition.

Here is Meredith’s statement:

DES MOINES, Iowa – October 14, 2015— Meredith Corporation today confirmed that it has granted a Limited Waiver to Media General, Inc. in connection with the definitive merger agreement between Meredith and Media General announced on September 8, 2015.

The Waiver allows Media General to conduct due diligence on the unsolicited offer it has received from Nexstar Broadcasting Group, Inc., and to provide Nexstar with certain information to attempt to support its previously claimed synergies. Meredith believes this analysis will confirm that a Meredith–Media General combination is in the best interest of both companies’ shareholders.

Meredith is extremely confident that Meredith Media General has the potential to generate significant shareholder returns superior to Nexstar’s offer for Media General. The Meredith–Media General combination creates a powerful and diversified multiplatform media company, and provides multiple avenues for growth. The Board of Directors of Meredith continues to recommend the proposed transaction with Media General.

Additionally, Meredith said today it is increasing the estimated synergies from a Meredith–Media General combination to at least $85 million, up from the $80 million identified when the merger agreement was announced. Meredith also believes synergies could be even higher as the two companies move forward with integration activities.

The new Meredith Media General will be a diversified, multiplatform media company with a strong financial position, unmatched content creation capabilities, deep consumer insights and data, and expansive reach. Its compelling attributes include:

  • A powerful competitor in the media industry with $3 billion in revenues, over $920 million of EBITDA, and at least $1 billion in pro-forma cumulative free cash flow in the first two calendar years post-closing.
  • Best-in-class capital stewardship, including a disciplined capital allocation plan that balances investments in the business with returning cash to shareholders via dividends and share repurchases.
  • More than 80 television stations across 54 markets that reach 30 percent – or approximately 34 million – U.S. TV households. These high-quality local broadcast assets will include 25 Big Four network-affiliated TV stations in the Top 50 DMAs, making Meredith Media General the largest owner of Big Four stations in Top 50 markets.
  • A powerful digital platform reaching over 200 million monthly unique visitors via a combination of leading national and local consumer sites and business-to-business digital capabilities in key growth sectors such as content, mobile, social, video and native advertising.
  • Leading multiplatform national media brands with a top female reach of 100 million unduplicated American women and over 60 percent of U.S. Millennial women across multiple platforms including print, digital, mobile, video and brand licensing.

The new Meredith Media General will also be positioned for long-term growth in the media industry:

  • Meredith Media General’s 30 percent TV household reach provides for further expansion in the television space, as it is well below the government-mandated 39 percent ownership cap. A Nexstar-Media General combination puts it at, or possibly above, the ownership cap.
  • Meredith Media General will possess a powerful digital business with projected first-year revenues of approximately $500 million, with tremendous growth potential. Meredith has an established and profitable digital business and is well-positioned to maximize opportunities inherent in Media General’s current digital activities.
  • Meredith Media General will build on Meredith’s success in generating revenues not dependent on advertising via its high-margin brand licensing and its nationally recognized and profitable marketing services businesses.

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