Say goodbye to the logo accompanying this story, and to the “MDP” stock symbol from our daily Wall Street Report.
Meredith Corporation as you knew it is now another faded company of broadcast media’s past, as Gray Television on Wednesday completed its $2.8 billion merger and subsequent spin-off of its non-local broadcast television assets to the Barry Diller-led IAC.
The acquisition of Meredith Local Media, comprised of 17 television stations in 12 local markets, was priced at $16.99 per share in cash.
Gray’s portfolio of television stations now serve 113 local markets reaching approximately 36 percent of US television households.
With estimated combined historical basis net revenue exceeding $3.2 billion on a blended
2020/2021 basis, Gray is now the nation’s second largest television broadcaster in terms of revenues, it says.
Furthermore, with a new, larger portfolio including 79 markets with the top-rated television station and 101 markets with the first and/or second highest rated television station, Gray retains its position as the largest owner of top-rated local television stations and digital assets in the United States.
“Gray is a far stronger company today with the exciting and transformative addition of
Meredith’s excellent television stations and its fine employees,” said Hilton H. Howell, Gray’s Executive Chairman and CEO. “We are grateful to the numerous professionals at Gray, Meredith and their advisers who dedicated themselves over the past year to the successful completion of this transaction.”
Gray’s acquisitions of Quincy Media Inc., completed in August, and Meredith Corporation are anticipated to be approximately 50% accretive to blended 2021/22 free cash flow per share, the company says.
Furthermore, expected strong free cash flow generation throughout 2021 and 2022 is anticipated to allow Gray to deleverage its capital structure following the closing.
As of the closing date, the blended average annual interest rate on the aggregate $2.8 billion of incremental debt used, in part, to finance the Meredith acquisition was an estimated 4.15%.
NEW Q4 GUIDANCE ISSUED
The Meredith acquisition will increase Gray’s net revenues and expenses in the fourth quarter 2021, resulting in the following updated guidance:
• Broadcasting net revenues to between $655 and $665 million
• Operating expenses (before depreciation, amortization, and (gain) loss on disposal of
assets, net)
o Broadcasting between $457 and $466 million including transaction related
expenses of between $19 and $20 million
o Corporate between $73 and $80 million including transaction related
expenses of between $51 and $54 million
“We anticipate that our total leverage ratio, as defined in our senior credit facility, at
December 31, 2021, will be approximately 5.4 times on a trailing eight-quarter basis, netting our total cash balance and giving effect to all transaction related expenses,” Gray said.
Wells Fargo Securities LLC served as financial advisor and Eversheds Sutherland LLP and Jones Day served as legal counsel for Gray.
