Starboard Urges Media General to Negotiate Deal With Nexstar

Activist investor Starboard Value LP urged Media General Inc. to negotiate the best possible deal with Nexstar Broadcasting Group Inc. within the bounds of its pending agreement to acquire Meredith Corp., a move Starboard still opposes.

In a letter Tuesday to Media General Chairman J. Stewart Bryan III, Chief Executive Vincent L. Sadusky and the company's board, Starboard also warned it was prepared to take necessary steps, including a possible proxy fight, to ensure the outcome is in the best interests of shareholders and that the company doesn't act to prevent shareholders from voting on any potential transaction.

The letter comes a day after Nexstar offered roughly $1.8 billion for Media General, in a move that potentially could scuttle the pending deal for Meredith.

A Media General spokesman didn't have an immediate comment.

Starboard, which has a stake of roughly 4.5% in Media General and is one of its biggest shareholders, said it believes a "combination of Nexstar and Media General is highly strategic." The activist investor also said it would vote its shares against the Meredith deal, even before considering Nexstar's offer.

Starboard also said it was surprised that Nexstar previously made a private offer in August and expressed concern Media General had refused a chance to negotiate a possible deal with Nextar.

Media General earlier this month agreed to acquire Meredith for about $2.4 billion in cash and stock, continuing a trend of consolidation in the U.S. broadcast industry as local TV stations look for negotiating leverage against large cable and satellite providers. Meredith is known for magazines such as Better Homes Gardens and Family Circle, but its 17 local TV stations are the centerpiece of the pending deal.

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.

Nextar recently traded at $45.48, up 4.5%. Media General rose 1.5% to $13.85, and Meredith fell 38 cents to $43.05.

Write to Tess Stynes at tess.stynes@wsj.com

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(END) Dow Jones Newswires

September 29, 2015 12:25 ET (16:25 GMT)

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