Media General acquiring LIN Media for $1.6 billion

Media General is acquiring LIN Media for $1.6 billion in stock and cash, the companies said Friday.

The combination of Media General and LIN will create a local broadcasting giant that will own and operate 74 television stations in 46 mostly midsized and smaller markets. Overall, Media General and LIN will have a nationwide reach of about 23%.

Only Baltimore-based Sinclair Broadcast Group, which owns and operates almost 170 outlets, will be bigger than the new Media General in terms of television stations. However, many broadcasters including CBS and Fox have a larger national reach.

ON LOCATION: Where the cameras roll

“The merger of two highly respected broadcasters with superior television and digital assets creates maximum value for shareholders and provides us the scale, breadth and resources to compete more effectively in the rapidly evolving media landscape,” said LIN Media President Vincent Sadusky in a statement.

After the sale closes, Sadusky will become CEO of the combined entity with Media General Chairman J. Stewart Bryan staying on in his post.

Under the terms of the deal, LIN shareholders will get cash and stock worth about $27.82 for each of their shares, an almost 30% premium over LIN’s Thursday closing price. LIN and Media General said the enterprise value of the sale, including debt, is $2.6 billion.

The deal, which is subject to approval by the Federal Communications Commission, is likely to be criticized by media watchdogs who have raised concern about media consolidation reducing diversity in the marketplace. The FCC is in the process of revising and tightening its ownership rules regarding local broadcasters. Media General said it will likely have to divest some television stations for the sale to get through the FCC.

Over the last few years, several broadcasters have combined including Gannett Co.’s acquisition of Belo and Los Angeles Times parent Tribune Co.’s purchase of Local TV LLC.

By consolidation, the combined stations will be in a better position to negotiate programming and distribution agreements as well as share resources.

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Follow Joe Flint on Twitter @JBFlint.