In a $2.7 billion deal that will make it the nation’s second largest TV station group, Gray Television has cut a deal to buy Meredith Corp.’s Local Media Group (LMG) of 17 television stations in 12 local markets.
The blockbuster transaction will give Atlanta-based Gray a combined $3.1 billion in revenue on a blended 2019/2020 basis. The deal follows its $925 million acquisition of Quincy Media, announced in February. Once both deals close and after required divestitures, Gray will operate television stations in 113 local markets reaching about 36% of U.S. television households.
Nexstar Media Group is the country’s largest local television company with 198 TV stations in 116 markets covering nearly 62% of U.S. television households, according to its website.
The pro forma Gary portfolio will include 79 markets with the top-rated television station and 101 markets with the first and/or second highest rated television station, according to Comscore data cited by Gray in its Monday morning announcement.
In selling off its local TV group, Meredith says it will focus exclusively on its lifestyle-focused National Media Group (NMG) which includes People, Better Homes & Gardens, and All Recipes. The deal also allows Meredith to pay down all of its existing debt, increase its financial flexibility and open up growth opportunities.
The transaction is structured as a spin-off of Meredith Corp.’s NMG into a standalone publicly traded company. Shareholders will receive $14.50 per share and 1-for-1 equity share in post-close Meredith, which will retain the Meredith Corp. name. At the closing, Gray will acquire Meredith’s other operating division, known as the Local Media Group, which owns the following 17 television stations in 12 local markets:
- WGCL (CBS) / WPCH (Independent), Atlanta, Georgia (DMA 7)
- KPHO (CBS) / KTVK (Independent), Phoenix, Arizona (DMA 11)
- KPTV (FOX) / KPDX (MyNetwork), Portland, Oregon (DMA 21)
- KMOV (CBS), St. Louis, Missouri (DMA 23)
- WSMV (NBC), Nashville, Tennessee (DMA 29)
- WFSB (CBS), Hartford-New Haven, Connecticut (DMA 32)
- KCTV (CBS) / KSMO (MyNetwork), Kansas City, Missouri, (DMA 34)
- WHNS (FOX), Greenville-Spartanburg, South Carolina (DMA 35)
- KVVU (FOX), Las Vegas, Nevada (DMA 40)
- WALA (FOX), Mobile, Alabama (DMA 57)
- WNEM (CBS), Flint-Saginaw, Michigan (DMA 73)
- WGGB (ABC & FOX) / WSHM-LD (CBS), Springfield, Massachusetts (DMA 116)
Gray’s and Meredith’s TV portfolios overlap in only one market: the Flint-Saginaw DMA. To win regulatory approvals, Gray will spin off its ABC affiliate in the market, WJRT-TV, before the Meredith purchase closes.
“The television station portfolios, company cultures and commitments to localism of Gray and Meredith are highly complementary,” Gray’s Executive Chairman and CEO Hilton Howell said in a statement. “We are very excited to acquire Meredith’s excellent television stations, and we look forward to welcoming its employees into the Gray family.”
The transaction was unanimously approved by Meredith's and Gray's Board of Directors and is expected to close in fourth quarter 2021.
“We expect the transaction to unlock meaningful shareholder value as it advances all of the company's financial priorities: reducing net debt, improving financial flexibility, allocating capital to fast-growing digital and consumer opportunities, and providing returns to shareholders," said Meredith Chairman and Chief Executive Officer Tom Harty. “As a more focused company with an enhanced balance sheet and cash-generating media assets, we will further advance our position as a media leader with trusted brands, a digital business of scale, and unparalleled reach to women.”