Media General to buy Meredith for $2.4B in TV, magazine deal The combined company will take on the name Meredith Media General.

Nathan Bomey | USA TODAY

Media General, which owns or operates 71 television stations nationwide, reached a deal Tuesday to acquire Meredith Corp. for $2.4 billion, creating the third largest TV station operator in the U.S. and helping the companies diversify their revenue sources.

Meredith, based in Des Moines, owns or operates 17 TV stations and publishes several national magazines targeted primarily at women, including Better Homes and Gardens, Shape, Allrecipes and Parents. Its websites, many of them affiliated with the magazines, reach 200 million visitors monthly, Meredith said.

The combined company will own 88 TV stations in 54 markets after the deal closes, expected by the end of the second quarter next year. It will take on the name Meredith Media General.

Live TV viewership has been shrinking as the business has been roiled by the cord-cutting movement, with many consumers shedding costly cable subscriptions in favor of a patchwork of digital media subscriptions. And Meredith's magazine business faces the same challenges confronting the traditional media business, which is grappling with an exodus of advertisers and readers from print to digital.

Digital revenue affords the new company an avenue for growth, Meredith CEO Stephen Lacy suggested during a conference call Tuesday. "We have upside opportunity to really take the content from the Meredith side and aggressively monetize that into the ... digital audience that Media General has built," he said.

Lacy also signaled that the company will pursue other opportunities for consolidation, including possibly acquiring other companies.

Lacy will become CEO of the new company, while Meredith Chief Financial Officer Joseph Ceryanec will become CFO.

The company said executives from both Meredith and Media General will make up the rest of the senior executive team, but it was not immediately clear whether that included Media General CEO Vincent L. Sadusky.

The cash-and-stock deal for Meredith reflects a price of $51.53 per share, a 12% premium over Friday's closing price. Including debt, the deal is valued at $3.1 billion.

The companies said they expect to slash $80 million in costs within the first two years, including $60 million in the first 12 months.

The combined company will have annual revenue of $3 billion with pre-tax profit of more than $900 million. RBC Capital Markets and JPMorgan Chase provided $2.8 billion in financing to complete the deal.

Combining the companies will reap “significant operating benefits,” said Carl Salas, Moody’s vice president and senior credit officer. But they “offset the increase in leverage and added exposure to print advertising,” he said.

To secure regulatory approvals, the new company plans to shed stations in six markets through sales or swaps: Portland, Oreg.; Nashville, Tenn.; Hartford-New Haven, Conn.; Greenville-Spartanburg, S.C.; Asheville, N.C.; Mobile, Ala.-Pensacola, Fla.; and Springfield, Mass.

Officials said the company would keep its corporate offices in Des Moines and Richmond but will be incorporated in Virginia. It will have some 9,000 employees.

Two members of the Meredith family who collectively own 63% of the company's Class B shares have voted to approve the deal, which must also win approval from common stockholders from both companies.

Contributing: Roger Yu

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