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(Updated, 2:54 p.m.)
RICHMOND, Va. – Media General Inc. agreed to acquire Providence-based LIN Media LLC in a transaction valued at about $1.6 billion, adding local TV stations across the U.S. to get better negotiating leverage with advertisers and cable providers.
LIN’s shareholders will get stock or cash worth $27.82 a share, the companies said, a 29 percent premium to Thursday’s closing price. Including debt of $968 million, the purchase would be valued at $2.6 billion, Media General, which owns WJAR-TV NBC 10, and LIN, which owns WPRI-TV CBS 12, said Friday in a statement.
The deal would create the second-largest television-only broadcasting company in the country, according to the statement.
The deal follows acquisitions in the past year by Tribune Co., Gannett Co. and Sinclair Broadcasting Group Inc. to pile up local-broadcasting assets, getting a wider audience for advertisers. Media General itself, backed by Warren Buffett and Mario Gabelli, spent $860 million last year to acquire New Young Broadcasting Holding Co.
To complete the LIN transaction, Richmond, Va.-based Media General will form a new holding company, giving its own shareholders one share for each they own in the current entity. Investors of LIN can opt for 1.5762 shares of the new company or $27.82 in cash, up to a maximum of $763 million in cash payouts, the companies said.
The merger of Media General, which owns WJAR-TV, NBC 10, and LIN Media, which owns WPRI-TV, CBS 12 and operates WNAC-TV Fox 64, means at some point, there will likely be a change in the regional market. The deal is anticipated to close in the early part of 2015. It is subject to FCC approval.
“There are five overlap markets - Birmingham, Green Bay, Mobile, Providence and Savannah. We know we’re going to have to deal with those and, in most cases, swap or sell,” said Media General President and CEO George L. Mahoney in a Friday webcast and conference call for investors. “We’re going to work with the FCC and we are committed to moving this transaction forward very promptly.”
“The swap opportunity is one that I want to highlight right now. Swapping is hard in order get value for value, but it obviously cleans out the issue and allows us to increase, or even grow, our national footprint,” said Mahoney. “So that’s the first area where you’re going to go if you’re going to try figure out how to be creative with the FCC. There’s real opportunity there. That’s where we’ll start, and the rest of it is going to be a question of what we need to do in order to get through the process.”
“We are excited about the announcement made today, but are focused on our daily commitment to serve our viewers and advertisers. It’s business as usual here at WPRI-12/FOX Providence/myRITV,” said station General Manager Patrick Wholey.
PBN staff contributed to this report.