Media General Inc. and privately held New Young Broadcasting Holding Co. today announced a definitive agreement to combine the two companies in an all-stock merger transaction. The new company will retain the Media General name and will remain headquartered in Richmond, Va.  

Media General owns 18 network-affiliated stations, and Young owns or operates 12 network affiliates. The combination will create a company with 30 stations operating in 27 markets, reaching 16.5 million, or 14%, of U.S. TV households. On a pro forma basis, 2012 revenues were $605 million, including approximately $115 million of political revenues.

Media General says the new company “will have a strong balance sheet, including significant tax carryover net operating losses that will survive the merger, and an enhanced credit profile, creating opportunities to refinance existing debt at a significantly lower cost of capital. The merger will be accretive to free cash flow in the first full year. The companies have identified $25 million-$30 million of operating and financing synergies.

The balance of network affiliations will include CBS (11), NBC (9), ABC (7) Fox (1), CW (1) and MNT (1). Sixteen of the 30 stations are located in the Top 75 DMAs. Media General says the new company “will be more geographically diverse and will have a presence in more markets that generate strong political revenues. Its increased size will enhance its ability to participate in retransmission revenue growth, share growth of national and digital advertising, and syndicated programming purchasing.”

Commenting on the news, media broker Larry Patrick said: “The deal simply demonstrates the ‘rolling thunder’ of TV acquisitions is continuing”. Patrick also said to expect similiar deals for another two years: “There are a lot more acquisitions in the pipeline.”

Station groups like Young and Media General, Patrick said: “are finding that the economics of scale and retrans are clearly making it advantageous to get larger and larger.”

More from TVNewsCheck