Irving-based Nexstar Broadcasting Group Inc. emerged victorious Wednesday in its contentious, months-long bid to become the nation’s second largest broadcaster.

Nexstar said it has entered into a definitive merger agreement with Media General, finally edging out publisher Meredith to consummate a deal valued at $4.6 billion. The three media companies have been in a public tug of war since September when Nexstar’s first public offer for Media General was soundly rejected.

“It’s been a busy 122 days,” Perry Sook, chairman, president and CEO of Nexstar said in an interview with The Dallas Morning News.

Nexstar will acquire all outstanding shares of Media General for $10.55 a share in cash and 0.1249 of a share of Nexstar Class A common stock for each Media General share. Media General shareholders also are entitled to proceeds from the sale of Media General’s spectrum in an incentive auction to be held by the Federal Communication Commission.

The $4.6 billion valuation includes the assumption of debt.

To reflect its broadened operation and capabilities, Nexstar will change its name to Nexstar Media Group Inc. once the deal is final.

The new Nexstar Media Group will be one of the nation’s leading providers of local news, entertainment and sports programming and digital content through its broadcast and digital media platform.

Annual revenue is expected to top $2.3 billion. With 171 television stations in 100 markets, and a growing digital media operation, Nexstar Media Group will expand its reach to about 39 percent of all U.S. television households – edging close to the cap imposed by the FCC.

The deal creates the second largest broadcaster in America “in terms of national reach, the broadcaster with the most stations, a significant digital platform and the synergies [that] create enormous value that the companies couldn’t create on their own,” Sook said, shortly after briefing analysts on the deal.

The move, which follows a private courtship that began years ago, puts the new company in a better bargaining position with respect to the fees it is able to charge pay TV companies, including Dallas-based AT&T, which now owns DirecTV.

“With the cable industry, the distributors — whether it’s AT&T and DirecTV or Charter and Time Warner, or other combinations — as that side of the industry continues to consolidate and scale, it is necessary for the folks sitting on the other side of the desk, the broadcasters, to continue to scale,” Sook said, noting that nearly half of his stations’ contracts with content providers are up for negotiation this year.

“The negotiation becomes all about scale to produce a fair and equitable result.”

AT&T declined comment.

The deal increases Nexstar’s portfolio by two-thirds and “more than doubles our audience reach, provides entrée to 15 new top-50 DMAs and offers synergies,” he said in a statement.

With the definitive agreement, Media General says good night to its previous suitor, Meredith, which owns both magazines and TV stations. Meredith will receive a $60 million termination fee and will have an opportunity to negotiate for the purchase of some of Media General’s broadcast and digital properties.

The transaction, which has been unanimously approved by the boards of directors of both companies, values Media General at $17.14 a share, based on Nexstar’s 30-day volume weighted average price a share as of Tuesday plus the value of the spectrum sale.

The deal still must be approved by federal regulators.

It represents about a 54 percent premium over the closing share price of Media General on Sept. 25, 2015, the last trading day before Nexstar’s initial public announcement about its interest in acquiring Media General.

On completion of the transaction, expected late in the third quarter or early in the fourth quarter of 2016, Media General and Nexstar shareholders will hold about 34 percent and 66 percent, respectively, of the combined company’s outstanding shares.

Sook said the company’s headquarters will “absolutely” stay in North Texas, hopefully at the Irving office the company has occupied for about two years.

He said he expects to add at least 40 corporate employees to the roughly 50 who work in the office now.

“I started the company in northeastern Pennsylvania, the location of our first acquisition, and made a conscious decision to move the headquarters of the company from Pennsylvania to Dallas in the year 2000,” he said.

He was was drawn to the “proximity to a major airport that can get me just about everywhere that I need to go on a direct flight… the weather, the tax environment. All those were positives that caused us to consciously make the decision to base the company here.

“Even though we continue to grow,” he said, “we can do everything we need to do right where we are.”

Presented by The Dallas Morning News

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