Media General/LIN Merger: WPRI/WNAC Kept, WJAR Sold to Sinclair

Media General, Inc. and LIN Media LLC today announced definitive agreements to divest television stations in five markets. The divestitures are designed to comply with regulatory rules as the two companies seek to obtain approval for the business combination that they announced on March 21, 2014.

The closing of the pending transaction is conditioned on the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act and receipt from the Federal Communications Commission of consent to the transfer of control of broadcast licensee subsidiaries of Media General and LIN Media in
connection with the transaction. Regulatory authorities will require the divestiture of stations in the following markets to comply with applicable law: Birmingham, AL; Providence, RI-New Bedford, MA;Mobile, AL-Pensacola, FL; Green Bay-Appleton, WI; and Savannah, GA.

The companies believe that no other market divestitures will be required.

Transaction Details

In agreements with Sinclair Broadcast Group, Media General will acquire Sinclair’s FOX and CW affiliates in the Colorado Springs-Pueblo, CO market (KXRM-TV and KXTU-LD, respectively) and Sinclair’s MyNetworkTV affiliate in the Tampa-St. Petersburg-Sarasota, FL market (WTTA-TV). Sinclair will acquire Media General’s NBC affiliate in the Providence, RI-New Bedford, MA market (WJAR-TV) and LIN Media’s FOX and CW affiliates in the Green Bay-Appleton, WI market (WLUK-TV and WCWF-TV, respectively). Sinclair will also acquire certain assets of WTGS-TV, the FOX affiliate in the Savannah, GA market, and the rights to acquire the principal assets of WTGS-TV from WTGS Television, LLC. Hearst Corporation will acquire Media General’s NBC affiliate in the Birmingham, AL market (WVTM-TV) and LIN Media’s ABC affiliate in the Savannah, GA market (WJCL-TV). Meredith Corporation will acquire LIN Media’s FOX affiliate in the Mobile, AL-Pensacola, FL market (WALA-TV).

“We’re pleased to announce this divestiture plan, which we believe should clear the way for our business combination with LIN Media to move forward in the regulatory approval process,” said George L. Mahoney, President and Chief Executive Officer of Media General. “Additionally, the purchase of the MyNetworkTV station in Tampa provides us with the opportunity to increase share in Media General’s second largest market. Also, the addition of the FOX and CW affiliates in Colorado Springs marks the first time we will have a television station in Colorado. The stations being divested are strong performers. We are proud of the work that they have done, and we wish the employees at these stations all the best as they transition to new ownership,” said Mr. Mahoney.

Vincent L. Sadusky, President and Chief Executive Officer of LIN Media, said, “The divestiture plan is an important milestone that positions us well with regulatory authorities. We are pleased with the consideration we will receive for these terrific stations and plan to use the net proceeds to reduce debt.

The addition of stations in Tampa and Colorado Springs will further diversify and strengthen the combined company’s portfolio as well as provide opportunities to expand our digital business. I am more confident than ever that the combination of Media General and LIN Media, two highly respected broadcasters with superior television and digital assets, creates maximum value for shareholders.” Mr. Sadusky will become the President and CEO of the combined company following the completion of the transaction.

Additional Transaction Details

Media General will structure the transactions, along with its previously announced purchase of WHTM-TV in Harrisburg, PA, to maximize tax efficiencies. The stations to be acquired, including WHTM, have a combined Broadcast Cash Flow of approximately $21 million, based on 2013/2014 averages. The stations to be divested have a combined Broadcast Cash Flow of approximately $37 million, based on 2013/2014 averages. Gross proceeds for all stations to be divested will be approximately $360 million. The aggregate purchase price for the stations to be acquired, including WHTM, will be approximately $177 million. Net proceeds, after taxes and expenses, are expected to be in the range of $140 million to $160 million and will be used to reduce Media General’s debt after the closing of the merger. The divestitures and acquisitions are contingent upon regulatory and other customary approvals and upon the completion of the transaction, except for Media General’s previously announced purchase of WHTM, which is expected to close in the third quarter of 2014. Media General and LIN Media continue to expect that the business combination will be completed in early 2015.

Upon the closing of the transaction and these divestitures and acquisitions, including WHTM, the combined Media General and LIN Media will own and operate or service 71 stations across 48 markets, reaching 27.6 million or 24% of U.S. television households. The companies continue to expect to realize combination run-rate synergies of $70 million in three years with approximately one-half of that amount realized by the end of the first year following the completion of the transaction.

Moelis & Company LLC served as the exclusive financial advisor to Media General in connection with the divestitures and acquisitions. LIN Media utilized the Minority Media and Telecommunications Council’s brokerage services. Fried Frank Harris Shriver & Jacobson LLP and Pillsbury Winthrop Shaw Pittman LLP served as legal counsel to Media General.

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