Meredith Corporation To Sell Local Media Group For $2.7 Billion, Focus Exclusively On Leading Portfolio Of National Brands

Meredith Corporationannounced that it has agreed to sell its Local Media Group (“LMG”) to Gray Television, Inc. (NYSE: GTN) for $2.7 billion in cash and will focus exclusively on its National Media Group (“NMG”) portfolio post-close. Under the terms of the transaction, Meredith’s National Media Group will be spun out to shareholders as a standalone publicly traded company retaining the Meredith Corporation name, with shareholders receiving cash consideration per share of approximately $14.50 and 1-for-1 equity share in post-close Meredith. The transaction was unanimously approved by Meredith’s and Gray’s Board of Directors.

Following the LMG sale, Meredith will focus on accelerating the growth of its iconic brands including PEOPLE, Better Homes & Gardens, and Allrecipes, which deliver trusted, actionable content for every aspect of consumers’ lives. The more focused company will continue producing and delivering content for 95% of U.S. women, many of whom are primary decision makers for the household.

“We expect the transaction to unlock meaningful shareholder value as it advances all of the company’s financial priorities: reducing net debt, improving financial flexibility, allocating capital to fast-growing digital and consumer opportunities, and providing returns to shareholders,” said Meredith Chairman and Chief Executive Officer Tom Harty. “As a more focused company with an enhanced balance sheet and cash-generating media assets, we will further advance our position as a media leader with trusted brands, a digital business of scale, and unparalleled reach to women.

“Meredith is on the leading edge of trends, products, life-enhancing information, and human-interest stories that consumers demand now more than ever. This transaction will allow us to sharpen our focus on the potential of our brands and assets,” Harty said. “We will invest to accelerate our digital growth and leverage our industry-leading first party data to deepen engagement with consumers across multiple platforms and provide advertising partners with greater value.”

Strategic rationale for the transaction
*Monetizes LMG at a premium price and an attractive point in the cycle – A 10x multiple (average of LMG’s Fiscal 2020/2021 Adjusted EBITDA) reflects a highly competitive process and Meredith Corporation’s high-quality broadcast portfolio;
*Structure provides tax-efficient path to split businesses – Allows the full proceeds to extinguish all existing Meredith Corporation debt;
*Significantly improves financial strength – Meredith expects to be levered at approximately 2x Adjusted EBITDA, with committed financing from RBC Capital Markets and Barclays. The structure enhances financial flexibility and enables capital returns to shareholders;
*Creates shareholder value through strategic transformation – Existing shareholders to receive one-time cash consideration plus one-for-one equity in Meredith;
*Sharpens strategic focus on growth opportunities – Fully establishes Meredith as a multi-platform, consumer-focused, lifestyle media company with increased capacity to make strategic investments in Meredith’s leading consumer and digital platforms.

Meredith’s leadership and opportunity going forward
Meredith reaches more adult women than any media company in America, with brands that serve more than 120 million (or nearly 95%) of American adult women, including 90% of Millennial women. Additionally, Meredith’s brands reach nearly 65 million (or nearly 55%) of American adult men.

The demand for high quality, exciting, and informative content around Meredith’s core expertise including celebrity and entertainment news, house and home, food, style, health, fitness, and parenting has accelerated dramatically during the pandemic, and fundamental shifts in consumer behavior suggest these trends will continue.

Meredith’s digital business is already large, profitable, and growing with digital advertising contributing over half of Meredith’s total expected advertising revenues. Digital advertising revenues in Meredith’s fiscal 2021 third quarter were up 21% and have now surpassed magazine advertising revenue for two consecutive quarters. Meredith’s licensing and performance marketing revenues, which anchor its digital consumer activities, are additional key growth drivers.

“We address the fundamental passions and concerns that women and families face every day, creating sought-after content that millions of Americans across generations have grown to know, love, and trust,” said Mell Meredith Frazier, vice chair of Meredith Corporation’s Board of Directors. “We understand the trends and products that consumers crave better than any other media company, and we are incredibly proud and committed to keeping Meredith a thriving enterprise as dynamic as the lives our consumers lead.”

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