Big Broadcaster Tegna Sold To Standard General

Big publicly-traded broadcaster Tegna, which has been in play for months, agreed to sell itself to Standard General and investors led by Apollo Global Management and its Cox Media Group.

It’s a cash deal for $24 a share. That comes to an equity value of $5.4 billion, or $8.6 billion including the assumption of debt.

The price reps a 39% premium to where Tegna’s stock closed on Sept. 14, 2021 – lookback the company said reflects its last full day of trading before speculation began to pop about a potential sale, with Bryon Allen, Gray Television and other PE firms among potential suitors. It also reps a premium of 11% to Tegna’s all-time closing high since splitting off from the Gannett publishing business in 2015.

There’s been a spate of M&A in broadcasting since, including Nexstar acquiring Tribune Media and Sinclair Broadcast buying the Fox regional sports networks.

The deal was unanimously approved by Tegna’s board. Shareholders must also vote and the deal is expected to close in the second half of 2022. Tegna, currently listed on the NYSE, will go private. It’s up 7% in a down market today on news of the deal.

At close, Deb McDermott, CEO of Standard Media will be CEO, replacing Dave Lougee. McDermott currently serves as CEO of Standard Media. She was previously COO of Media General and CEO of Young Broadcasting.

Lougee drew headlines last spring when when Adonis Hoffman, a longtime fixture in Washington media and regulatory circles, withdrew his Tegna board nomination citing a racially charged interaction with the chief executive. Hoffman cited a 2014 incident at a luncheon where Lougee, who is white, mistook Hoffman, who is Black, for a hotel car valet.

Soo Kim, founding partner of Standard General, will become chairman. His firm has been pushing for change at Tegna since 2020 when he waged a proxy battle and tried to seat an alternative slate of directors, citing management’s
“pattern of passivity” in financial performance and refusal to consider acquisition offers.

Following the close of the transaction, Cox will acquire Tegna stations in Austin (KVUE), Dallas (WFAA and KMPX) and Houston (KHOU and KTBU) from Standard General. Tegna owns 64 stations in 51 markets, including top-4 network affiliates in the top 25 markets. It owns multicast networks True Crime, Twist and Quest.

Tegna’s OTT advertising company Premion is expected to operate as a standalone business majority owned by Cox Media Group and Standard General.

An affiliate of Standard General will hold substantially all of the voting, common equity in the new entity that is acquiring Tenga, with CMG and funds managed by affiliates of Apollo Global Management to hold securities in the new entity that will be non-voting and non-attributable and with other investors holding non-voting interests.

A syndicate of banks led by RBC Capital Markets will provide debt financing.

J.P. Morgan Securities is acting lead financial advisor with Greenhill & Co. also to Tegan. Wachtell Lipton Rosen & Katz and Covington & Burling are legal advisors. Moelis & Company and RBC are financial advisor to Standard General with Fried Frank Harris Shriver & Jacobson LLP and Pillsbury Winthrop Shaw Pittman LLP as legal advisors.