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Merger to Give Media General Library of Content, Meredith Better Retrans Deals

The combination of Meredith’s digital and publishing capabilities with Media General’s reach makes their $2.4 billion merger, announced Tuesday, a “blockbuster” deal, according Media Venture Partners managing director Elliot Evers.

“The urge to merge continues,” Evers said. “I am surprised to see the mix of print that Meredith has in its DNA with Media General’s digital assets like LIN.

“I still think of Meredith as a print company with a bunch of TV stations and Media General as a TV company with a bunch of digital assets. If you look at it that way, it does make a fair amount of sense.”

The merger will make the company, called Meredith Media General, the third-largest U.S. station group, with 88 stations initially in 54 markets reaching 30% of the country. That size is key especially for retrans deals and other negotiations.

“You get a bigger seat at the table with syndicators when you got 88 stations,” Evers said. “If you have 88 stations, they have to listen.”

Art Slusark, Meredith’s chief communications officer, indeed said they are excited about moving Meredith’s retrans agreements, where applicable, to Media General’s rates. He also pointed to a “really diverse portfolio” of stations, including a much bigger footprint in battleground states, particularly in the Southeast and Midwest, as the 2016 presidential election rolls around as well as the strength that should come with having 34 CBS stations.

“When it’s all said and done, it’s all about who has the best content,” said Steve Schwaid, VP of digital strategy at consulting firm CJ&N, who has been consulting with Meredith on its digital product for the past couple of years. “Oh my God, look at all this content they have.” He added that TV stations will look very different a few years from now, so “having that digital content put them in a really good space.”

From Meredith’s national brands, a female-skewing publishing roster led by magazine like Better Homes and Gardens and Shape, “we’ll be able to provide them with content,” Slusark said. That content will be put to use with the digital assets that LIN Media, which merged with Media General last year, had acquired in the previous few years. “With those synergies together (it becomes) a really legit strong business that we think has lots of upside potential to build on.”

Also crucial in a merger this big is the organizational structure. Both companies have a “lean corporate structure, Schwaid said, adding that Media General has a “bottom-up structure where stations have the resources” while Meredith CEO Steve Lacy gives presentations to stations at town hall meetings each year. “They’re pretty damn good at communicating,” Schwaid said

Lacy will assume the role of CEO of the new Meredith Media General, with current Media General president and CEO Vincent Sadusky planning to leave the company after the merger closes. “That’s a puzzle to me,” Evers said of Sadusky’s imminent departure. “Media General is the acquiring dominant entity both board wise and share wise, but the Media General CEO doesn’t stay on...”

The biggest puzzle is what happens next in an ever-changing industry. Will this merger influence other companies to do the same?

“It makes all the guys who are pretty big,” Evers said, “want to get bigger.”