Fate of Meredith deal may be decided at Media General board of directors meeting today
Reports are that Media General may express a preference for a deal with Nexstar, marrying two broadcasters without print magazine businesses, though a final deal could still be months away
The future of the Meredith-Media General merger may be decided today (Friday the 13th) when the Media General board of directors meet to discuss the deal, and the counter deal from Nexstar.
Media reports say the board is leaning towards the Nexstar offer, which would merge two media companies that are exclusively in broadcast, versus Meredith that has a substantial print magazine business.
Meredith, though, continues to cross its fingers, including a mention of the proposed deal in a press release about the company declaring a dividend:
Separately, Meredith said today the deadline for public comment on its pending merger applications with Media General before the Federal Communications Commission has passed with no oppositions having been filed, an important milestone in the FCC approval process. The FCC review process is now focused on completion of the required television station divestitures in overlap markets.
Even a decision to express a preference for the deal with Nexstar by the board of Media General won’t mean the end of the story as it is likely that the board would simply say they want to start real negotiations with Nexstar in hopes of getting the suitor to increase its bid.
For Meredith, the bride potentially left at the alter, the end of the merger won’t disrupt the company as much as it might have were they on a standard January to December fiscal calendar. Instead, the publisher and broadcaster is currently in Q2 of its year giving to time before they have to consider the consequences of any failed deal.
For publishers, it is hard to see why Meredith wouldn’t be an attractive merger partner, but such is the desire to avoid print these days that the mere presence of print magazines in the Meredith portfolio is seen as undesirable.
Media General investor Starboard was brutal in its assessment of the proposed Meredith-Media General deal last month, saying merging with Meredith would be a step in the wrong direction.
“Media General chose to exit the low-growth and low-margin newspaper business in 2012 and indicated to its shareholders at that time that the Company would remain focused on growing its broadcast business going forward,” Starboard said in a letter to Media General. ” However, the Meredith transaction, if consummated, would bring Media General back into the publishing business given that approximately 66% of Meredith’s revenue is generated from its publishing business while only approximately 34% of Meredith’s revenue is generated from its broadcast business.”
“It is inconceivable to us that Media General would be willing to pay a premium multiple to acquire a company with a less desirable business mix while handing over management control to Meredith’s incumbent management team whose background is primarily in operating publishing businesses. From the perspective of a Media General shareholder, it is extremely difficult to understand the rationale for the Meredith transaction,” Starboard concluded.
On Tuesday Starboard sent another letter to the board of Media General, accusing the board of dragging its feet – though that delay may now be at an end if the board decides Friday on a definite course of action.