Leading local station owner Nexstar Media Group and smaller rival Tegna have unveiled a definitive agreement for a merger.
As part of the deal, Nexstar will acquire all outstanding shares of Tegna each for $22.00 in cash, which values the transaction at $6.2 billion. Tegna’s board of directors has approved the merger and the company’s debt will refinanced or closed at the completion of the merger agreement. Sinclair had also been looking at a deal for Tegna.
Nexstar has financing in place from a consortium of Wall Street investment banks to finance the transaction. The merger deal is seen as a test for the FCC to loosen local TV station ownership rules as it gets set to rule on the Nexstar-Tegna agreement.
Once completed, the merger will see Nexstar emerge with 265 local TV stations in 44 states and the District of Columbia and 132 of the country’s 210 television DMAs, or Nielsen’s Designated Market Areas.
The combined company will have stations in 9 of the top 10 DMAs, 41 of the top 50 DMAs, 62 of the top 75 DMAs and 82 of the top 100 DMAs, covering, in total, 80 percent of U.S. TV households.
Nexstar chairman and CEO Perry A. Sook, who is betting the FCC will allow that market concentration, in a statement said of the merger agreement: “The initiatives being pursued by the Trump administration offer local broadcasters the opportunity to expand reach, level the playing field, and compete more effectively with the Big Tech and legacy Big Media companies that have unchecked reach and vast financial resources. We believe TEGNA represents the best option for Nexstar to act on this opportunity.
Nexstar’s purchase price represents a 31 percent premium to Tegna’s average 30-day average stock price on August 8. Shares in Tegna had been rising as news of active merger talks with Nexstar went public in early August.
The transaction will increase Nexstar’s reach in key local TV station markets like Atlanta, Phoenix, Seattle, and Minneapolis.
Mike Steib, CEO of Tegna, in his own statement said: “We are thrilled to have found a partner in Nexstar that will enable Tegna’s stations to continue doing what we do best: creating outstanding and impactful local content coupled with the delivery of indispensable digital products to the communities we serve around the country. Nexstar and Tegna both share a rich heritage of commitment to journalistic excellence and technological advancements. Together, we will expand news coverage to serve more communities, across more screens, and ultimately secure the future of local news for generations to come.”
