Once Lin Media's 43 stations are absorbed, the combined company will operate 74 TV stations across 46 markets in the U.S.. It'll reach 26.5 million, or about 23%, of U.S. TV households.
It's the latest evidence of the local TV industry consolidation, as broadcasters collect more stations to deflect fallout from shrinking audience and advertising revenues. TV-station owners are increasingly relying on retransmission revenues – the fee cable or satellite operators pay TV stations for the right to air their signal – to make up for sluggish sales. And large broadcasters have more bargaining leverage against pay-TV operators in retrans negotiations.
Lin Media shareholders will receive $763 million in cash and 49.5 million shares of Media General stock. The stock portion of the deal is worth $27.82 per Lin Media share. That's 28% higher than its trading price prior to the announcement. The newly formed company, to be called Media General, will assume $968 million of Lin Media's debt.
Shares of Lin Media were up 19% Friday morning to $25.56. Media General shares were up 0.81% to $17.48.
Once the deal is closed, Lin Media CEO Vincent Sadusky will become CEO of the combined company.
Several other large broadcasters have bought competitors in recent months. Gannett, which owns USA TODAY, acquired Belo for $1.5 billion. Sinclair Broadcast Group paid $985 million to buy eight TV stations from the Allbritton family, including an ABC affiliate in Washington, D.C.
Tribune Company bought Local TV Holdings for $2.73 billion last year, enlarging its portfolio to 39 stations.
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