Media General will acquire Meredith Corp. for $2.4 billion, combining the two companies’ TV and digital assets to create greater reach and efficiency.
The new company, Meredith Media General, will own 88 TV stations in 54 markets, making it the third-largest owner of network affiliates.
On the digital side, it will reach 200 million monthly unique visitors. Meredith brings female-focused assets like Better Homes & Gardens, Shape and AllRecipes, while Media General’s digital assets include Federated Media, mobile marketing company LIN Mobile and BiteSizeTV, which creates online entertainment videos.
Meredith Media General said the deal would create $80 million in efficiencies over the next two years.
But it believes the acquisition will give it greater scale, positioning it to capture more advertiser budget.
Meredith will be the No. 1 or No. 2 brand in most of its markets, “and that’s where all the advertising budgets goes” from a local TV standpoint, Meredith CEO Steve Lacy said in a call with investors. Lacy will serve as CEO of the combined companies.
The resulting “powerful, multiplatform, highly diversified media company,” as Lacy said, plans to make even more acquisitions to achieve scale or a top position in a market. This deal “positions Meredith Media General to … participate in future industry consolidation,” Lacy said.
Coming at the beginning of the 2016 election cycle, the deal’s timing could lend additional momentum to the merged companies’ efficiencies of scale. About two-thirds of the network affiliate stations are in 10 battleground political states, according to slides provided by the company. In the last cycle, Media General received $200 million in ad revenue. It expects to use any extra revenue from the coming season to pay down its debt.
“This could be an opportunity to take advantage of a very robust market,” Lacy said. Before, Meredith, which reached only 10% of households via its network affiliates, didn’t always win those political budgets. The combined company reaches 30% of US TV households, putting it in a stronger position.
Meredith Media General will have revenues of $3 billion annually, $500 million of which will come from digital. Meredith Media General plans to leverage the video expertise from the network affiliates to expand digital video production among the new company’s properties. It will also use the ad tech capabilities of Meredith’s Selectable Media, which specializes in video and native advertising, across an expanding array of its properties.
