LIN, Media General to Divest Stations in Five Markets

Media General is divesting stations in five markets to get regulatory approval for its $2.59 billion buy of LIN Media (CD March 24 p6), said the companies in a news release Wednesday (http://bit.ly/1tqM8fr). The divestitures include Media General and LIN swapping three stations with Sinclair (http://bit.ly/1oSguJd), Media General and LIN each selling a station to Hearst Corp. (http://bit.ly/1tilKWU), and LIN selling a station to Meredith Corp. (http://bit.ly/1mmV69a), according to news releases from the companies involved. The deals are contingent on approval of the Media General/LIN deal, the releases said.

The divestitures should “clear the way” for Media General/LIN to “move forward in the regulatory approval process,” said Media General CEO George Mahoney. The Media Bureau declined to comment on whether it had advised that the companies divest the stations to comply with the commission’s duopoly rules. An FCC official pointed out that the plan to divest the stations was part of the Media General/LIN application. “Because the Commission’s [Local Television Multiple Ownership Rule] does not permit common ownership of two Top Four stations in a market, the applicants will divest one Top Four station in each of these markets,” said the application (http://bit.ly/1kVOPWL).

Despite the scale of the deal, it doesn’t involve the transfer or creation of any new sharing agreements, said Free Press Policy Counsel Lauren Wilson in an interview. Free Press was a vocal opponent of recent large transactions in sharing deals for Gannett/Belo and Sinclair/Allbritton Communications’ TV stations, but hasn’t filed any objections to Media General/LIN. “A merger like this that doesn’t involve any new evasions of the commission’s rules is a good sign,” Wilson said. The size and cash involved in the deal shows that “closing the JSA [joint sales agreement] loophole didn’t destroy the industry like so many predicted it would,” Wilson said. “You don’t need sharing arrangements."

Along with the divestitures, Media General announced an amended merger agreement for the deal, dropping the cash involved in the deal to $2.597 billion and pushing back a shareholder vote, in a news release (http://bit.ly/1uXOyG4). The amended agreement is in part connected to LIN’s losing an Indianapolis CBS affiliate to Tribune earlier this month, said Wells Fargo analyst Marci Ryvicker in an email to investors. The amended deal also removes Media General’s right to break the deal over regulatory actions, Media General said. “Media General’s former shareholders will own approximately 67 percent, and LIN Media’s former shareholders will own approximately 33 percent” of the new company, it said. The shareholder vote on the deal has been delayed until October, but Media General said it and LIN “continue to expect” that the deal will be completed in early 2015.

Sinclair Broadcast will get a Providence NBC affiliate, two stations -- CW and Fox

affiliates -- in Green Bay, Wisconsin, and the “broadcast assets” of a Savannah, Georgia, station owned by WTGS Television. In return, Sinclair is selling Media General a Tampa MyNetworkTV station, and its CW and Fox affiliates in Colorado Springs, a Sinclair news release said. Completing the deal will require Sinclair to get “a waiver to allow the continued joint ownership of the two Green Bay stations,” said Sinclair. Though it doesn’t specify what type of waiver, the two stations were previously run by LIN under a failing-station waiver, said merger documents. The deal will drop Sinclair’s nationwide reach under the FCC 39 percent ownership cap to 38.2 percent from its previous 38.9 percent, Ryvicker said, and that opens the possibility that Sinclair could “pursue additional ’tuck-in’ acquisitions.”

Hearst will buy Media General’s NBC affiliate in Birmingham, Alabama, and LIN’s ABC affiliate in Savannah. Hearst characterized the stations as being in “growth markets” and said the deal would increase the company’s reach of U.S. TV households to nearly 19 percent.