The parent companies of Savannah-area stations WSAV, WJCL and WTGS announced a $1.6 billion merger Friday, creating the second largest broadcasting group in the country in number of stations.
LIN Media, owner of WJCL, an ABC affiliate, and the contract operator of WTGS, a Fox outlet, is merging with Media General, which owns local NBC affiliate WSAV.
The combined company, to be called Media General, will own 74 stations in 46 markets with a reach of 26.5 million people, about 23 percent of U.S. households. If approved, it will become the second biggest owner of TV stations behind Sinclair Broadcasting Group, which has 167 stations.
The new company will have to sell or swap some stations in order to meet federal anti-trust requirements, including, perhaps, one of its three Savannah stations. Lou Anne Nabhan, vice president of communications for Media General, said it was too soon to speculate on particular outcomes.
“We are excited about the announcement made today but are focused on our daily commitment to serve our viewers and advertisers,” said Les Vann, general manager of WJCL and WTGS. “It’s business as usual here at WJCL/WTGS.”
Shareholders of LIN Media will receive $1.6 billion in cash and stock, or about $27.82 per share. Vincent Sadusky, LIN Media president and CEO, will lead the new company, according to a press release.
This is the first broadcasting merger since cable providers Time Warner and Comcast announced their pending mega union in February. Broadcasters have been moving quickly toward consolidation, according to analysts, to provide them with more leverage in increasingly contentious negotiations over retransmission fees and rates.
However, a bigger factor in this particular case, according to Ann Hollifield, department head of telecommunications at the University of Georgia, might be that the federal government is close to approving spectrum auctions to allow media companies to sell off their assets.
“Although details have to be determined, it does look as if the federal government is highly likely to authorize some type of spectrum auction in 2015,” said Hollifield. “There are companies out there trying to gobble up stations in hopes that their assets will be more valuable on the auction block.”
With advertisers and audiences increasingly fragmented, Hollifield said, revenues have been flat or declining for many stations across the country. As a result, some stations may want to get out of the TV business and sell their part of the spectrum to cellular providers who are eager to snatch up more frequencies.
“As we move into a wireless society, there’s more and more demand for spectrum now that everybody has tablets and smartphones — and spectrum is a finite resource,” said Hollifield. “What TV stations sit on is one of the pieces of the spectrum that can handle incredibly broad range of data information (and) cell companies want it.”
Hollifield said the two companies were also highly complementary and would give Media General stations regional economies of scale, allowing them to bring in new areas of service and more ad revenue.
Media General projected $70 million in operational savings within three years of the deal closing, slated for early next year.