Meredith or Nexstar? What Media General’s Board Needs to Consider

By Kevin Eck 

With Meredith and Nexstar trying to outdo each other to impress Media General enough to get the OK to merge, things can get a little confusing for the everyday reader.

What started as Media General’s $2.4 billion offer in cash and stock to buy Meredith, got complicated when Nexstar decided it wanted Media General for itself and made an alternative offer.

This week, Perry Sook’s company announced it had completed negotiations to buy Media General for roughly $2.3 billion, contingent on Media General bailing on its proposed merger with Meredith. Not to be left at the merger altar, Meredith upped its original deal with Media General in what it called a “Merger of Equals aimed squarely at stockholders.

The Wall Street Journal breaks the three-way romance into a somewhat bite sized piece for those trying to keep score:

The two proposals represent significantly different options for Media General shareholders to consider. Meredith’s offer would be valued at $18.84 a share, not counting any proceeds from the spectrum sale, but includes far less cash than Nexstar’s offer and exposes Media General investors more heavily to the magazine publishing business, an industry that has struggled.

It also assumes the combined company would trade at 9 times its earnings before interest, taxes depreciation and amortization, despite the fact that magazine businesses trade at far lower multiples. Some investors said Thursday that Meredith’s offer makes optimistic assumptions.

Nexstar’s bid, on the other hand, could take longer to close. But it includes more cash and relies less on assumptions about how the combined company would perform.

Another factor weighing on Media General’s board is time. All three companies face a Jan. 12 deadline to apply to participate in the Federal Communications Commission’s spectrum auction set for March. Any merger that is submitted to the FCC after that could take longer to be approved. Meredith says its deal is already going through regulatory review and could close by June 30.

Lurking in the background, too, is pressure from activist hedge fund Starboard Value LP, which owns 4.9% of Media General and has threatened to run a fight for board seats in 2016.