Sook Updates Nexstar-Media General Status

Nexstar and Media General continue to swap due diligence on a possible deal but it hasn’t progressed to the point of negotiations, Nexstar boss Perry Sook said during this morning’s investor call on third-quarter financial results.

“We’ve had conversations with many Media General shareholders who support our combination,” Sook said, noting that financial markets’ reaction to the potential $4.1 billion deal has been largely positive.

Nexstar privately offered to acquire Media General in August, shortly before Media General publicly disclosed it had a deal to acquire Meredith for $2.4 billion.

The Media General-Meredith deal encountered headwinds shortly after it was announced as investors and analysts questioned the economics, the management structure that would have put Meredith boss Stephen Lacey in charge and Media General getting back into the publishing business.

When Nexstar publicly disclosed its offer, which offered a significant premium on where Media General’s stock was trading at the time, criticism of the Media General-Meredith deal mounted.

A late September letter from Starboard Value, one of Media General’s larger shareholders with a 4.5% stake, to Media General executives outlined those criticisms and questioned why the company had refused to enter talks with Nexstar over an offer than would, on the surface, yield substantially greater value to shareholders.

The continuing Nexstar-Media General talks, while not negotiations, suggest that deal still has legs, but Sook provided a leavening note in his remarks.

“For Media General to enter into conversations with us, they would need to declare our offer superior or reasonably likely to be superior before we enter what you would consider negotiations,” he said.

Sook also pointed out that if the Media General does come to pass, that coupled with the recent acquisition of stations in North Dakota would still put Nexstar at roughly 30% U.S. coverage after factoring in the FCC’s UHF discount.