After going dark on DISH Network last month in a dispute that carried on so far the FCC was called in to mediate, Media General has reached an agreement with the satellite company. Terms were not disclosed but the pact will affect Media General TV stations in 17 markets, which will be available to DISH subscribers as of today: Augusta, Ga.; Birmingham, Ala.; Charleston, S.C.; Columbus, Ga.; Columbus, Ohio; Greenville, N.C.; Greenville/Spartanburg, S.C.; Hattiesburg, Miss.; Jackson, Miss.; Mobile, Ala./Pensacola, Fla.; Florence/Myrtle Beach, S.C.; Providence, R.I.; Raleigh/Durham, N.C.; Roanoke/Lynchburg, Va.; Savannah, Ga.; Tampa/St. Petersburg, Fla. and Tri-Cities, Tenn./Va.
Media General shares are up about 20% in initial trading this morning following the announcement that it will combine with privately held Young Broadcasting in an all-stock transaction. The deal will create a company with 30 TV stations in 27 markets, reaching 14% of all U.S. viewers. The new entity, to keep the Media General name, will have affiliates with all of the major networks including CBS (11 stations), NBC (9), ABC (7) Fox (1), CW (1) and MyNetwork TV (1). “The business combination of Media General and Young is a transformational event that will benefit shareholders, employees and the communities we serve,” Media General Chairman J. Stewart Bryan III says. He adds that the new Media General will find it easier to refinance its debt and take advantage of ”attractive synergies” — but also vows to promote “quality local journalism” while “operating top-rated TV stations.” Next year the company expects to reduce the size of its combined board from 14 members to 11 with five apiece from Media General and Young plus one director picked by the Nominating Committee. The deal comes a little more than a year after Warren Buffett’s Berkshire Hathaway bought Media General’s newspapers. That gave the debt-laden surviving TV company a little more latitude to join other station owners who are eager consolidate: Sellers see this as a good time to exit a mature business while buyers expect additional growth from pay TV retransmission consent fees.
Here’s the release with financial details:
Does Warren Buffett know something about the newspaper business that the rest of the world doesn’t? Whatever the case, Media General shares are rocketing nearly 58% in pre-market trading this morning after the legendary investor agreed to pay $142M for 63 of its daily and weekly newspapers — the whole portfolio except for the Tampa properties that include The Tampa Tribune. A unit of Buffett’s Bershire Hathaway is providing financing for Media General, which is also a major owner of television stations. The deal is a “monumental change” that will enable Media General to “focus on our broadcast television business and its future growth opportunities, including digital content and Mobile DTV,” says CEO Marshall Morton.
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It will take years before most ad sales will hit the peaks that TV stations saw in 2007, Moody’s Investors Service analyst Carl Salas says this morning in an industry report. Local businesses have been slow to increase their spending after the economy tanked in 2008 and 2009 — and now broadcasters must compete for those dollars against websites, social media, digital displays and other emerging media. Sure, stations will see some extra cash from retransmission consent deals with pay TV providers. But it won’t be a windfall: Major networks are demanding reverse compensation agreements from their affiliates, giving the national broadcasters much of the dough collected by the stations that they used to pay to carry their programs.
The partnership involves big names in local TV including Belo, Cox, E.W. Scripps, Gannett, Hearst, and Media General. They want to enhance TV viewing beginning in early 2012 by offering an app that enables Apple or Android mobile devices to automatically detect what you’re watching. The stations then would feed additional info about the shows — including local and syndicated fare — as well as opportunities to connect with other viewers. Yes, they’ll also send ads to your device. Here’s how they describe the free service, to be called ConnecTV: