Meredith deal with Media General dead; NYT files dangerous lawsuit denying fair use doctrine
Morning Brief: Nexstar Broadcasting Group announces it has a definitive deal to acquire Media General, merging two leaders in local television stations, without adding print magazines to the portfolio mix
The deal between Meredith and Media General is officially dead as Nexstar Broadcasting Group announced that it had a definitive deal to acquire Media General for $4.6 billion in cash and stock.
“The acquisition of Media General’s broadcasting and digital media assets represent a transformational growth opportunity for Nexstar and is strategically and financially compelling. The transaction increases Nexstar’s broadcast portfolio by approximately two thirds with very limited overlap with our existing properties, more than doubles our audience reach, provides entrée to 15 new top-50 DMAs and offers synergies related to the increased scale of the combined digital media operations,” Perry Sook, Chairman, President and CEO of Nexstar, said in the company’s announcement.
“Financially, the transaction is expected to more than double our revenue and adjusted EBITDA and result in over $500 million of annual free cash flow which we intend to allocate to leverage reduction, additional strategic growth investments and the return of capital to shareholders.”
“We are pleased to reach this agreement with Nexstar, which provides Media General shareholders with substantial and immediate value, as well as the opportunity to participate in the significant upside potential of the combined company,” Vincent L. Sandusky, President and CEO of Media General, said. “Together with Nexstar, we can deliver a more comprehensive, integrated and competitive offering across all markets for the benefit of our advertisers and brands.”
For investors in Media General, the Meredith deal was never quite right. Media General had shed its newspaper holdings in 2012, selling them to Warren Buffett’s Berkshire Hathaway. The following year it expanded its broadcast holdings by acquiring Young Broadcasting and LIN Media. The last thing Media General would want to do, investors had to think, was return to print. This meant that had the Meredith deal gone through the magazines would most likely been spun off.
Meredith now will receive a generous break-up fee, $60 million. But what investors in Meredith will want to ask during its investor conference call (if they are paying attention) is what Meredith will do now? Will in announce a spin off of its magazine division? Or double down on print, looking to expand its holdings as it did when it picked up the Martha Stewart Living magazines and the three titles from American Media that included SHAPE.
Update: Meredith has now announced earnings, reporting higher overall revenue and income coming from its magazine group.
Meredith also conceded that its deal with Media General was dead and said it liked the idea of a $60 million infusion of revenue (who wouldn’t?).
“While we still believe in the strategic and financial benefits a merger with Media General would have created, we are pleased with the financial benefits of the termination agreement and the shareholder value created,” said Meredith’s Chairman and CEO Stephen M. Lacy.
What in God’s name is The New York Times doing? The paper of record has apparently filed suit against David Shields, the author of a book, War is Beautiful, critical of the NYT for its war coverage. At issue, the paper says, is the author’s use of NYT front pages in the book.
But as the book is about the NYT and its coverage, this would seem to be a very clear cut case of fair use, as pointed out by Georgetown law professor Rebecca Tushnet:
It’s hard not to look at this lawsuit as the reaction of a paper embarrassed at having licensed photos for what turned out to be a work of harsh criticism. Whether that criticism is justified or not (and whether licenses were even required, or sought only to avoid a legal battle), the once-Grey Lady looks unappealingly thin-skinned. I would point out that fees are available to prevailing copyright defendants, and no matter what happens in Kirtsaeng the law is clear enough here that this is a good case for such an award.
The author and publisher had licensed the use of some of the artwork in the book, but did not bother to license thumbnails of front pages used in a collection of them used in one instance. That it would have needed to license anything is questionable, but that the NYT would see the thumbnails as a violation of its rights is very odd.
“The book contains prints of numerous photographs copyrighted by NYTC. Defendants properly sought and obtained licenses from NYTC for the limited use of photographs in the Infringing Work,” the lawsuit states.
“However, Defendants also printed, without permission, copies of the 64 Front Pages along the inside cover of the Infringing Work. Defendants never sought or obtained a license for the use of the 64 Front Pages.”
In its reply to the lawsuit, lawyers for the author state the obvious: “Plaintiff’s claims are barred, in whole or in part, by the doctrine of fair use, 17 U.S.C. § 107, as well as other applicable limitations on exclusive rights offer under the copyright act.”
The NYT knows very well what the law says. If it doesn’t… I don’t even want to contemplate that possibility.