Media General Still Likes Meredith, Auction

Media General’s board continues to favor the $2.4 billion merger with Meredith, Vince Sadusky, Media General’s president-CEO said during this morning’s conference call to discuss third-quarter financial results.

“The board continues to recommend the transaction,” Sadusky said in a terse update on Media General’s M&A status.

That continuing recommendation comes despite Nexstar’s $4.1 billion bid to acquire Media General and questions from investors over why Media General would opt for the Meredith deal in light of Nexstar’s offer.

Sadusky noted, however, that Media General and Nexstar are exchanging information and that the two companies signed a non-disclosure agreement on Oct. 19.

The Media General-Meredith transaction has come under fire from investors, including Starboard Value, whose 4.5% stake in Media General makes it one of the company’s larger shareholders. Starboard Value, in an assessment shared by other investors and analysts, sees the Nexstar deal bringing greater value to shareholders.

The dueling deals put Media General in a potentially awkward situation regarding next year’s spectrum auction. Under auction rules, potential spectrum sellers are constrained in sharing information with other potential sellers to prevent bid rigging.

“We don’t think that the auction rules will impact strategic conversations at this point,” Sadusky said.

Sadusky reiterated Media General’s intention to participate in the auction, noting that the company has a number of stations in markets where there’s high demand for spectrum, translating into potentially lofty valuations.

“What we’ve said about the spectrum auction is that we plan to participate,” he said, adding that, “opening bid prices for some of our markets [are] higher than we had anticipated.”