Media General’s headquarters on East Franklin Street. (Photos by Michael Schwartz)
The transformation of Media General continues.
The downtown-based television station operator said Thursday that it plans to merge with New Young Broadcasting and bring the private Nashville company’s 12 TV stations – including Richmond’s WRIC Channel 8 – into the Media General fold.
In the all-stock deal, Young shareholders would eventually own a majority stake of Media General. Should the deal close, the combined company would continue under the Media General name and keep its headquarters in Richmond at Media General’s home base on East Franklin Street.
The merger with Young is Media General’s second major deal in a year.
This is the second large deal Media General has worked in the past 12 months. Last summer, it sold its newspaper operations, including the Richmond Times-Dispatch, to a division of Warren Buffett’s Berkshire Hathaway.
George Mahoney, Media General’s president and chief executive, said Thursday that the deal with Young creates a stronger media company with more cash flow and allows the combined firms to better negotiate their debt load.
“Lower leverage does all sort of things to us,” said Mahoney, who would remain CEO after the merger. “In the short term, it gives us the opportunity to lower interest rates. There’s so much free cash flow, we’ll have the ability to pay down debt much more quickly than we ever have before.”
Media General has about $601 million in debt. Young has about $164 million.
George Mahoney
About 130 employees work out of Media General’s Richmond headquarters. That headcount won’t significantly increase as only a small percentage of employees from Young’s corporate offices will make the transition, Mahoney said. Employees from Young’s TV stations will come over.
Conversations about a deal began more than three months ago. Mahoney said the pace of the discussions began to heat up in the past six weeks, as both sides liked what they saw.
“As we talked, it became more and more compelling,” he said. “As we’ve gotten farther into understanding how the Young stations operate, it’s become even more clear that this is a terrific transformational transaction for Media General.”
Mahoney found himself repeating the word “transformational,” given the company’s rapid change from a newspaper-centric company to being focused largely on television.
“[The deal with] Berkshire was huge, and it cleared the path for us to do some wonderful things going forward,” he said. “I’m thinking of this as the first of those.”
Mahoney said Media General would be excited to take control of Richmond’s WRIC. Federal law prohibits companies from owning TV stations and newspapers in the same market. Media General’s longtime ownership of the Times-Dispatch had kept it out of the TV business in Richmond.
“It will be terrific to have a media outlet in our home market again,” Mahoney said. “I miss the Times-Dispatch.”
As part of the deal, 60.2 million shares of newly created Media General common stock will go to Young shareholders. Media General will agree to do away with its current stock structure of Class A and Class B shares. The latter are held largely by the family of Media General Chairman J. Stewart Bryan III.
Those Class B shares currently have great leverage, with the power to elect 70 percent of the company’s board of directors. Those shareholders will receive no extra consideration for having their shares rolled in with everyone else’s.
Mahoney wouldn’t comment on whether that part of the deal has been a tough sell.
“[Class B shareholders] have seen in this particular transaction it is far better to have a piece of a much larger pie and be able to increase shareholder value as a result,” he said.
Media General’s stock price jumped after the pending deal was announced, closing Thursday at $9.76 per share, up 33 percent for the day.
Shareholders of Media General must approve the deal, and a green light from the FCC is needed.
If and when the deal closes, Mahoney said Media General would look to continue its growth, particularly by adding to the combined 30 stations in its and Young’s current markets.
“This is a consolidating industry, and we’re aware of that,” he said.
Media General’s headquarters on East Franklin Street. (Photos by Michael Schwartz)
The transformation of Media General continues.
The downtown-based television station operator said Thursday that it plans to merge with New Young Broadcasting and bring the private Nashville company’s 12 TV stations – including Richmond’s WRIC Channel 8 – into the Media General fold.
In the all-stock deal, Young shareholders would eventually own a majority stake of Media General. Should the deal close, the combined company would continue under the Media General name and keep its headquarters in Richmond at Media General’s home base on East Franklin Street.
The merger with Young is Media General’s second major deal in a year.
This is the second large deal Media General has worked in the past 12 months. Last summer, it sold its newspaper operations, including the Richmond Times-Dispatch, to a division of Warren Buffett’s Berkshire Hathaway.
George Mahoney, Media General’s president and chief executive, said Thursday that the deal with Young creates a stronger media company with more cash flow and allows the combined firms to better negotiate their debt load.
“Lower leverage does all sort of things to us,” said Mahoney, who would remain CEO after the merger. “In the short term, it gives us the opportunity to lower interest rates. There’s so much free cash flow, we’ll have the ability to pay down debt much more quickly than we ever have before.”
Media General has about $601 million in debt. Young has about $164 million.
George Mahoney
About 130 employees work out of Media General’s Richmond headquarters. That headcount won’t significantly increase as only a small percentage of employees from Young’s corporate offices will make the transition, Mahoney said. Employees from Young’s TV stations will come over.
Conversations about a deal began more than three months ago. Mahoney said the pace of the discussions began to heat up in the past six weeks, as both sides liked what they saw.
“As we talked, it became more and more compelling,” he said. “As we’ve gotten farther into understanding how the Young stations operate, it’s become even more clear that this is a terrific transformational transaction for Media General.”
Mahoney found himself repeating the word “transformational,” given the company’s rapid change from a newspaper-centric company to being focused largely on television.
“[The deal with] Berkshire was huge, and it cleared the path for us to do some wonderful things going forward,” he said. “I’m thinking of this as the first of those.”
Mahoney said Media General would be excited to take control of Richmond’s WRIC. Federal law prohibits companies from owning TV stations and newspapers in the same market. Media General’s longtime ownership of the Times-Dispatch had kept it out of the TV business in Richmond.
“It will be terrific to have a media outlet in our home market again,” Mahoney said. “I miss the Times-Dispatch.”
As part of the deal, 60.2 million shares of newly created Media General common stock will go to Young shareholders. Media General will agree to do away with its current stock structure of Class A and Class B shares. The latter are held largely by the family of Media General Chairman J. Stewart Bryan III.
Those Class B shares currently have great leverage, with the power to elect 70 percent of the company’s board of directors. Those shareholders will receive no extra consideration for having their shares rolled in with everyone else’s.
Mahoney wouldn’t comment on whether that part of the deal has been a tough sell.
“[Class B shareholders] have seen in this particular transaction it is far better to have a piece of a much larger pie and be able to increase shareholder value as a result,” he said.
Media General’s stock price jumped after the pending deal was announced, closing Thursday at $9.76 per share, up 33 percent for the day.
Shareholders of Media General must approve the deal, and a green light from the FCC is needed.
If and when the deal closes, Mahoney said Media General would look to continue its growth, particularly by adding to the combined 30 stations in its and Young’s current markets.
“This is a consolidating industry, and we’re aware of that,” he said.
I like it real well but they can sell KRON directly to NBC without any bureaucratic red tape and combined the operations with KSTS to improve reception of NBC service in the Bay Area as a continuance of the NBC station being from KNTV NBC 11 Bay Area to KRON NBC 4 Bay Area and KRON being housed at NBC Bay Area division with KNTV being spunned off to either Hearst or a real local broadcaster with interest to keep it going plus with real benefits for both NBC finally wanting to own KRON and KNTV being spunned off and… Read more »