Media General Inc. is a TV broadcasting company currently backed by Warren Buffett and Mario Gabelli. The company agreed to merge with New Young Broadcasting Holding Co., and shares of the stock rose by a whopping 34%. This stock deal places an $870 million value on both companies.
Media General is the current owner of 18 TV stations. Shares of their stock rose to $9.76 at the close in New York. In all, this is the largest one-day gain in over 19 months. The shares of this stock have actually more than doubled in 2013.
This merger actually highlights a hastening consolidation within the local television. This is driven by the fees that broadcast networks and stations are extracting from satellite operators and cable companies such as DirecTV and Comcast Corp. In the last two years, Sinclair Broadcast Group Inc. has actually spent over $1.84 billion. They have expanded their reach by 34% in US households, and they are buying up local media outlets we learned according to Bloomberg Industries.
Media General’s CEO and president George L Mahoney is going to lead the new company into the future. They intend to keep the Media General name, and the company is also going to remain based out of Richmond, Virginia, we learned in a statement made today. New Young broadcasting is currently headquartered in the city of Nashville in Tennessee.
When the deal is complete, Media General will have around 89.1 million outstanding shares. This will include roughly 60.2 million shares issued to Young’s shareholders, the statement reads. This share total suggests a current market value of around $870 million, if you base it on today’s prices.
When the two companies merge, the new Media General will own 30 network affiliated stations in a total of 27 markets. They will reach around 16.5 million TV households in the United States of America, or roughly 14% of the company. Their stations will include one Fox station, seven ABC networks, 11 CBS channels and nine from NBC.