Highly Diversified Local Marketing and
Content Platform with Strong Financial and Growth Profile will be
Better Positioned to Compete in Rapidly Transforming Industry based
on Combination of Scale and Commitment to Localism, Innovation and
Growth
Nexstar Media Group, Inc. (Nasdaq: NXST) (“Nexstar”) and Tribune
Media Company (NYSE: TRCO) (“Tribune Media”) announced today that
they have entered into a definitive merger agreement whereby
Nexstar will acquire all outstanding shares of Tribune Media for
$46.50 per share in a cash transaction that is valued at $6.4
billion including the assumption of Tribune Media’s outstanding
debt. The transaction reflects a 15.5% premium for Tribune Media
shareholders based on its closing price on November 30, 2018, and a
45% premium to Tribune Media’s closing price on July 16, 2018, the
day the FCC Chairman issued a public statement regarding his
intention to circulate a Hearing Designation Order for Tribune
Media’s previously announced transaction with a third party.
Tribune Media shareholders will be entitled to additional cash
consideration of approximately $0.30 per month if the transaction
has not closed by August 31, 2019 (pro-rated for partial months and
less an adjustment for any dividends declared on or after September
1, 2019). The transaction has been approved by the boards of
directors of both companies and is expected to close late in the
third quarter of 2019, subject to receipt of required regulatory
approvals and satisfaction of other customary closing
conditions.
Upon closing, the transaction is expected to be immediately
accretive to Nexstar’s operating results inclusive of expected
operating synergies of approximately $160 million in the first year
following the completion of the transaction and planned
divestitures. The proposed transaction will combine two leading
local media companies with complementary national coverage and will
reach approximately 39% of U.S. television households pro-forma for
anticipated divestitures and reflecting the FCC’s UHF discount. The
transaction is not subject to any financing condition and Nexstar
has received committed financing for the transaction from BofA
Merrill Lynch, Credit Suisse and Deutsche Bank.
Following the completion of the transaction, Nexstar will
benefit from increased operational and geographic diversity and
scale as a result of Tribune Media’s diverse portfolio of media
assets including 42 owned or operated broadcast television stations
in major U.S. markets; compelling local news and entertainment
content creation; significant broadcast distribution; a
reinvigorated general entertainment cable network, WGN America; a
31% ownership stake in TV Food Network, which is a top tier cable
asset; and equity investments in several digital media businesses.
The combined entity will be one of the nation’s leading providers
of local news, entertainment, sports, lifestyle and network
programming through its broadcast and digital media platforms with
pro-forma annual revenue of approximately $4.6 billion (2018/2019
average) and pro-forma adjusted EBITDA of approximately $1.7
billion (2018/2019 average). With 216 combined, pre-divestiture
full power, owned or serviced, television stations in 118 markets
and rapidly growing digital media operations, Nexstar will continue
its commitment to localism and innovation and offer superior
engagement across all devices, including large-scale reach to U.S.
television households and online users.
Perry Sook, Chairman, President and CEO of Nexstar, commented,
“Nexstar has long viewed the acquisition of Tribune Media as a
strategically, financially and operationally compelling opportunity
that brings immediate value to shareholders of both companies. We
have thoughtfully structured the transaction in a manner that
positions the combined entity to better compete in today’s rapidly
transforming industry landscape and better serve the local
communities, consumers and businesses where we operate. As with our
past transactions, we have developed a comprehensive regulatory
compliance plan and believe we have a clear path to closing. With
committed financing and a plan for significant synergy realization
that will result in only a minimal increase in Nexstar’s pro-forma
leverage, the combined entity will be poised for growth, leverage
reduction and increased capital returns for shareholders.
“The transaction offers synergies related to the enhanced scale
of the combined broadcast and digital media operations, and
increases our audience reach by approximately 50%. Furthermore, the
addition of the Tribune Media broadcast assets further expands our
geographic diversity, as pro forma for the completion of the
transaction, we will serve 18 of the nation’s top 25 markets and 37
of the top 50 markets.
“Financially, the transaction will result in approximately 46%
growth in Nexstar’s average annual free cash flow in the 2018/2019
cycle to approximately $900 million, or approximately $19.50 per
share, per year based on approximately 46.2 million Nexstar shares
outstanding. In the twenty two years since we founded Nexstar, we
have demonstrated prudent use of leverage and an ability to source
capital at attractive rates to support our strategies for growth
and the enhancement of shareholder value. Given our planned
divestitures and the significant free cash flow from operations we
intend to allocate capital from the combined entity to immediately
reduce leverage and increase our return of capital to shareholders,
while investing in our business to improve service to viewers and
advertisers. This focus, combined with our time proven operating
and integration strategies will enable us to extend our strong
long-term record of shareholder value creation.”
Peter Kern, CEO of Tribune Media, said, “We are delighted to
have reached this agreement with Nexstar as it provides Tribune
shareholders with substantial value and a well-defined path to
closing. Together with Nexstar we can better compete by delivering
a nationally integrated, comprehensive and competitive offering
across all our markets. We believe this combination will produce an
even stronger broadcast and digital platform that builds on the
accomplishments of both companies and benefits our viewers and
advertisers. The premium value our shareholders are receiving
reflects the hard work of our dedicated Tribune employees in
maximizing the value of our portfolio. I look forward to working
closely with the Nexstar team to deliver on the value of this
compelling combination and to ensure a smooth transition and
integration of our companies.”
Thomas Carter, Chief Financial Officer of Nexstar, added, “This
accretive transaction marks further progress toward our goal of
improving our competitive position by strategically expanding our
operating base to realize the benefits of scale, increasing our
strategic and financial flexibility, and driving shareholder value.
Our long-term experience in integrating acquired assets and our
success over the last seven quarters in outperforming our synergy
targets and driving other operating efficiencies related to our
acquisition of the Media General operations will serve us well as
we add the Tribune Media assets to our operating base. With our
experienced management team, operating discipline and focused
approach to managing our capital structure and cost of capital, we
believe the acquisition of Tribune Media presents another
meaningful opportunity for Nexstar, the markets we serve and our
shareholders. Notably, after giving effect to the transaction, the
incurrence of debt, transaction expenses, and the expected first
year synergies of $160 million as well as in-process and planned
asset sales, we expect our net leverage ratio to be approximately
5.3x at closing and with the free cash flow generated from this
base of operations, we expect Nexstar’s net leverage to decline to
the 4.0x range by the end of 2020, a year which will also benefit
from significant 2019 renewals of retransmission consent agreements
and the Presidential election.”
Completion of the transaction is subject to approval by
Tribune’s shareholders, as well as customary closing conditions,
including approval by the FCC, and satisfaction of antitrust
conditions. Nexstar intends to divest certain television stations
necessary to comply with regulatory ownership limits and may also
divest other assets which it deems to be non-core. All after-tax
proceeds from such asset sales are expected to be applied to
leverage reduction.
BofA Merrill Lynch is acting as financial advisor and Kirkland
& Ellis LLP and Wiley Rein LLP are acting as legal counsel to
Nexstar Media in connection with the proposed transaction. Moelis
& Company and Guggenheim Securities are acting as financial
advisors to Tribune Media and Debevoise & Plimpton LLP and
Covington & Burling LLP are acting as its legal counsel.
Conference Call, Webcast, Investor Presentation
Nexstar Media will host a conference call today, Monday,
December 3, at 8:30 a.m. ET to review the transaction and host a
question and answer session. To access the conference call,
interested parties may dial 323/994-2093 (domestic and
international callers). The Conference ID Number is 8529802.
Participants can also listen to a live webcast of the call from
Nexstar’s website at www.nexstar.tv or Tribune Media’s website at
www.tribunemedia.com.
During the conference call and webcast, management will review a
presentation summarizing the proposed transaction which can be
accessed at www.nexstar.tv. A webcast replay will be available for
90 days following the live event at www.nexstar.tv. Please call
five minutes in advance to ensure that you are connected. Questions
and answers will be taken only from participants on the conference
call. For the webcast, please allow 15 minutes to register,
download and install any necessary software.
About Nexstar Media Group, Inc.
Nexstar Media Group is a leading diversified media company that
leverages localism to bring new services and value to consumers and
advertisers through its traditional media, digital and mobile media
platforms. Nexstar owns, operates, programs or provides sales and
other services to 174 full power television stations and related
digital multicast signals reaching 100 markets or nearly 39% of all
U.S. television households. Nexstar’s portfolio includes primary
affiliates of NBC, CBS, ABC, FOX, MyNetworkTV and The CW. Nexstar’s
community portal websites offer additional hyper-local content and
verticals for consumers and advertisers, allowing audiences to
choose where, when and how they access content while creating new
revenue opportunities. For more information please visit
www.nexstar.tv.
About Tribune Media
Tribune Media Company is home to a diverse portfolio of
television and digital properties driven by quality news,
entertainment and sports programming. Tribune Media is comprised of
Tribune Media Broadcasting's 42 owned or operated local television
stations reaching approximately 50 million households, national
entertainment cable network WGN America, whose reach is more than
77 million households, and a variety of digital applications and
websites commanding 54 million monthly unique visitors online.
Tribune Media also includes Chicago's WGN-AM and the national
multicast networks Antenna TV and THIS TV, and Covers Media Group,
an unrivaled source of online sports betting information.
Additionally, the Company owns and manages a significant number of
real estate properties across the U.S. and holds a variety of
investments, including a 31% interest in Television Food Network,
G.P., which operates Food Network and Cooking Channel. For more
information please visit www.tribunemedia.com.
Additional Information and Where to Find It
This communication is being made in respect of a proposed
business combination involving Tribune Media and Nexstar. In
connection with the proposed transaction, Tribune Media intends to
file relevant materials with the U.S. Securities and Exchange
Commission (the “SEC”), including a preliminary proxy statement on
Schedule 14A. The information in the preliminary proxy statement
will not be complete and may be changed. Tribune Media will deliver
the definitive proxy statement to its shareholders as required by
applicable law. This communication does not constitute a
solicitation of any vote or approval and is not a substitute for
any proxy statement or any other document that may be filed with
the SEC in connection with the proposed business combination.
INVESTORS AND SECURITY HOLDERS OF TRIBUNE MEDIA ARE URGED TO READ
THE DEFINITIVE PROXY STATEMENT AND OTHER DOCUMENTS FILED WITH THE
SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED
TRANSACTION. Investors and security holders will be able to obtain
these materials (when they are available) and other documents filed
with the SEC free of charge at the SEC’s website, www.sec.gov.
Copies of documents filed with the SEC by Tribune Media (when they
become available) may also be obtained free of charge from Tribune
Media’s website at www.tribunemedia.com.
Certain Information Regarding Participants
Tribune Media and Nexstar and their respective directors and
executive officers may be deemed to be participants in the
solicitation of proxies from shareholders of Tribune Media in favor
of the proposed transaction under the rules of the SEC. Information
about Tribune Media’s directors and executive officers is available
in Tribune Media’s Annual Report on Form 10-K for the year ended
December 31, 2017, which was filed with the SEC on March 1, 2018
and Tribune Media’s definitive proxy statement, dated April 19,
2018, for its 2018 annual meeting of shareholders. Information
about Nexstar Media’s directors and executive officers is available
in Nexstar Media’s Annual Report on Form 10-K for the year ended
December 31, 2017, which was filed with the SEC on March 1, 2018,
and Nexstar Media’s definitive proxy statement, dated April 27,
2018, for its 2018 annual meeting of shareholders. Additional
information regarding participants in the proxy solicitations and a
description of their direct and indirect interests will be included
in the proxy statement and the other relevant documents filed with
the SEC when they become available.
Forward-Looking Statements
This communication includes forward-looking statements. We have
based these forward-looking statements on our current expectations
and projections about future events. Forward-looking statements
include information preceded by, followed by, or that includes the
words "guidance," "believes," "expects," "anticipates," "could," or
similar expressions. For these statements, Nexstar Media and
Tribune Media claim the protection of the safe harbor for
forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995. The forward-looking statements
contained in this communication, concerning, among other things,
the ultimate outcome, benefits and cost savings of any possible
transaction between Nexstar Media and Tribune Media and timing
thereof, and future financial performance, including changes in net
revenue, cash flow and operating expenses, involve risks and
uncertainties, and are subject to change based on various important
factors, including the timing of and any potential delay in
consummating the proposed transaction; the risk that a condition to
closing of the proposed transaction may not be satisfied and the
transaction may not close; the risk that a regulatory approval that
may be required for the proposed transaction is delayed, is not
obtained or is obtained subject to conditions that are not
anticipated, the risk of the occurrence of any event, change or
other circumstance that could give rise to the termination of the
Merger Agreement; the risk that Nexstar Media fails to obtain the
necessary financing arrangements set forth in the debt commitment
letters delivered pursuant to the Merger Agreement, the impact of
changes in national and regional economies, the ability to service
and refinance our outstanding debt, successful integration of
Tribune Media (including achievement of synergies and cost
reductions), pricing fluctuations in local and national
advertising, future regulatory actions and conditions in the
television stations' operating areas, competition from others in
the broadcast television markets, volatility in programming costs,
the effects of governmental regulation of broadcasting, industry
consolidation, technological developments and major world news
events. Unless required by law, Nexstar Media and Tribune Media
undertake no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise. In light of these risks, uncertainties and
assumptions, the forward-looking events discussed in this
communication might not occur. You should not place undue reliance
on these forward-looking statements, which speak only as of the
date of this release. For more details on factors that could affect
these expectations, please see Tribune Media’s and Nexstar Media’s
filings with the Securities and Exchange Commission.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20181203005261/en/
Nexstar Media:Thomas E. CarterChief Financial
OfficerNexstar Media Group, Inc.972/373-8800JCIRJoseph
Jaffoni/Jennifer Neuman212/835-8500 or nxst@jcir.comTribune
Media:Gary WeitmanSVP/Corporate
Relations312/222-3394gweitman@tribunemedia.com
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