NXST Nexstar Media Group Inc

Nexstar Broadcasting Group Inc. offered to buy local-television station owner Media General Inc. in a bold attempt to break up Media General's recent agreement to buy Meredith Corp.

Nexstar Chairman and Chief Executive Perry Sook sent a letter Monday morning to Media General's board offering $14.50 a share for the company. The offer includes $10.50 in cash and 0.0898 Nexstar shares for each Media General share, according to the letter, a copy of which was reviewed by The Wall Street Journal.

The proposal, which values the Richmond, Va., company at about $1.85 billion, represents a premium of 30% over Media General's closing price on Friday of $11.15 a share. Including Media General's debt, it is worth some $4.1 billion.

Media General earlier this month said it agreed to buy Meredith for about $2.4 billion in cash and stock. Including debt, the deal, which must be approved by both companies' shareholders, was valued at $3.1 billion.

Media General shareholders didn't react well, driving down the company's stock that day even though it has since regained ground—in part on speculation Nexstar would make a bid.

Nexstar, based in Irving, Texas, has a portfolio of more than 100 TV stations in 58 markets, covering about 18% of U.S. television households. Media General operates or services 71 stations. Combining Nexstar and Media General would create a pure-play broadcast company owning or providing services to 162 stations in 99 markets, reaching 39% of U.S. television homes, according to Nexstar's letter.

Nexstar in August privately offered $17 a share for Media General, but the bid was rebuffed, according to people familiar with the matter. The broad market sell off since then helps explain the lower offer, they said.

"The combined company's significantly expanded audience reach and portfolio diversification would be highly attractive to programmers and advertisers alike, and its enhanced operating and financial scale would position it for near- and long-term success in an environment of ongoing industry consolidation," Mr. Sook wrote in Monday's letter.

There has been a wave of consolidation in the U.S. broadcast industry, as local TV stations seek to maintain or increase negotiating leverage with big cable and satellite providers, many of whom themselves are striking combinations.

In a conference call with analysts when the Media General deal was announced, Meredith Chief Executive Stephen Lacy said: "This deal creates a powerful, multiplatform and highly diversified media company and it builds a platform for continued industry consolidation." Mr. Lacy would be CEO of the combined company.

Meredith is known for magazines such as Better Homes Gardens and Family Circle. But its 17 local TV stations are the centerpiece of the Media General deal. Meredith Media General, as it would be known, would encompass 88 stations reaching 30% of U.S. households, or 34 million homes.

After selling most of its newspaper holdings to a subsidiary of Warren Buffett's Berkshire Hathaway a few years ago, Media General has bulked up through deals including its purchase of LIN Media LLC last year and New Young Broadcasting in 2013. Nexstar had been interested in buying LIN prior to its purchase by Media General, the people said.

Nexstar indicated in its letter that it believes it is a mistake for Media General to increase once again its exposure to the publishing business, which has been bedeviled by declining circulation and advertising revenue.

Executives for both Meredith and Media General have said that they view Meredith's magazine titles as a key driver of content creation for their digital properties.

The developing tussle comes as many media companies are splitting their broadcast businesses from their print operations. In June, Gannett Co. completed the spinoff of its broadcasting and digital-media business, now called Tegna Inc. That followed similar moves by Tribune Media Co. and News Corp, publisher of the Journal.

Nexstar is betting that any dissatisfaction among Media General shareholders with the Meredith deal will encourage them to pressure the company's management to negotiate a deal with Nexstar, which had a market value roughly similar to Media General's, at about $1.4 billion.

Mr. Sook, who is also Nexstar's founder, was a pioneer of the "retransmission consent" revenue stream for local TV stations, the payments cable and satellite operators make to carry their signals. Those fees have become a major driver of growth for stations in the past several years, as well as the major broadcast networks that get a cut of the cash for providing valuable programming like sports and prime-time shows.

Write to Dana Cimilluca at dana.cimilluca@wsj.com

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(END) Dow Jones Newswires

September 28, 2015 07:05 ET (11:05 GMT)

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