By PBN Staff
By PBN Staff
RICHMOND - Media General Inc. – parent company of WJAR-TV NBC 10 – and privately held New Young Broadcasting Co. Inc. announced a definitive agreement Thursday to combine the two companies in an all-stock merger transaction.
The new company will retain the Media General name and remain headquartered in Richmond, Va. George L. Mahoney, president and CEO of Media General, will retain that role following the merger.
Media General owns 18 network-affiliated stations and Young owns or operates 12 network-affiliated stations. According to a release, the combined company will own or operate 30 network-affiliated TV stations across 27 markets, reaching 14 percent of U.S. television households.
Network affiliations will include CBS, NBC, ABC, Fox, CW and MNT. “The new company will be more geographically diverse and will have a presence in more markets that generate strong political revenues. Its increased size will enhance its ability to participate in retransmission-revenue growth, share growth of national and digital advertising, and syndicated programming purchasing,” said a release.
“The business combination of Media General and Young is a transformational event that will benefit shareholders, employees and the communities we serve,” J. Stewart Bryan III, chairman of Media General, said in prepared remarks.
Bryan added that the combination provides “immediate accretion to free cash flow, a strong balance sheet, the opportunity to refinance debt at a much lower cost and attractive synergies. Young’s management and its owners share Media General’s commitment to quality local journalism and to operating top-rated TV stations, making this merger a unique and compelling combination with significant growth potential.”
Thomas J. Sullivan, the executive chairman at New Young Broadcasting called the merger “compelling on many levels,” and added that it would “create a company with valuable strategic assets, significant financial resources and a deep team of talented and experienced personnel.” Sullivan will join the Medial General board of directors.
Under the merger agreement, Media General will reclassify each outstanding share of its Class A and Class B common stock into one share of a newly created class of Media General common stock. This will be entitled to elect all of Media General’s directors. The companies said that no additional consideration will be paid to Class B shareholders for giving up their right to directly elect 70 percent of Media General’s directors.
Media General plans to issue roughly 60.2 million shares of the new common stock to Young’s shareholders. The estimated total shares outstanding after closing in 89.1 million.
Media General’s pro forma ownership split will be approximately 32.5 percent Media General shareholders and 67.5 percent Young shareholders, according to a release. The new stock will be listed on the New York Stock Exchange and trade under the symbol MEG.
Media General reported 2011/2012 average revenue of $320 million and Young reported revenue of $219 million. The companies reported that, on a pro forma basis, 2012 revenue was $605 million, including approximately $115 million of political revenue.
As of March 31, Media General’s outstanding debt was $601 million, and Young’s was $164 million. The newly combined company intends to pursue a total debt refinancing of approximately $900 million, reflecting the total debt outstanding of both companies, said the Media General release.
Following the merger closing, the board of directors will consist of 14 directors, including Media General’s current nine directors and Young’s current five directors. Bryan will serve as the initial chairman.
At the 2014 Annual Shareholders’ Meeting, the size of the board is slated to be reduced to 11 directors and consist of five of the current Media General directors, the five former Young directors, and one additional director selected by the Nominating Committee.