Gray Television, Inc. (“
Gray”) (NYSE: GTN) has
agreed to acquire all outstanding shares of Meredith Corporation
(“
Meredith”) for approximately $14.50 per share in
cash, or $2.7 billion in total enterprise value after the spin off
of Meredith’s National Media Group to the current Meredith
shareholders. The parties expect to close the transaction in the
fourth quarter of 2021.
Immediately prior to closing this acquisition, Meredith will
spin off to its existing shareholders its National Media Group
operating division, which owns the nation’s largest portfolio of
magazines as well as digital and marketing assets. At the closing,
Gray will acquire Meredith’s other operating division, known as the
Local Media Group, which owns the following 17 television stations
in 12 local markets:
WGCL (CBS) / WPCH (Independent), Atlanta, Georgia (DMA 7) KPHO
(CBS) / KTVK (Independent), Phoenix, Arizona (DMA 11) KPTV (FOX) /
KPDX (MyNetwork), Portland, Oregon (DMA 21)KMOV (CBS), St. Louis,
Missouri (DMA 23)WSMV (NBC), Nashville, Tennessee (DMA 29) WFSB
(CBS), Hartford-New Haven, Connecticut (DMA 32) KCTV (CBS) / KSMO
(MyNetwork), Kansas City, Missouri, (DMA 34) WHNS (FOX),
Greenville-Spartanburg, South Carolina (DMA 35) KVVU (FOX), Las
Vegas, Nevada (DMA 40) WALA (FOX), Mobile, Alabama (DMA 57) WNEM
(CBS), Flint-Saginaw, Michigan (DMA 73) WGGB (ABC & FOX) /
WSHM-LD (CBS), Springfield, Massachusetts (DMA 116)
Gray currently operates in only one of these television markets,
the Flint-Saginaw DMA. To facilitate regulatory approvals for this
transaction, Gray will divest its ABC affiliate in the market,
WJRT-TV, to an independent third-party no later than the closing of
the Meredith acquisition.
With a combined net revenue exceeding $3.1 billion on a blended
2019/2020 basis, Gray’s acquisition of Meredith’s television
stations will transform Gray into the nation’s second largest
television broadcaster. Gray’s portfolio of television stations,
including all announced transactions and less divestitures, will
serve 113 local markets reaching approximately 36 percent of US
television households.
The transaction augments Gray’s position as the largest owner of
top-rated local television stations and digital assets in the
United States, with a pro forma portfolio including 79 markets with
the top-rated television station and 101 markets with the first
and/or second highest rated television station according to
Comscore’s audience measurement data.
Gray’s Executive Chairman and CEO Hilton H. Howell commented,
“The television station portfolios, company cultures, and
commitments to localism of Gray and Meredith are highly
complementary. We are very excited to acquire Meredith’s excellent
television stations, and we look forward to welcoming its employees
into the Gray family. Moreover, Gray’s Board and shareholders are
deeply appreciative of the tireless efforts of our team led by
Kevin Latek and Jim Ryan on this transaction and our other recently
announced significant transactions. Building on our successes
throughout 2020 and just the first few months of 2021, Gray
Television clearly has an even stronger and brighter future than
ever!”
Transaction Summary
Gray expects that the Meredith transaction will be significantly
accretive to free cash flow per share. To date, Gray has identified
an estimated $55 million in synergies annualized for the first full
calendar year following the closing. Including these anticipated
$55 million of synergies, the purchase price for Gray’s acquisition
of Meredith represents a multiple of approximately 7.9 times a
blended average of the Meredith television stations’ 2019/2020
operating cash flow.
The transaction is subject to customary closing conditions and
regulatory approvals, including certain consents necessary to
effectuate the spin-off of Meredith’s National Media Group
immediately prior to the closing of Gray’s acquisition of Meredith.
Importantly, the proposed transaction will not create any new
duopolies of local television stations. Moreover, giving effect to
the FCC’s UHF Discount, the pro forma portfolio of television
stations will reach approximately 25 percent of US television
households, which is well below the FCC’s national audience cap of
39 percent. As a result, subject to the anticipated divestiture of
WJRT-TV, Gray’s acquisition of Meredith complies with all FCC
ownership rules without the need for any rule waivers.
Wells Fargo has underwritten the debt financing portion of the
transaction. Expected strong free cash flow generation through the
closing of all pending transactions and throughout 2021 and 2022 is
anticipated to allow Gray to deleverage its capital structure
following the closing. Assuming a year-end 2021 closing, Gray
anticipates that its total leverage ratio, net of all cash, would
approximate 5.3 times on a trailing eight-quarter operating cash
flow, including estimated annualized synergies from all announced
transactions.
The transaction has been approved by the Boards of Directors of
both Gray and Meredith. No Gray shareholder vote will be required
to consummate the transactions described herein. Completion of the
transaction is subject to approval by Meredith’s shareholders.
Meredith’s significant shareholders have entered into agreements
with Gray to support the transaction.
Conference Call
and Additional Information
Gray will host a conference call for all stakeholders and other
interested parties to discuss this transaction further beginning at
10:30 a.m. Eastern today, Monday, May 3, 2021. The live
dial-in number is 855-493-3489 and the confirmation code is
6738037. The call will stream live and be available for
replay at www.gray.tv. Until June 3, 2021, a taped
replay of the conference call will be available at 855-859-2056
with the confirmation code 6738037.
Additional information regarding the transaction can be obtained
from Gray’s Current Report on Form 8-K being filed with the SEC in
connection with the announcement of this transaction, including the
investor presentation furnished therewith, which presentation will
also be available on Gray’s website.
Advisors
Wells Fargo Securities, LLC served as financial advisor and
Eversheds Sutherland LLP and Jones Day served as legal counsel for
Gray.
About Gray:
Gray Television is a television broadcast company headquartered
in Atlanta, Georgia. Gray is the largest owner of top-rated local
television stations and digital assets in the United States
(“U.S.”). Gray currently owns and/or operates television stations
and leading digital properties in 94 television markets that
collectively reach approximately 24% of U.S. television households.
During 2020, Gray’s stations were ranked first in 70 markets, and
ranked first and/or second in 86 markets, as calculated by
Comscore’s audience measurement service. Gray also owns video
program production, marketing, and digital businesses including
Raycom Sports, Tupelo Honey, and RTM Studios, the producer of
PowerNation programs and content, and is the majority owner of
Swirl Films.
Forward-Looking Statements:
This press release contains certain forward looking statements
that are based largely on Gray’s current expectations and reflect
various estimates and assumptions by Gray. These statements are
statements other than those of historical fact, and may be
identified by words such as “estimates”, “expect,” “anticipate,”
“will,” “implied,” “assume” and similar expressions. Forward
looking statements are subject to certain risks, trends and
uncertainties that could cause actual results and achievements to
differ materially from those expressed in such forward looking
statements. Such risks, trends and uncertainties, which in some
instances are beyond Gray’s control, include Gray’s inability to
complete its pending acquisition of Meredith or additional pending
transactions, on the terms and within the timeframe currently
contemplated, any material regulatory or other unexpected
requirements in connection therewith, or the inability to achieve
expected synergies therefrom on a timely basis or at all, the
impact of recently completed transactions, estimates of future
retransmission revenue, future expenses and other future events.
Gray is subject to additional risks and uncertainties described in
Gray’s quarterly and annual reports filed with the Securities and
Exchange Commission from time to time, including in the “Risk
Factors,” and management’s discussion and analysis of financial
condition and results of operations sections contained therein,
which reports are made publicly available via its website,
www.gray.tv. Any forward-looking statements in this presentation
should be evaluated in light of these important risk factors. This
presentation reflects management’s views as of the date hereof.
Except to the extent required by applicable law, Gray undertakes no
obligation to update or revise any information contained in this
presentation beyond the published date, whether as a result of new
information, future events or otherwise.
# # #
- Gray's Pro Forma Television Portfolio
Gray Contacts:
Website: www.gray.tv
Hilton H. Howell, Jr., Chairman, President and Chief Executive Officer, 404-266-5512
Jim Ryan, Executive Vice President and Chief Financial Officer, 404-504-9828
Kevin P. Latek, Executive Vice President, Chief Legal and Development Officer, 404-266-8333
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