Gray Closes On Meredith Purchase

Gray Television on Wednesday afternoon closed on its previously announced acquisition of Meredith Corp.’s Local Media Group and its 17 television stations in 12 markets for $16.99 per share in cash, or $2.8 billion. Gray’s portfolio of television stations now serve 113 local markets reaching approximately 36% of U.S. television households.

With estimated combined historical basis net revenue exceeding $3.2 billion on a blended 2020-21 basis, Gray says it is now the nation’s second largest television broadcaster in terms of revenues. In addition, with a new, larger portfolio including 79 markets with the top-rated television station and 101 markets with the first and/or second highest rated television station, Gray retains its position as the largest owner of top-rated local television stations and digital assets in the United States.

“Gray is a far stronger company today with the exciting and transformative addition of Meredith’s excellent television stations and its fine employees,” said Gray’s Executive Chairman and CEO Hilton H. Howell. “We are grateful to the numerous professionals at Gray, Meredith and their advisers who dedicated themselves over the past year to the successful completion of this transaction.”

Gray said its acquisitions of Quincy Media in August and of Meredith today are anticipated to be approximately 50% accretive to blended 2021-22 free cash flow per share. Expected strong free cash flow generation throughout 2021 and 2022 is anticipated to allow Gray to deleverage its capital structure following the closing. As of the closing date, the blended average annual interest rate on the aggregate $2.8 billion of incremental debt used, in part, to finance the Meredith acquisition was an estimated 4.15%.

The Meredith acquisition will increase Gray’s net revenues and expenses in the fourth quarter 2021, resulting in the following updated guidance:

• Broadcasting net revenues to between $655 million and $665 million.
• Operating expenses (before depreciation, amortization, and (gain) loss on disposal of assets, net)
  • Broadcasting between $457 million and $466 million including transaction related expenses of between $19 million and $20 million
  • Corporate between $73 million and $80 million including transaction related expenses of between $51 million and $54 million.

Gray said it anticipates its total leverage ratio, “as defined in our senior credit facility, at December 31, 2021, will be approximately 5.4 times on a trailing eight-quarter basis, netting our total cash balance and giving effect to all transaction related expenses.”

Wells Fargo Securities, LLC served as financial adviser and Eversheds Sutherland LLP and Jones Day served as legal counsel for Gray.