Media General, owner of Tampa NBC affiliate WFLA-Ch. 8, on Thursday announced it is merging with privately held New Young Broadcasting Holding Co. of Nashville, creating a new public company nearly twice its size seeking $900 million in financing to cover the combined firms' debts.
News of the all-stock deal boosted Media General's stock price 33.7 percent to $9.76 at the close in New York, the biggest one-day gain in more than 19 months. The company's once-floundering stock shares have more than doubled this year.
The new company will retain the Media General name and its Richmond, Va., home base, combining the company's 18 network-affiliated TV stations with Young's 12 stations. After the merger, the 30 stations will reach 16.5 million households in 27 markets across the country, or 14 percent of U.S. viewers, the companies said in a statement. Young has no TV stations in Florida.
Officials at WFLA and Media General couldn't say how the Tampa station might be affected by the merger or how the new company's top leadership would be chosen. The statement noted that George L. Mahoney, president and chief executive officer of Media General, will retain his role after the merger.
At WFLA, general manager Brad Moses said Thursday, "I learned about this at 7 o'clock this morning, just before the press releases went out. But I think it's a good thing."
In the immediate future, operations at TV stations are expected to proceed as usual, according to Media General spokeswoman Liz Cleal.
The merger, valuing the companies at $870 million, creates a larger entity with more clout to demand retransmission fees from cable systems that carry their channels, as well as better terms for syndicated TV programming and debt refinancing.
It also ends Media General's stock structure, divided into two classes, allowing the Bryan family of Richmond to control the company. After the shares are reclassified into one type of common stock, Young shareholders will own 67.5 percent and Media General shareholders 32.5 percent, according to the merger announcement.
J. Stewart Bryan III, chairman of Media General, said, "The business combination of Media General and Young is a transformational event that will benefit shareholders, employees and the communities we serve.''
The companies have a combined debt of $765 million, with more than 75 percent of that total coming from Media General. (The company sold all of its newspapers except the Tampa Tribune last year to superstar investor Warren Buffett's Berkshire Hathaway company, earning $142 million, a $400 million loan and $45 million in credit.)